February 21, 2020

What are Lord Best’s ‘modest proposals’ for leaseholders?

Lord Best proposes 'relatively modest reforms which would make a difference to leaseholders’ lives'. But what are they?

Lord Best proposes ‘relatively modest reforms which would make a difference to leaseholders’ lives’. But what are they?

Chairman of the Hanover Housing Association Lord Best has “a number of relatively modest reforms which would make a difference to leaseholders’ lives”.

Campaign against retirement leasehold exploitation has contacted the cross-bench peer to discover what these might be.

Lord Best has held a meeting of peers interested in leasehold issues. He referred to his “modest proposals” during a Lords question on Thursday.

In it the government was urged to revisit the issue of residential commonhold tenure as an alternative to leasehold.

The initiative came from Baroness Gardner of Parkes, who repeatedly raises leasehold issues in the Lords.

There was a commitment to review the 2002 Commonhold and Leasehold Reform Act 10 years after.

Baroness Gardner was backed by LibDem Baroness Maddock who said:

“It is quite incredible that many of us spent hours scrutinising the Bill well over 10 years ago. Since that 2002 Bill, there have been only 15 commonhold new developments and 152 units within blocks. That is not necessarily due to a lack of interest: there are significant obstacles for both old and new properties. Given the time that has been spent on this matter, I really think it is time that we as a Government looked at post-legislative scrutiny much more seriously, particularly in cases such as this.”

Lord (Richard) Best then said:

“Would the Minister be willing to meet some of the Members of your Lordships’ House who recently got together to look at these issues? We discovered that there are quite a number of relatively modest reforms which would make a difference to leaseholders’ lives but which at the moment are not receiving attention.”

It is unclear what these changes may be.

Campaign against retirement leasehold exploitation / LKP has contacted Lord Best for clarification.

Comments

  1. Michael Epstein says

    A Translation!
    A few of us have got together and we reckon if we throw the peasants a few bones, we can keep a corrupt system going for our benefit!

  2. A proper 10 year review of the Commonhold and Leasehold Reform Act 2002 and a justification on an economic basis is what we really need. Modest reforms will not solve the leasehold system problems.

    The use of freehold title , Commonhold title or Leasehold title for new build property is decided by the developer or builder who will offer whatever gives the highest profit. The residential property buyer has no decision on what title will be used even though the leasehold title is a 99 years or 125 years longterm rental agreement and there is no actual sale of the property.

    The sale of property under freehold title or commonhold title is a transfer of ownership to the buyer and this becomes a savings investment for the owner. The sale of leasehold property is the sale of rental agreement paid for by a premium which slowly falls in value to NIL at the end of the lease term for the buyer. whose investment in the premium is eroded or wiped out by the decline in value of the premium.

    The leasehold system actually damages the working lifetime savings of 3 million or 5 Million leaseholders whose savings base should be the No. 1 concern since the Government does not have the resources to adequately fund the future state pensions of an aging population. Also the full life time productivity of 3 or 5 million leaseholders is lost to this country.

    Even Scotland and Ireland and all of Europe have stopped using the leasehold system and only in England and Wales, does the Government allow the builders to impose leasehold title on the buyers.

    Lets ask the Housing Minister and Prime Minister to explain where is the economic benefit to the nation by keeping the leasehold system .

  3. Ollie’s point(s) is valid and while a flat can be sold for a premium “the purchase price” that does erode over time. What reformers have to think about is the response- that erosion is offset by the spiralling values of property, far in excess of most other investments, and virtually all accessible to the average home owner, and therefore “its not a problem?! Thats like arguing I made a £1000 and it should be £1005 – burn the system down”. Like it or not these are the economic arguments that will be made.

    In parallel the legal arguments that “wandering into commonhold will create acres of administration and paperwork, puts buyers/sellers costs up etc, and for owners that the disputes will clog up the courts with no tribunal and no precedent to go to” will be made. The evil lawyers and agents will just be as happy as “thank you very much -with 5M existing victims here is brand new income stream”.

    As Ollie sais and I explained earlier about the added value retained property and contrived valued are too juicy to vanish overnight.

    On balance it far more sensible to look at retaining leaseholds and
    -requiring the freehold to transferred to a flat owners company
    -all leases should forfeiture free( at least on SC and Rent) and 999 years long (as it was in the 1990’s) or as I say perpetuity- 1 day
    -where staff accommodation is provided that it is part of the freehold title.
    -no common parts leases etc

    This is far less confusing to buyers who won’t have to choose common hold or freehold and is simple model for those who enfranchise their existing freeholds. For those issues like service charge and other disputes there is ready made system of law and tribunals and crucially the aggrieved flat owners still have rights to have matters independently determined.

    • Increasing values in property is not the experience of retirement leasehold.

      I recently met an investor in retirement flats (who has c30) and the most he has paid is £42k and the least £24k.

      My interest in this sector was when I encountered one-bed retirement flats on sale for £15,000 in north Oxford. The estate agent informed me that in the past these flats had simply been handed to the freeholder.

      This research began my whole interest in retirement and non-retirement leasehold tenure and formed the basis of several articles in the Mail.

      I think the livelihoods of thousands of freeholders, lawyers and surveyors etc depends on leasehold not working very well. But consumers are ill-served by it.

      You obviously have a sincere interest in this subject and more to say on it than can be addressed in comments. If you wanted to write a longer article for publication I would happily edit and assist.

      A number of lawyers and others write for LKP / Campaign against retirement leasehold exploitation, and alternative views are welcome.

      Sebastian

      • OK I will think that over. Posting here does tend to be “stream of consciousness” so it might be a little easier to digest in the form of a considered article 🙂

  4. Trevor Bradley says

    I think that time is way overdue for AM to declare who he actually is, who he represents and what he actually does. It would then be far more clearer for many other posters on this site to understand his stances in so many “difficult comments ” he posts.
    I have no problem in declaring in full what I do in life. Does he?

    • Dear Trevor,

      I don’t agree. Some people who comment on this site have to do so anonymously. For example, they might be employees in the sector.

      We welcome many and varied opinions on all issues. Anyone who thinks we are talking rubbish is free to say so.

      LKP / Campaign against retirement leasehold exploitation might not have the right answers, but it is asking the right questions and the more people engaged with leasehold reform the better.

      AM delights in being contrarian, but has made some very valid points at times. If you think he / she is talking gibberish, fire back!

      Best wishes,

      Sebastian O’Kelly

      • Trevor Bradley says

        No, I certainly do not think AM/he/she is talking gibberish. However, AM does at times make some concerning comments that do not, for better or worse, confirm where he/she actually “stands”.
        I beleive in absolute total transparancy and, if by being that way it means I would lose my job then so be it. That is how I so strongly feel about all the “theft” that goes on in the leasehold sector.
        Thhis is one of the few criticisms I have of this/similar sites, posters “hide”. Come on everybody – lets get EVERYTHING, names and alll, out in the open

        • But Trevor I am simply making a point for people to consider- it is clear that I am a reformer but appreciate that simple reforms often lead to complicated and unintended consequences, and do not always see the need to start over with CH (and its risks) as many here do.

          There is no need for total transparency as this is an exhange of ideas and positions, and as explained the notion of “nothing to hide” is easily countered with ” those that know everything about you can do anything to you”. Sadly, in the property sector, I have had to pick of the peices of 2 people who had disagreed with people in the line of work, and who were then victimised and targeted in a vile and viscous way, one resulting in divorce over rumours and false social media posting.

          I have even stuck up for Bem Mire who appeared on a leasehold site to answer questions about residents complaints on their sites and in the end all he got was abuse and very very little in the way of actual problems which he was wiling to discuss. One of the famous named landlords even targeted me and one of the other lawyer posters for the advice that we gave on countering late payement and subletting fees.

          There are some nasty people and the internet can be dangerous

          Besides, cynically, I might tell you that I am Sir Hubert Hyphen Hypen a major beneficiary of a Landed London Estate and then post as Sally the aggreived Council leaseholder. At least this way i am honest about saying that for commercial and personal reasons I prefer not to.

  5. Michael Epstein says

    To me the unique strength of all the campaigning sites is that we learn and grow through alternative opinions. To deny this we just become a mob. I undestand why the identity of AM needs to be protected (though after 12 he should post as PM!!)

  6. Here is the weblink to the 15K flat with 9K service charges :

    http://www.dailymail.co.uk/property/article-1354186/MARKET-WATCH-The-15-000-flat-fees-9-300-year-surprisingly-buy-it.html

    Can anyone post a break down of the service charge costs for this site ?

    Its excessively high service charges which destroys the life time savings when investing into new leasehold retirement property .

  7. Further to my posting on May 11 calling for 10 year review of the CLRA 2002, I wish to point out that Land Registry record shows average price of E&W property is £ 169 ,124 whereas Nationwide claims £ 183,577

    If we take the average price of property at £170,000 i.e conservatively value , the total amount of investment in E&W leaseholds will amount to £170,000 x 3 Mil = £ 510 Bil or £170,000 x 5 Mil = £ 850 Bil depending on whether you take the total leaseholds in E&W as 3 Mil or 5 Mil.

    At the end of the lease term of say over 100 years , this total investment falls to Nil value when the leases reach expiry date and the property must be returned to the “freehold reversioner” and the savings of up to £ 850 Bil from job earnings of 5 -10 generations of leaseholders is wiped out. This savings wealth would not be wiped out if the leasehold properties were originally sold under freehold title or commonhold title as the owners of the property would have gained the benefit in rise in property value.

    The UK National debt now stands at around £1,370 Bil so I think Campaign against retirement leasehold exploitation needs to educate the MPs how the expansion of the leasehold system is damaging E&W economy. Its only E& W which keeps the leasehold system. The rest of Europe uses Commonhold.

    • Or remain as an assured tenant….

      Actually its very good for the economy.

      1. One of the problem with housing need and demand is that there are lot of properties which are not being sold and are underoccupied and represent a substantial but static asset base. Leases ending will release some of those for sale.
      2. Freeholders will then have 5 million properties to sell and 5 million buyers have to borrow money and spend on lawyers and surveyors fees to buy them and all the elective spending on furnishing etc.

      I am not saying that this is morally right, merely responding to one fallacious argument with another 🙂

      • AM, this is the most outrageously contrarian comment you have made. I am glad that you acknowledge that it is morally dubious. I fear you will go far in the world of leasehold.

        But you are a defender of this form of tenure, so what is the justification for this wealth erosion?

        A recent LKP reader who had paid off his mortgage and ceased working, had to resume in order to extend his lease.

        Residents outside England and Wales look askance at this sort of thing and wonder why we put up with it.

        • 😀 it was contrarian response to a rather poorly thought out post. I did qualify the post so that it should be taken as seriously as the one that I responded to.

          My problem with the commonhold v leasehold argument is exactly the point that you are making. While it might help new builds,it doesn’t help existing owners who do have leases and who, whether they extend or convert to CH, will have to compensate the landlord, rightly or wrongly, for the extension and rental income loss. As a result I don’t see it as an either or, you simply require instead, by law, that leases only have a peppercorn rent and are 999 years or “Perpetuity – 1 year” long, in all future grants, and that as result the freehold is transferred to an RMC.

          I am now off to invent a peppercorn virus that destroys peppercorn crops making such investments very valuable- “excellent” ( in Monty Burn’s voice) 🙂

  8. Mystified says

    I totally agree with Campaign against retirement leasehold exploitation.
    I am pretty much in that position. I have paid my mortgage a long time ago,
    lived on Peverel owned property over 30 years. Now I am forced to get an extension to my Lease yet
    there is nearly 90 years left of the original.

    E&M is very difficult to deal with. Don’t know how it is going to end. I been made to understand that somehow I have breached the Lease. I have never knowingly or unknowingly done such a thing.
    It is totally untrue.

    • Why are your “forced”? 90 years is more than adequate for a mortgage term and for sale in the next few years. If you are thinking long term then you are right the sooner the better but I am intrigued as to why you see yourself as “forced|?

  9. Mystified,
    Can I help, Sebastian can give you an email, contact me?

    • Mystified says

      Thank you Chas,

      I have sent you an email. I hope you have received it by now.

      Kind Regards

  10. In my posting dated 20 May 2014 ( and it was not poorly thought out), I tried to show the total value of the leasehold system in E&W at roughly £510 Bil or £ 850 Bil, depending on whether you take the total mumber of leaseholds at 3 Mil or 5 Mil. This value is also an estimate of the family savings which may be lost by the several generations of leaseholders due to declining value of the lease. No other country and Government in this world would allow such a huge debt position to be created for generations of its own citizens.

    Probably the largest company within Vincent’s freehold portfolio is Proxima GR Properties Ltd Co. 3829939 which has reported 2010 accounts to Companies House, as having issued capital of £28 Mil and freehold assets valued at approx £0.85 Bil. Using a ratio of 100:1, we can estimate this one company alone has assets which includes many leaseholds to the value of £85 Bil i.e roughly 15%% of 3 Mil or 10% of 5 Mil leaseholds respectively. About 2 years ago, one national paper quoted Vincent claiming his freehold portfolio is worth £2-£3 Bil and this implies owning 25%-50% of the total stock of leasehold properties in E&W. And all the freeholds in his companies are ultimately controlled by Tchenguiz Family Trust based in the British Virgin Islands).

    This situation probably means very little to the average man in the street, but just view the situation as brilliant dealing such that only £28 Mil down plus lending by recklessly managed US, Icelandic and Scottish banks, has helped Vincent to put the handcuffs on the future savings of several millions of E&W Leaseholders, present ones and future generation successors. What’s NOT brilliant is the UK Government attitude and the Housing Ministers’ total lack of understanding of the economic consequences and not even making any effort to investigate why so many leaseholders are being exploited by front line companies such as E&M ( on global subletting fees) Kingsborough Insurance Services ( on extracting 40%+ commissions), Peverel Management in Retirement Homes ( rigging of prices in work contracts) etc.

    We really need Baroness Gardner and Baroness Maddock to take the lead to establish an APPG at Westminster to investigate and expose the economic issues. Simply reporting leasehold abuse and overcharging does not attract enough support from MPs in Parliament to bring about reform.

  11. Ollie,

    A well put together comment, regarding the Tchenguiz Family Trust and Proxima GR Properties Ltd.

    The British Governments Ministers do not find mileage, as yet,in taking on board the Leasehold Problems, they only take up the cuddle’s, when they can benefit by turning the complaints into votes for themselves?
    We have been informed that the TFT pay a very large sum of money for Lobbyist and to the Tory Party?

    Not surprising when the appointment of Paul Lester CBE, to Peverel Management Services as an Independent Non-Executive Chairman who is also a member of the HM Treasury Major Projects Review Group?

    Also when Janet Entwistle stated that the existing management team will focus on delivering best- in- class service for all Peverel`s Customers? That is unless you are one of the 65 developments, that the then Peverel Management Services and Cirrus Communications, cheated residents out of up to £1.4million from 2005 to 2009, out of Service Charges for works that were either not required or stated that the system requires updating?

    The reason is clear, it allowed Cirrus Communication to tender for all the work knowing they would win all the tenders, as the stooge companies were sent the Cirrus Tended Price, so they could bid less? These corrupt practices carried on from 2004 to 2009, until the papers caught up with them?

    My friend in Epsom has written and emailed Paul Lester and has yet to receive a reply, similar to askjanetaquestion, which no longer exists?

    Askjanet was the way Janet could find out what we knew About Peverel???

  12. Michael Epstein says

    Chas,
    May I clarify a point concerning the 65 developments yopu mention that were victims of the Peverel/Cirrus price fixing.?
    Whilst you are correct that Peverel/Cirrus was found guilty concerning 65 developments the OFT made it very clear that this was a minimum number, it was very likely that other developments would have been involved. The OFT having established guilt at the 65 developments did not see any point in further investigation as the verdict (and lack of penalty) would have remained the same even if the true number was 130 developments.

  13. The OFT having established guilt did so on what they were given by Peverel Services Ltd I believe informed by who are the Holding Company and has 20 subsidiaries?

    I am aware that it was a minimum number as those who remained were protected, and those that had left were thrown to the wolves?

    Surely those involved must see that they have been left high and dry, so who will come forward with more evidence, maybe we can offer a decent reward???

  14. Chas,

    Send your complaint and OFT findings to Serious Fraud Office for followup prosecution.

  15. Campaign against retirement leasehold exploitation,

    Any reply from Lord Best about his modest proposals ?

  16. On the contrary, the posts on 20th May and 3rd June are poorly thought out as the assumptions are nonsensical. The “theft” of £5 or £8.5 B is hardly a theft when every buyer (save the reckless or ill advised one) knows that it is a wasting asset. Moreover, it is loss or theft that is generational, between 4 and 6 for most , or 50 in the case of 999 year leases, and one that can easily be averted with a lease extension when the cost, or loss/theft, is relatively small. Taking your average figures, then what we are talking about is low millions not high billions. In government terms, thats lunch money.
    It would be a reckless or utterly stupid act to allow those savings to be lost and your rationale is therefore preposterous, as is only likely to occur in a handful of the 5M cases.
    Comparing the worth of the company to the value of leaseholds is simply using big scary figures which do not stand analysis. While some value refers to lease extensions, much of it refers to the ground rent income, some to notice fees and consent fees, development rights and retained premises eg the house manger flats etc, and common parts leases, and some might relate to other income streams such as the commissions. These are distinct assets that have little to do with leasehold flats or their values.

    Your own figures of comparing the asserted value of the companies and the value of all leaseholds proves my argument, you only have to look at the reported number of properties under management and the number of new builds, and have a little understanding of the market, to see that they are nearer 10%, through all their holdings, at best.
    There is therefore no dire economic peril to look at, the existing issues of lease extensions costs exit/ transfer fees, the lack of a binding code of practice on all landlords, not simply agents, and the appalling exploitation ( though the average council could give “Chengooz” a run for his money on that score).
    Presenting such inflated and contrived arguments only undermines the real need for reform.

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