June 17, 2024

DCLG leasehold team issue raft of improvements

Retirement exit fees may get the chop, at last!

DCLGThe new DCLG leasehold team, with whom Campaign against retirement leasehold exploitation / LKP has been working closely, yesterday announced a range of measures in addition to “Florrie’s Law” (see LKP) and acceptance that the residential leasehold sector is far larger than was previously thought.

They include referring exit fees in retirement leasehold to the Law Commission.

As the Office of Fair Trading already declared these to be a “likely” unfair contract term and made a not-very-useful deal with the Tchenguiz freehold companies on limiting their impact, it is highly likely that these monetising clauses will be history.

Exit fees are an unjustifiable extra earner for freeholders. They were pioneered by retirement housebuild McCarthy and Stone – and copied by everyone else – to bump up the value of freeholds that were then sold on to monetising enthusiasts.

McCarthy and Stone dropped the exit fees at its own freeholds in late 2008 (or January 2009, according to Campaign against retirement leasehold exploitation) after the OFT announced its leisurely investigation into the charges (it reported in Sept 2012).

They have been dropped as an extra earner by all the main retirement housing builders, but are widely in existence throughout every level of the sector.

Campaign against retirement leasehold exploitation veteran Susan Wood unsuccessfully fought the issue in the Sheffield small claims court in January last year.

The Tchenguiz freehold company went to the expense of deploying a London barrister – who tried in vain to get the case bumped up to a superior court where he would clobber the issue by raising the prospect of his costs.

All the legal documents involved are available via Campaign against retirement leasehold exploitation for any family wishing to challenge this fee.

The issue of exit fees heading to the Law Commission was one of a number of important announcements yesterday.

These included an acceptance by DCLG that the size of the leasehold sector is 63 per cent larger than officials (and assorted trade bodies and LEASE) seemed to think.

There are now officially “an estimated 4 million residential properties in England subject to a long lease”.

Then came Eric Pickle’s intervention with Florrie’s Law, which limits repair bills to £15,000 for council leaseholders (£10,000 outside London).

Councils will also have to will also be required to make clear what help is available, including loans and deferred payment options, will have to offer affordable repayment terms and publish details of how they award contracts for the major works on their websites.

“But with an estimated 4 million residential properties in England subject to a long lease, Mr Pickles has also asked officials in his department to examine what further support can be offered to other leaseholders,” says the DCLG.

Already, plans are in place to require managing agents to belong to an ombudsman redress scheme “so leaseholders have somewhere to go if they get a raw deal”. (LKP / Campaign against retirement leasehold exploitation says any issue above £1,000 should be taken to the Land Tribunal.)

But ministers will also look to address:

“providing access to summaries of the determination of tribunal cases so people have a better understanding of the outcome”

This is a vitally important point. LKP has taken up the issue of the Land Tribunal’s very inadequate bureaucracy with Judge Siobhan McGrath, its president.

Land Tribunal rulings are difficult to find. In haphazard fashion they appear on the Ministry of Justice website and on that of the Leasehold Advisory Service, which was considering a charge for the service.

A paid-for database is available via the property managers / freeholders’ trade journal News on the Block (which has commercial ties with LEASE through monetising conferences for professionals).

The DCLG is also examining ways to make it easier for leaseholders to get recognition of a tenants’ association.

This will be good news to the residents of fancy West India Quay in London’s Docklands.

Last April their freeholder Yianis group deployed a £74,560 legal onslaught, headed by a QC, to crush the initiative.

In addition, there was a threat of libel proceedings the evening before the tribunal case to the residents’ leader TV producer Jane Hewland.

The residents were represented for free by LKP / Campaign against retirement leasehold exploitation, which feels strongly on this issue, and they won the case. More here

The DCLG says there should be more awareness of what being a leaseholder means before people buy leasehold properties.

LKP / Campaign against retirement leasehold exploitation fully endorses this, although the sector likes to pretend that disputes concerning all sorts of highly complicated and sometimes dubious revenue streams would be prevented if only residents read their leases.

Civil servants have noticed that if freeholders are prepared to blow £74,560 to prevent a recognised residents’ association – a very minor matter in most circumstances – then mugging up on the lease before purchase is not a panacea for all.

The DCLG staff say that residents should more easily gain information on absentee leaseholders, especially where owners wish to buy the freehold.

This is vital for leaseholders trying to organise right to manage, and every effort is made by some freeholders to prevent and frustrate leaseholders from organising collectively.

Finally, the DCLG want to ensure freeholders provide a realistic valuation of the price a leaseholder would have to pay to buy the freehold or extend their lease. Excellent.

The full DCLG announcements can be read here



  1. A Reviewer says


    It simply proves that campaigning with PROVEN facts does work.

    Also that persistence pays off. Persistence is NOT mean that one is Vexatious.


  2. Alex Ellison says

    Well done and thank you to Campaign against retirement leasehold exploitation and LKP for their tireless campaigning – it looks as if the tide is turning.

  3. This will be a great step forward, so long as Tchenguiz, et al don’t start “contributing” to the party funds for the next election.

    • Michael Hollands says

      I think by now they must have fallen out with the Institutions of this country.
      More likely to donate to the Peverel Pensioners Welfare Fund

  4. Sebastian/Martin,

    Superb result, I know there is a long way to go, but there really is a feeling of the beginning of the end has started.

    [REDACTED …]

  5. Well done Campaign against retirement leasehold exploitation, for getting the attention of Civil Servants to show some interest in leasehold problems.

    Not only do we want the retirement “exit fees” to be given the CHOP , we want the ” annual ground rent charge for residential long leases” and ” forfeiture of leases” to be given the CHOP.

  6. Michael Epstein says

    Since a “Well known” freeholder has securitised exit fees against loans, should exit fees be abolished the freeholder would have to make a formal approach to their lenders since the outstanding loans would no longer be securitised. They have already have had to do this when the terms for exit fees were changed with the agreement of the OFT.

  7. In 1976 when I bought into a housing association scheme in London the leaseholders had to pay back a 5% ‘redemption fee’ on all sales. But when we took over the right to manage and freehold we drew up new leases and abolished the 5% charge.

    Like the early housing associations, I suspect McCarthy & Stone adopted this idea of writing ‘exit fees’ into their leases from the mortgage loan companies to help pay for the huge interest payments on their own bank loans when starting up their retirement housing business!

    “MoneySavingExpert.com What is a Mortgage Exit Fee?

    It’s all about ‘mortgage exit administration fees’ or MEAFs, paid when closing a mortgage account (including shifting to a new lender). It’s supposedly to cover staff, legal and admin costs. MEAF’s are known by a variety of other names including ‘deed release fees’, ‘sealing fees’, ‘final administration fees’, ‘discharge fees’ and ‘final redemption fees’.

    Sneakily, during the noughties some lenders charged more than their contracts stated, but in January ’07 the regulator, the then FSA (now the FCA), announced if “past customers have paid a higher fee they can expect a refund of the difference”. Yet if you don’t ask, you don’t get.”