As there is so much news to share, we are now publishing it as separate articles. Click on the read more links for the full stories

17.3.12 – Enfranchisement or buying your freehold

News on the Block published a whole section on this topic in issue 58, plus various articles on service charges.  We will be reprinting some with permission as they are full of good advice for those considering buying their freehold.

29.2.12 – Are you a FRED, asks Retired Magazines?

A brand new demographic group has been identified in Britain and labelled FREDs. Members of this demographic are over fifties who are ‘facing retirement earnings doubts,’ and according to the likes of Liverpool Victoria, the friendly society, and the Office for National Statistics, this group of around two thirds of all over fifties have very real fears that they will face an impoverished retirement. These fears can multiply very fast if you are living in a leasehold development, managed by an unscrupulous managing agent. Click below to read the article.

http://www.retiredmagazines.co.uk/Lifestyle/lifestlye.html

21.2.12 Squeeze’em dry

Depressing news for anyone living in a leasehold flat: buying up freeholds is one of the best ways the rich can increase their wealth, according to the Sunday Times.

One fund rose 5.8 per cent last year.

This means freeholds are an attractive alternative to artworks or stamps, although London parking spaces have shown a return of 9 per cent, it is claimed.

“Additional income comes from commissions for arranging building insurance for the leaseholders and renegotiating leases,” says the Sunday Times.

In other words, trouser commissions for as many services as you can and make life difficult for leaseholdes in order to squeeze them dry.

In most jurisdictions, these would be criminal acts.

Freehold Income Trust, which owns 65,000 freeholds, each paying an average of £119 in ground rent, targets  a yield of 4.25 per cent, but did significantly better than that over the past 12 months with 5.8 per cent.

The fund is up over 18 per cent over the past three years and 34 per cent over the past five – these are really impressive results, given the collapse in capital values of virtually all non-prime London flats. Retirement flats have fallen further than most.

“A Cambridge college recently invested a sizeable amount for the first time.” says Anthony Wyld, of the trust.

(Historical note: No surprise there, sadly. All Souls, Oxford, had huge stakes in the slave trade.)

The fund is unregulated – so no compo if it fails – and minimum investments are £5,000 with an initial charge of three per cent and an annual management fee of £1.3 per cent.

The inquities of feudal leasehold law are part and parcel of Merryie England, so it’s no surprise that the position of freeholders is monetised.

ends.

18.02.02 – see article about sub-letting fees case decided recently by the Lands Tribunal

Click here for the link to the page describing the case which clearly shows that these fees have to be reasonable and commensurate for the work involved.

16.02.12 Melissa Briggs and Sebastian O’Kelly meet Baroness Gardner in the House of Lords to discuss leasehold reform

Having sat in the gallery and watched Questions, we are happy to report that Messrs. Lawson, Lamont, Tebbitt, Whitelaw, the Archbishop of Canterbury and many others all seem to be in fine form.  We will post some pictures on the photo gallery page shortly. The action was very reminiscent of time spent in Arun Council Chamber, although the surroundings were a lot more magnificent.

We met Baroness Gardner, along with Baroness Masham, Lord Seldson and Lord Flight this morning to discuss steps that we can take to increase exposure of the necessity for leasehold reform, and learn how we may best achieve genuine progress. Leaseholders want to obtain some form of amendment to solve the mixed development right to manage problem, to crack down on unfair lease terms, and to control service charges to curtail the inexorable rises that are unjustified and way beyond the rate of inflation, and to ensure that spurious inter company commissions are outlawed.

These issues were discussed along with the review of Service Charges currently being carried out by the London Assembly. Baroness Gardner has now requested a short debate on the subject, and when it is tabled, we will arrange to be present to hear how it goes. We were left under no illusions of how difficult legislative progress may be to achieve, but that makes us more determined to keep up the pressure we are exerting. We also understand the process required, and have made several more valuable contacts whose support we will be seeking.

Many members of the House of Lords live in leasehold properties in the nearby streets, so there is a great deal of sympathy for the campaign and we think we can count on quite a bit of senior support when the debate takes place.  More news will be posted on our progress in due course especially in regard to the short debate we are hoping will take place in the next session.

As we left, we spotted David Hewett entering. Does anyone know who he was visiting or why?

TV Coverage

13.02.12 Not fair, so won’t pay

A fanfare of trumpets for Joanna Worth, 49, who is making a stand on the great exit fee rip-offs.

Joanna is defying Peverel, which is demanding one per cent of the capital value of her flat in Beckenham, Kent, because she has sub-let it out to a pensioner.

So far she has received three communications from Peverel, including a last one on December 23 2011 threatening legal proceedings within 14 days.

“This is completely wrong and I think someone needs to make a stand against them,” says Joanna, who heard Melissa Briggs, co-founder of the CarlEX campaign, being interviewed on Radio 4’s Money Box Live last Saturday.

Joanna, who worked for the Citizens Advice Bureau for many years, bought the one-bedroom flat at Park Court in September 2007 to provide a home for an elderly friend, but the friend moved out after a couple of years.

She then sub-let it to a woman in her sixties.

In July 2010 she received her first letter from Peverel, claiming that the house manager believed that the flat had been sub-let.

“It is simply a rip-off that these charges are levied,” says Joanna. “Peverel does absolutely nothing for them whatsoever.”

Peverel does not do badly out of the 30-unit Park Court as it is. Joanna pays £2,468 a year in service charges and a heafty £494 in ground rent.

“I just hope Campaign against retirement leasehold exploitation can organise a class action to get these rip-off fees banned,” says Joanna.

It is astonishing, given that she is too young actually to be allowed to live at Park Court, that her conveyancing solicitor did not warn her of these fees – which, as is customary, were buried deep in the lease.

One thought may occur to Peverel and prompt it to drop the fees: sales to Park Court are sluggish and three flats, priced between £149,000 and £157,000 are on the market.

Without occupants, the milch cow yields no milk.

11.2.12 – Second response from the OFT re Exit Fees

We reproduce here the email received last night from Jason Freeman, Barrister, the head of legal at the OFT, basically stating that the Office of Fair Trading will not be ruling on the fairness of the contract terms of exist fees because they claim they somehow do not have the power to look at unfair terms in a contract!  It beggars belief and raises the question what is the point of the OFT? (Was it a naive assumption that the Office of FAIR Trading would be able to use the word UNFAIR? Jason did also tell me the name of the organisation is likely shortly to be changed. Reader suggestions needed please that I can pass back to Jason. We will load the best!)

It does appear as if the OFT was scared witless by the various landlords’ legal teams as the OFT advised nearly a year ago they were going to rule against exit fees, but suddenly held back their decision at the last minute after strong legal pressure from an “unknown” source. The only companies that have voluntarily stopped charging exit fees are McC and S and Churchill. Fairhold still charge 1% of sale value on exit, + 1% to contingency, + a Grant of Probate fee (this is scandalous – the executor has already paid to obtain this, and all they have to do is prove they have it), Pegasus charge 5%, Anchor sometimes charge 1% for every year of tenancy – this can lead to a 30% charge on exit.

Unfortunately the call from the OFT to me and this confirmatory and unsatisfactory email came through after the BBC interview was concluded, so I could not refer to it on the radio.  Another opportunity is going to present itself very soon though.

Dear Melissa,

Thank you for letting me know your concerns in relation to retirement home transfer fees today, and I am sorry that I am not able to be more open about the state of play in relation to our investigation. The OFT is subject to legal restrictions on what we can say about investigations, which means that we can come across as less transparent than perhaps individually we would like.

As I hope I was able to make clear, the OFT is not able to rule that a term in a contract is or is not unfair: only a court can make such a ruling. As a consequence, the likely outcome of our investigations are going to be one of the following: we conclude there is no problem, and close the case; we reach a voluntary settlement with the parties and publish the undertakings they give; or we issue court proceedings where we consider terms are unfair, and the parties are not willing to give satisfactory undertakings.

In the event that we take matters to court, the other side obviously has the opportunity to defend the case, and there is the prospect of appeals, not only to the Court of Appeal and Supreme Court, but also to the European Court of Justice on points of European law. It is difficult to predict how long such litigation will take in any given case, since this depends very much on the appetite of the other side in reality to appeal matters that they lose. However litigation is likely if there are any appeals to take quite a few years.

In relation to the retirement homes investigation, the current state of play is that we are in negotiation with a number of parties about changes they should make to the way they enforce lease terms and what future leases should include. In general the OFT tries to resolve matters through negotiation rather than litigation, but because of the practicalities of these discussions this can take some time.  In this case I am hopeful that we will reach the relevant agreements in the next few months.

You mentioned that you felt that the fact of the OFT investigation somehow impeded you from organising a class action. I hope I was also clear that I don’t see that there is any such impediment. Obviously any legal action you might take is a matter for you and you should obtain your own legal advice on it, but the Unfair Terms Regulations do make provision for individuals to challenge terms as unfair in court, and the court is able to make a binding ruling in relation to that contract. In some ways this sort of challenge is more straightforward than the sort of challenge that the OFT can bring, since the individual involved is able to set out all the circumstances of their own case. In OFT litigation we have to set out what we think happens in the typical case. You are also no doubt aware that individual tenants can in some circumstances challenge fees payable on assignment in the Leasehold Valuation Tribunal under the Commonhold and Leasehold Reform Act 2002, or in the County Court under the Landlord and Tenant Act 1927. However this could depend on exactly how the lease under challenge is drafted.

9.2.12 – 2 new property managers pages loaded on LKP.

If you are venturing down the RTM route, LKP can help you. They are now offering a Right to Manage service and the number of accredited managing agents is beginning to grow so you can avoid jumping out of the frying pan into the fire. The latest two managing agents BlocNet and Block Managers both have their new web pages loaded onto www.leaseholdknowledge.com accessible from the accredited companies page.

7.2.12 – Secrecy surrounds the sale of Peverel

Despite information around the industry that the story would be public within two weeks, no news is forthcoming regarding the outcome of the sale of Peverel. Extensive enquiries continue.

Another couple of major LVT’s are happening next week – we will be bringing news of these soon.

4.2.12 – CQRA win back £500K

It would appear that the CQRA know exactly what is good for their future as leaseholders, and this quite definitely does not include reappointing their pre LVT wins management company. A large number of leaseholders attended the CQRA Extraordinary General Meeting at the Rose, the on-site 900 seat theatre, on Saturday 4th February. CQRA were delighted that the Rose were able to provide them with their main auditorium as a venue for this important meeting, and would like to thank them for all their help.

Following a four year battle against the landlord for mismanagement, it was explained to the members how as part of the various LVT cases CQRA have now recovered a staggering £400,000. CQRA also hope the court’s appointed receiver manager, HML Andertons, will soon complete his action to recover a further £93,000 from the landlord for monies he wrongly collected in rentals for the common areas. This would take the total recovered to over half a million pounds.

It was also explained that they have probably saved a further half a million pounds over the last three years under receiver manager, HML Andertons, who have introduced a number of cost savings and helped them end what the LVT described as “onerous” 14 year contracts which the landlord had previously signed with related party companies.

There was an unanimous vote in support of the motion: The meeting supports HML Andertons application to the LVT to extend their appointment as the property managers for Charter Quay from 3rd August 2012 to 31st December 2014. CQRA would like to extend their thanks to the members of the Charter Quay Residents’ Association for their support – they now have 94% of the 244 leaseholders as members of CQRA.26.1.12 – CHAINBOW SOLD TO TRINITY

Land Tribunal action gives hope to regain rents on house managers’ flats

January 26 2012: Those in retirement developments who are being charged for the rentals of house managers’ flats will be cheered by an action heading for the Lands Tribunal.

The peppery residents of Charter Quay, in Kingston, Surrey, which has won a string of LVT actions over Tchenguiz/Peverel over-charging are demanding a £93,000 refund.

The action is to recover rental charges for the common areas  and is being taken by their (good) managing agent HML Andertons.

The case has huge significance for retirement leaseholders where rentals for manager flats can cause the same problem.

Both can be challenged if they are outside the terms of the lease.

The case of Warwickshire Hamlets v Gedden is a good example on this issue which went to appeal to the upper tribunal with the tenants case being upheld. Appeal cases are important as they set precedent for the lower LVTs to follow.

In the case at Charter Quay the landlord has charged a staggering £93,000 for “notional rentals of the common areas” in the years 2005-2009.

All five years of this “rental” were taken from the Charter Quay service charge account in 2009 just before Tchenguiz-owned managing agent was thrown off the site.

It is claimed Estates and Management admitted in  2010 that they owed the money in an email from the managing director Michael Gaston.

Now the issue is heading for the courts, and the Charter Quay residents are determined not to accept a penny less than full settlement.

If you are being wrongly charged for rentals of the common parts the Warwickshire Hamlets case can be found here:

http://www.bailii.org/uk/cases/UKUT/LC/2010/LRX_156_2008.html

24.1.12 – LEASE FAILS TO IMPRESS

See the LKP News page for hard hitting article about CEO of LEASE, Anthony Essien’s weak performance at the London Assembly yesterday. LEASE, the Leasehold Advisory Service, is a government quango, which you might have assumed from its title supported leaseholders.

23.1.12 See LKP news page for full reports re London Assembly meeting debate regarding Service Charges.

New figleafs to hide their shame

The Association of Residential Managing  Agents (ARMA), the trade body for residential leasehold managers has appointed Michelle Banks, a civil servant from Communities and Local Government, as its new chief executive.

Banks, a deputy director at CLG where she works in housing and planning, is to succeed David Hewett, who is retiring after 15 years.

She takes up her post on February 6 and will oversee the implementation of the ARMA-Q project, the association’s voluntary self-regulation regime.

Peverel has appointed Peter Hinchliffe, of the Financial Ombudsman Service, as joint chairman of the group to head its new “governance and regulation group”.

Aussie baroness told leasehold law is fine as it is

That was the answer on Tuesday in the Lords to Baroness Gardner, who is a former dentist known as Trixie who is from Australia – where iniquitous English leasehold law has long been uprooted. Read more here….

The London Assembly agrees with Trixie!

See the London Assembly’s totally opposite opinion by clicking here….   The meeting of the London Assembly to discuss their investigation takes place on Monday 23rd January.  LKP will be represented, and will report back to readers immediately after the meeting. It is open to the public, so go along if you can. 2pm, City Hall, Committee Room 5.

More rapacious managers named and shamed

After Sebastian O’Kelly’s article in the Mail on Sunday, Colin Dennard, 71, got in touch about his own tussles with rapacious managers in cahoots with squeeze’em dry landlords. Having always been an owner of freehold houses, Colin was astonished at how the charges mounted up at his 28-year-old son’s £160,000 leasehold flat in a block of only ten at Bournemouth. The development, called the Bays, had developers Lakeside Developments as the landlords with Trust Property Management as the managing agents. Both are owned by David Glass, about whom there are numerous lamentations on the web. Read more here…

Has Peverel FINALLY found a buyer?

Rebecca Bridle, long suffering spokesperson for the group, did not immediately deny to us that it had been sold, and said she would get back to our correspondent shortly. When she later produced a statement, it said “It is inappropriate for us to comment on the process at this stage although the Administrators are in discussions with bidders and hope to conclude the process shortly.”

CarlEX/LKP is running a book on the likely buyer:

1/ Foreign buyer who doesn’t read newspapers or the Net: 1/1

2/ Management buyout headed by Lee Middleburgh and Keith Edgar 50/1

3/ Vincent Tchenguiz seeking to introduce ethical capitalism business model 1000/1

Watch this space for unfolding news…….

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London Assembly notices leaseholders at last

The London Assembly have been investigating the issue of service charges for some time and have been having meetings with DCLG and senior representatives from CarlEX/leasehold developments in London. For some totally unfathomable reason DCLG is still of the opinion that “there is no problem in the leasehold sector and that current legislation is all that is required” – however it is clear that the individuals investigating these issues at the London Assembly think otherwise.  HURRAY – and finally, someone is taking these issues on board.  Several senior representatives of CarlEX and LKP will be attending the meeting on the 23rd January, and we will report further once it has taken place.  Follow this link for more information and please note that there is a very interesting paper at the end of the page.  We will be reproducing it on the website shortly.

http://www.london.gov.uk/who-runs-london/the-london-assembly/assembly_investigation/service-charges

See below for link to the most recent Mail on Sunday’s article re leasehold reform in Scotland written by Sebastian O’Kelly which also appears on our Press Page.

Chelsea Bridge Wharf win their LVT 

For anyone thinking about buying Peverel – and the administrators are now in serious talks with a buyer – it looks like yet another flagship Thames-side development is about to slip out of its clutches.

Chelsea Bridge Wharf, beside the old Battersea Power Station site, is in the process of going for RTM, has won at LVT but Peverel is taking the issue to the Land Tribunal on appeal. It is the usual familiar story. The Tchenguiz’s Fairhold Artemis hoovered up the freehold and bought Peverel, the managing agent, and the fees started escalating. Read more here …

16.01.12 Correspondence with the PM

Today’s programme – Radio 4 You and Yours is worth listening to on the internet if you missed it at lunchtime – Grant Shapps was talking about similar issues in Park Home developments. It is easily found on BBC iPlayer.

13th January 2012 – Melissa Briggs and Sebastian O’Kelly had a positive meeting with Howard Phillips and Trevor Green of McCarthy & Stone on the subject of LKP Accreditation, the general market in retirement leasehold and leases themselves. They are continuing to build on many sites around the country, and now offer a superior level of service called Tailored Care for those who need that bit extra when they reach a certain age, including massage/wellbeing, a hobby room and internet enabled computers.  They are also offering an enhanced level of service to facilitate the actual removal process which seems to be an extremely positive move, and will no doubt prove very popular in some areas. McC and S are continuing to offer assistance with the ongoing development of the LKP accreditation process and are expecting to sign up to both the developer and the managing agent criteria in the near future.

Continuing the ongoing discussion we have been having with them with regard to standardising and simplifying the actual lease document, this process is nearly complete and we are looking forward to reading it ourselves once the final legal checks have been completed. This represents potentially a very significant step forward for future leaseholders and CarlEX are very pleased to announce that McC & S are at the forefront of this important development.

5th January 2012 – Developer Meetings

Melissa Briggs and Sebastian O’Kelly had a very positive meeting with Mark Clare and Patrick Law of Barratt Homes in London today.  Barratt have made the decision not to re-appoint Peverel, or related group companies, to manage any of their newer developments as has already been documented.  They are therefore now embarking on the process of forming their own in-house Management company. This mirrors exactly the decision made by McCarthy & Stone who terminated their contract with Peverel more than a year ago, and have started to manage new blocks themselves.  Both companies are now considering the accreditation scheme, and helping to refine it, and recognise that they have several hundred blocks each that are already managed by Peverel, whose residents may not be happy with their particular management style. We will be reporting further on the results of these meetings when confidentiality allows.

Campaign Videos now loaded on Leasehold Knowledge Facebook Page

Desmond Moreira of Rynew, (a London based Managing Agent, LKP accredited) arranged the videoing of both Melissa Briggs and Sebastian O’Kelly about their plans for the next two years regarding Leasehold Reform and the way they are promoting best practice in the industry. The results have been posted on our Facebook page – www.facebook.com/leaseholdknowledge and will be loaded on YouTube shortly.

Recent evidence regarding Estates & Management losing an important RTM fees case

Further writing on the wall has been uncovered with regard to the result of a recent notable LVT case involving E & M’s lawyer.

Estates & Management and their in-house solicitor Richard Sandler have been told by the LVT that they are NOT allowed to charge for legal fees when dealing with an RTM application. The case CAM/11UF/LCP/2011/0006 relates to properties in High Wycombe and was decided in August 2011. The report can be dowloaded from the LEASE website www.lease-advice.org.

If this finding becomes universal and is applied consistently, it means that E&M are not allowed to demand legal fees unless there is:

a) a demonstrable contract and fee rate agreement with the freeholder

b) evidence that E&M incurred the costs

The LVT chairman included harsh criticism of Richard Sandler in his decision, who appears to have strayed from the conduct expected of an experienced solicitor with a practicing certificate issued by the Law Society.  How many leaseholder groups have ended up paying a totally unnecessary £564 or £745 in the last five years? For those who have already paid up it may be too late, since the act of paying without protest can be interpreted as meaning that you have accepted the charges. Perhaps someone with experience of Richard Sandler’s conduct will give relevant details to the Solicitors’ Regulation Authority for them to consider. In the meantime anyone going through the RTM process should request the evidence of E&M’s right to charge fees and ask them to detail any costs incurred on behalf of the freeholder.

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St. George’s Wharf update by Sebastian O’Kelly

In September residents in the landmark St George’s Wharf, in Vauxhall, central London, where penthouses have been sold for £7 million and service charges even for a two-bedroom flat start at £5,000 a year, accepted a record £1 million in settlement of an LVT action.

The respondents were assorted freehold companies, but the grievances surrounded Peverel’s management outfit for upmarket estates Consort. The bulk of the complaints in fact pre-dated the Tchenguiz takeover of Peverel in 2007. The residents – who have included John Major and Chelsea Clinton – were bound by a confidentiality agreement, but I gave it full exposure in the Mail on Sunday on September 18. [SEE LINK]

The article prompted the developer, Berkeley Group, to issue an unpredendented apology to residents. “This should not have happened and the residents should not have had to fight this for four years. We should have admitted this earleir and publicly, and apologised to the residents,” said Rob Perrins, chief executive of the Berkeley Group. See link to related article below.

http://www.dailymail.co.uk/property/article-2039128/MARKET-WATCH-Flat-owners-win-record-1m-payout.html

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