April 22, 2024

Our ground rents are fair, says McCarthy and Stone (even though they go up to £600 and are for no service whatsoever)

DCLG Consultation Paper On Leasehold And Ground Rents – Statement – McCarthy & Stone

See our response to the DCLG consultation paper on Leasehold and Ground Rents

It is a fair bet that McCarthy and Stone will be making a strong submission to the DCLG into the leasehold houses and ground rent scandals firmly urging ground rents to stay.

Ground rents are for no service whatsoever, although McCarthy and Stone argues differently.

It charges £400-£500, and £500-£600, within the M25, which are extremely high for relatively small apartments.

At Neo Bankside, beside the Thames in central London where flats sell for up to £8 million, ground rents are only £800 a year.

“The slight increase compared to open market prices reflects the larger size of our retirement developments as our schemes include significant shared facilities such as the lounge, the laundry, the guest suite, staff areas, and, in some developments a dining room, restaurant and mobility scooter room.

“Once the additional space and facilities in a retirement development are factored in, our ground rents are broadly comparable, and they are also in line with those charged by other retirement developers.”

In fact, ground rents have nothing whatsoever to do with these facilities: they are simply a charge developers make and are as high as developers think they can get away with.

McCarthy and Stone makes 4 per cent of its income from selling freeholds, which attract higher prices depending on the lease terms.

4% of McCarthy and Stone earnings come from ground rents

Ground rents rise every 15 years “linked to either the movement in the Retail Price Index (RPI) since the last review, or if greater, by 2% per annum”.

McCarthy and Stone’s press statement says: “Leasehold is a common and widely accepted form of tenure for apartment living and has traditionally been used as an efficient way of managing apartment blocks and managed estates that contain a number of residents on the same site, often with competing voices.

“With best practice and proper guidance in place, it can work well, and has done for a number of years, and the vast majority of apartments are on fair terms.”

BetterRetirementHousing.com doubts whether two Office of Fair Trading investigations into retirement housing quite falls into “best practice and proper guidance”.

One OFT inquiry in 2012 was into the exit fees on sale introduced into leases as a money earner by McCarthy and Stone, which the company subsequently dropped.

The other OFT investigation found that 65 retirement sites across the country had been systematically cheated by management firm Peverel, now FirstPort, and it subsidiary Cirrus.

McCarthy and Stone sold its old freehold book to the interests of Vincent Tchenguiz, or rather his so-called Tchenguiz Family Trust based in the British Virgin Islands.

Until his arrest on wrong evidence in March 2011, Vincent Tchenguiz also owned Peverel.

Peverel / FirstPort owes its rise to fortune and public note owing to its management of the old McCarthy and Stone freeholds.

Mindful of the reputational catastrophe that ensued, McCarthy and Stone now manages its freeholds itself. Indeed, it has created headleases, so that its management arm manages the sites even after the freeholds have been sold on.