August 20, 2018

Prisk tells Nick Clegg that ARHM’s new code ‘must say more about exit fees’

Housing Minister Mark Prisk is expecting the new code of the Association of Retirement Housing Managers to address the controversial issue of exit fees.

These have been the subject of a long-running Office of Fair Trading investigation which concluded that they were wrong, but that it was not going to do anything about them. Fighting these fees has been left to pensioners or their heirs to fight out in the courts.

In a letter to Nick Clegg, who was contacted by a Campaign against retirement leasehold exploitation activist in his Sheffield Hallam constituency, Prisk makes clear that he is aware of the ARHM working on a new version of their code.

“A copy of that code should be available to the residents at every retirement leasehold development. We will need to scrutinise the ARHM’s updated code carefully before formal approval can be given and, in the light of the OFT’s report, we will be expecting it to say more, in particular, about the issue of exit fees.”

At the moment the ARHM code simply says that “Managers should be aware of the views of the Office of Fair Trading on transfer fees.”

PrisktoCleggThis is not good enough. The OFT has made clear that it believes these fees to be wrong. Campaign against retirement leasehold exploitation urges the ARHM to make this clear to its members.

Campaign against retirement leasehold exploitation urges anyone paying exit fees to include reference to the OFT’s report and that the fee is paid unwillingly and that they reserve their rights to dispute the fee in the courts.

It is to be hoped that there is an epidemic of small claims court actions on this scandal, which has been allowed to continue for far too long.

Campaign against retirement leasehold exploitation / Leasehold Knowledge Partnership has raised this issue with Prisk and other MPs.

Prisk says that he is “looking closely” at the OFT report and considering with other departments what needs to be done about the OFT report.

Exit fees were introduced into retirement leases by McCarthy and Stone, and other retirement housing providers. It then sold the freeholds on – with these lucrative earners – to the Tchenguiz Family Trust. It has received millions of pounds from them.

In a small claims court action in Sheffield in January, the Tchenguiz organisation sent an expensive barrister from London to defeat the claim for about £1,000 paid in an exit fee.

The cost of legal fire-power far outweighed the sums involved, but demonstrated how nervy the Tchenguiz Family Trust regards court actions on this issue.

ARHM has long been seen retirement leasehold as the poodle of Peverel Retirement – which pays the bulk of its fees – although its membership does include housing associations such as Hanover.

ARHM president Baroness Greeengross infuriated Campaign against retirement leasehold exploitation readers last year when she dismissed them as “barrack-room lawyers” with too much time on their hands.

Comments

  1. Blimey – is there an election coming up in a year or two?

  2. Mark Prisk is only doing less than half a job raising OFT “exit fees” with Mr Clegg. ( and Secretary of State and Law Commission )

    Mark Prisk should also be raising OFT ‘s view on “paying compulsory insurance with an insurer nominated by the landlord or agent” as an unfair term and to enforce the LVT Tribunals to render all such ” compulsory insurance cover under the landlord’s master insurance policy ” as not payable.

  3. See clause 4.4 on compulsory insurance in OFT publication on unfair terms –

    http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

  4. Also in the same OFT publication (oft356.pdf ) clause 3.45 has this to say :

    3.45 It is unfair to impose excessive sanctions for a breach of contract. A term that requires the tenant to pay more in compensation for a breach than a reasonable pre-estimate of the loss caused to the landlord is likely to be void as a penalty under common law.

    This OFT decision means the “350 pds threshold” for allowing the landlord to commence proceedings for forfeiture of a lease where the leaseholder interest in the property may be worth 165K pds ( national average) – should be replaced by a much higher threshhold value where the breach of lease causes an estimated loss exceeding 50% of the current market value of the property.

    The landlord company should be made to use the LVT Tribunal and the existing small claims court procedures to claim any monetary loss suffered.

  5. Thanks Ollie. Your point about forfeiture having a £350 threshold is very apt.

    We should be making more of this. In the Jackson case, where his £800k flat was forfeited, the freehold company, Cube Real Estate, informed me that it did not want the forfeiture to go through. I believe this: it would have been difficult to dissuade some in this company to return this asset, which would have been legally difficult in any case.

    And the reputational damage would have been considerable. Even our dozy media would notice something was amiss in taking a man’s entire property worth £800k over an initially £7,500 dispute – swollen to £76,000 by outrageous greedy legal fees. This is a scandalous state of affairs.

    It is difficult to keep bring leasehold scandals to wider public attention which is why all Campaign against retirement leasehold exploitation readers are urged to get in touch and keep us informed. We would very much welcome more contributions to the site

  6. The UK Government signed up for ECHR and every Government establishment should complying to Article 8 below which says :

    Article 8 – Right to respect for private and family life
    1. Everyone has the right to respect for his private and family life, his home and his correspondence.

    2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

    I think the Court and Judge failed to show any respect for Mr Jackson’s home and for the European Convention of Human Rights .

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