August 8, 2022

Too expensive to give figures on leasehold forfeiture, says Ministry of Justice

Emma Reynolds, Labour shadow housing minister, has demanded to know how many cases of leasehold forfeiture take place

Emma Reynolds, Labour shadow housing minister, has demanded to know how many cases of leasehold forfeiture take place

Emma Reynolds, Labour’s shadow housing minister, has discovered that no one knows how many cases of leasehold forfeiture take place – and it would be too expensive to find out.

The astonishing admission came from the Ministry of Justice in one of the last parliamentary questions of the session.

This means the Ministry of Justice does not know, or simply does not keep records of forfeiture cases, which often result in leaseholders being made destitute and homeless … with a big cash windfall for the landlord.

LKP has long argued that the cash incentive of forfeiture be removed.

There is strong anecdotal evidence that forfeiture is far more widespread than is believed, and it is threatened routinely in leasehold disputes.

Forfeiture means the lease is handed to the freeholder, with the loss of all capital and loans.

It is a nuclear weapon in the hands of freeholders, who include some of the dodgiest operators in residential property.

Usually the mortgage company steps in – at exhorbitant cost – and pays the leaseholder’s outstanding debt in order to protect the asset and its loan.

But not always.

LKP reverse the forfeiture of Dennis Jackson’s £800,000 flat in Battersea, south London. it was forfeited after the lender failed to step in.

Furthermore, Sebastian O’Kelly and Martin Boyd were kicked out of Wandsworth County Court in February 2013, following a trifling objection to their presence by the freeholder’s barrister.

So the life-shattering decision on Jackson over the fate of his home was taken in a closed court.

Reynolds asked the MoJ “how many cases there have been of residential leasehold forfeiture in the last five years; how many such cases were presented to the county courts; and how many residential leases were forfeited.”

Junior minister Shailesh Vara replied: “HM Courts & Tribunals Service’s IT systems are not able to determine and collate with accuracy the number of residential leasehold forfeiture cases presented in the last five years and the number of residential leases that were forfeited …”

“A manual search of these landlord possession cases would be required in order to identify the specific number of residential leasehold forfeiture claims presented and the number of leases forfeited.

“The retention period for landlord possession case files is three years. A manual search of these files could only be provided at disproportionate cost.”

Sir Peter Bottomley has suggested that all cases of leasehold forfeiture should be reported to the Master of the Rolls.

Comments

  1. When the leasehold feudal tenure system ( peasant’s land holding ) started about 8-900 years ago, the premium paid for the lease was probably 2 cows,6 pigs and 52 chickens. The lease was entered by the local land owner and one of his serfs . So it made sense to forfeit the lease if the annual ground rent was not paid or the lessee had died early ( life expectancy was only 40 years in those times and since no NHS system )

    But now fast forward into the 21st century, the leasehold system has adapted to suit modern economic life and new build flats may be sold under leasehold title for a premium over 6-10 times the national average annual salary of 24K and financed by 75% – 90% mortgages , it becomes an unfair contract term to leaseholders for Government Policy to retain the threshold for starting forfeiture action at arrears over 350 pds in the L& T Legislation. There is already facility in the small court system ( under the County Court) for recovery of debts up to 5K and this should be used for freeholders to claim against leaseholder owing 350 pds or more.

    The “right to forfeiture ” given to the freeholder should be changed to a “compulsory sale order”.

  2. 23 Jan 2013 : Column 389 :- HANSARD

    The new investment will not only boost supply but bring a different type of institutional landlord into the marketplace. This will bring much greater choice for tenants with regard to the type of property and facilities and indeed the terms of the tenancy. These institutional landlords will also bring a longer-term perspective, often of 25 or 30 years. That brings the opportunity for greater stability for tenants, and it also means that we as policy makers need to ensure that what we set is clear and consistent over that time frame.

    Sir Peter Bottomley (Worthing West) (Con): Will my hon. Friend give way?

    Mr Prisk: I will give way briefly, but then I will continue my speech, if I may.

    Sir Peter Bottomley: My hon. Friend rightly mentioned longer time scales. Will he inquire whether it would be possible—not today, but in future—for the Ministry of Justice and his Department to examine cases dealt with by the Leasehold Valuation Tribunal involving Mr Joseph Gurvitz, the Peverel company and the Tchenguiz family businesses, and to establish what lessons can be learned from them?

    Mr Prisk: I will look into those cases very carefully—I am aware of them—but I think that it would be wiser for me to take no further steps. My hon. Friend has made his point, however, and it is a good one.

    Sebastian do you know what this last paragraph meant?
    Did Mr Prisk ” look into the cases very carefully”?