Here are the High Court’s reasons yesterday for allowing the judicial reviews brought by seven groups of freeholders to proceed to a permission hearing in January 2025.
Key points from the decision:
- Nothing of any substance decided. The High Court has directed that a hearing on whether the claimants have permission to make a judicial review will be held in January 2025.
- The challenges seek judicial review of the changes to enfranchisement premium calculations (e.g. loss of marriage value, 0.1% ground rent cap).
- Three of the claims (by John Lyons Charity, The Portal Trust and Wallace Group) were not subject to stays.
- Four of the claims (by the Annington Homes, the ARC Time Freehold Income Fund, Long Harbour, Cadogan Estates) were subject to stays imposed by the Court.
- The government asked the High Court to continue the stays because it says it should only face one challenge and after the relevant commencement provisions have been made, so the High Court can consider the issues in the round.
- Three of the seven claimants asked the High Court to lift the stays so the claims could proceed.
- John Lyons Charity says it is already suffering financial loss. The government criticised its evidence on the basis that it compares current rates to those in 2016/17 (when interest rates were significantly lower than now and we were close to Brexit), but there is no evidence as to what happened before or after 2016/17 or why 2016/17 was chosen as the point of comparison?
- Albanwise Wallace also produced evidence showing the effect of assumed changes to marriage value and enfranchisement rates on its business. The government criticised this evidence as being based on assumptions that may not reflect reality.
- The Portal Trust claimed loss, but offered no evidence of that loss.
- The freeholders could not agree among themselves as to whether the claims should continue to be stayed or not. Ultimately, the court decided that all seven claims should continue to be managed together and go forward to a permission hearing.
- Contrary to the scaremongering before passage of Leasehold and Freehold Reform Act 2024 (LAFRA) about multi-billion damages, it is confirmed at paragraph 25 that the claimants are seeking declarations of incompatibility under s. 4 of the Human Rights Act 1998. This triggers an option (but not an obligation) for Parliament to change the law to make it compatible. According to the Ministry of Justice in 2023 there have only been 47 declarations since the Human Rights Act came into force in July 2000, of which 12 were overturned on appeal (https://assets.publishing.service.gov.uk/media/654cf01c014cc9000d677371/responding-human-rights-judgments-2022_2023.pdf).
As to the claimants seeking to protect their human rights:
Annington is a play thing of private equity financier Guy Hands — the man who famously bought EMI without checking its underlying fundamentals:
Guy Hands humbled by EMI fraud case defeat
Jury takes just four hours to throw out claims that Citigroup tricked Terra Firma boss over purchase of EMI
and which cost him €200 million (https://www.theguardian.com/uk-news/2016/jun/08/emi-collapse-guy-hands-terra-firma-court). Annington runs the Married Quarters Estate for the MOD, having lost a judicial review against that last year (https://www.judiciary.uk/wp-content/uploads/2023/05/Annington-final-judgment_15_05_2023.pdf).
Annington has been slated by the National Audit Office for costing taxpayers £2 – £4 billion:
The Ministry of Defence’s arrangement with Annington Property Limited – NAO report
The Ministry of Defence (the Department) has committed itself to annual rental bills of nearly £200 million and lost out on billions of pounds of asset value as a result of selling and leasing back the majority of its married quarters estate to Annington Property Limited in 1996 because of the subsequent steep increase in house prices and rents.
The Cadogan Estate is worth more than £5 billion and generates over £200 million a year in income (https://www.cadogan.co.uk/cadogan-announces-2023-annual-results/)
Cadogan Estates
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The John Lyons, which owns freeholds in upmarket St John’s Wood in north London is challenging the reforms as they amount to a massive wealth transfer to “non-doms and tax exiles”. Question: who is funding their challenge, if they are not paying all themselves?:
Judicial review application can be heard:
Related posts:
Legal arms race as Canary Riverside freeholder seeks judicial review
Leasehold reforms: respond to government consultation over ground rents before 17 January (because those legging you over will certainly be doing so)
Sir Peter Bottomley condemns criminal behaviour, price-fixing, cheating freeholders, exit fee fiddles, opportunist lawyers and feeble judicial intervention
Taylor Wimpey abandons the leasehold houses racket from January 1
Mundy case in Court of Appeal showdown over valuation racket
Southwark council’s leaseholder conference is an invaluable resource for all
Wonder when leaseholders missold by housing developers get their day in court? My freehold sold on behind my back to an investor even though I’d asked to buy it at point of sale. Telling me I couldn’t buy it until lived in the property for 2 years and then they sell it on to an investor a month after I moved in. Where is the justice for us? This is/was a national issue and not just me. The developers used this tactic across the board and got away with it. They should be compensating us.
The appeal by John Lyons charity is astonishingly selfish. They support children and young people up to the age of 25 who live in nine boroughs in North and West London: Barnet, Brent, Camden, Ealing, Hammersmith & Fulham, Harrow, Kensington & Chelsea and the Cities of London and Westminster.
If they succeed in their bid to block the scrapping of Marital Allowance tens of thousands of households in the areas they support will suffer financial hardship!. Clearly they are putting their own interests ahead of the broader picture. So often greedy Freeholders push ahead with extortionate Lease Extension Costs irrespective of fairness or suffering. The Government must stand up against this.
No doubt the High Court will take into account the Human Rights of more than Five Million Leaseholders, versus the rights of a few dozen “monopoly” big player Freeholders.
Their Honours may ask questions about how the Freeholders income is derived, by income header, for example, Ground Rent, Lease extension fee, and other precise income breakdown and more importantly justification for said fees.
The justification for the current Ground Rent demand would make interesting reading and quiet possibly may receive a great deal of valuable publicity for the exploited Leaseholders plight.
The arguements put forward for maintaining the as is could be fascinating. Leaseholders pay Ground Rent in return for precisely nothing in return, what possible justification for that could be offered?
I think you summarise the situation very well. This review of Leasehold is quickly being drawn into a Legal Battle but it is essential that the Government first looks at what VALUE a Leasehold actually gives to the Leaseholder and whether the associated costs are reasonable.
Many Leasehold Contracts provide minimal or no value yet they can have high Ground Rents and extortionate Lease Extension Costs. How can an entire home be worth a few meaningless lines on a scrappy piece of paper?.
I really hope there will be a proper review of this system. Sadly I anticipate a Legal Battle where rich Freeholders bring in their expensive Solicitors to defend THEIR Human Rights to live undisturbed in little Leasehold Apartments they have never visited.
Mr. Harrison,
I think you have hit the nail on the head when you say “whether the associated costs are reasonable”.
Ground rent is, in my view, unreasonable. It is a cash payment made in return for precisely no goods or services.
I would like my Freeholder to justify to me why they believe that annual demand is reasonable?
When my daughter bought her ex unmarried partner out to remortgage the family home in her sole name, Bartley Management charged her £500 for the privilege of taking one name off the Deed of Trust. Bartley Management Ltd are the estate grounds maintenance company that charge my daughter around £172 a year for attending to communal areas on the estate. How is this right. They not only receiving ground rent money each year but also anyone who wishes to remortgage their property will have to pay a fee just to remove one of the householder’s names off the TR1. £500 for doing diddly squat!!! My daughter, who has 4 children and works part-time, struggled to get the funds for the remortgage and then to her astonishment had to pay an extra £500 to the Estate Management company on top of the conveyancing firm.
Any thoughts.
Jenny Baker
Jenny,
The Freeloaders have excelled at monetising this largely unregulated industry to the limit.
Every possible income stream has been exploitated and apparently shared amongst their ranks for a Fee, allegedly.
I question, are those fees reasonable or justified? And if so, a written costing (s) should be published showing the formula used for all to see and scrutinise for all transactions.
Slightly off-topic, but related – I’m hoping this esteemed group of learned friends and leaseholders might be able to give me a steer… 6 months ago, I was foolish enough to become a leaseholder of a flat within an RTM-run building. The residential units in the building were built around 22 years ago. The RTM has been running for 12 months now.
6 weeks into my new leaseholder journey, there is a catastrophic mechanical failure of a critical component of the power system, that blows us off the grid and into darkness. This comes completely out of the blue… and of course, just my luck, it is deemed an uninsurable event. The freeholder is nowhere to be seen. The RTM, in their wisdom, end up racking up eye-watering costs to hire mobile diesel generators and consultants to restore power temporarily to the building. The final costs will be upwards of £350k when all is said and done. I have paid £4,000 to the RTM for my apportionment towards these major works. The freeholder has paid nothing, and arguably mismanaged the power system during the time that it was under their control – allowing it to fall into a state of disrepair.
Please tell me there is some justice in the world and that we might have a case to pursue them for a contribution?
Many thanks for reading.
James
James,
In my humble opinion the answer to your question is no. Other better qualified contributors to this site may well disagree with me, and if so I look forward to reading their valued replys and expert guidance.
We achieved RTM in March 2022 and within a few days we received complaints of water ingress in several top floor locations including apartments, which had allegedly been reported several months earlier. To cut a long story short matters were professionally put right at a competitive cost including a ten year guarantee.
Naturally, that cost was paid by the Shareholders only and not the Freeloader.
To our horror we learned that the roof extraction ducting vents needed replacing despite previous survey from the former managing agent saying that they were in good order.
Quiet how the surveyor managed to sign off those roof ducting vents as being in good order by using binoculars that were able to compensate for the Earths curvature remains a mystery.
In short, It is reported that several RTM Companys have found them selves in a similar situation to your good self including this one.
In my hard earned experience the above was caused by a lack of effective planned preventative maintenance over several years and sub standard repairs, replacements and renewals.
I hope the above is of some use.