The anti-ground rent trade body ARCO has been snubbed and left uninvited by retirement housing insiders at a City law firm conference next Wednesday to discuss whether a Retirement Housing Act is needed.
The Association of Retirement Community Operators, whose members build and manage their retirement housing and care sites for the long term, has declared that ground rents are not essential to the viability of retirement housing projects.
This opinion has put ARCO at odds with volume housebuilders McCarthy and Stone and the McCarthy family-owned Churchill Retirement Living, which sell off the freeholds to their sites to ground rent speculators.
Both are lobbying the government hard to be exempt from the ban on ground rents which is likely to be announced next month.
Unsurprisingly, LKP is not invited either.
Private Eye this week revealed that Churchill contributed £50,000 into the Conservative Party funds in February, according to the Electoral Commission.
The invitation-only meeting next Wednesday is hosted by City law firm Shakespeare Martineau “with the support of McCarthy & Stone and Housing LIN”.
The invitation runs:
“The session is intended to bring together key figures in the later living sector for an open discussion about whether we should have a new Retirement Housing Act for England. During a structured debate we will discuss what changes are required in order to drive real progress in delivering high quality fit-for-purpose homes designed for people in later life and how a new legislative framework might assist with this.”
It is very likely ground rents will figure in the discussions, as they will at the LKP-organised All Party Parliamentary Group meeting on July 11. That meeting will be addressed by both McCarthy and Stone CEO Clive Fenton and ARCO chief executive Michael Voges.
Among care providers and new entrants to the retirement housing market there is exasperation at the historic legacy of the volume housebuilders.
Only 2 per cent of over-65s live in designated retirement housing in the UK – against 17 per cent in Australasia and 12 per cent in the US.
Repeated scandals, involving two Office of Fair Trading investigations – and one finding of collusive tendering – as well as widespread dismal re-sale prices may have contributed to undermining public confidence in the sector.
The leasehold system involving loading the freehold with income streams and then flogging it off to whoever will pay the most may also have a lowering effect on consumer confidence.
There have been improvements under the current management of McCarthy and Stone as we acknowledge here:
McCarthy and Stone: Ground rents are not the future of retirement housing
The largest freehold owner in the sector is the so-called Tchenguiz Family Trust based in the British Virgin Islands.
Subsequent McCarthy and Stone sales have been made to Adriatic Land, where the ultimate beneficial ownership is hidden behind nominee directors of the Sanne Group headquartered in Jersey.
For example, 21-flat Wolsey Court in Leicester was completed by McCarthy and Stone in 2016 and the freehold sold off to Adriatic Land 4.
Ground rents are essential to McCarthy and Stone’s business model – Better Retirement Housing
but leaseholders are concerned it is selling freeholds to anonymous buyers … McCarthy and Stone complains about ‘right to reply’ to LKP / Better Retirement Housing articles McCarthy and Stone told The Times yesterday that there would be fewer of its form of retirement flats if the government reduces ground rents to a minimal …
Leasehold residents at the site are absolutely furious that their landlord, to whom they pay £495pa ground rents (rising with RPI), remains hidden.
They have been told by McCarthy and Stone that ground rents are essential to attract investors, pay for new land acquisitions, make sites viable and offset the loss of the communal spaces in retirement sites that in non-retirement blocks would be sellable flats.
It is repeated by the volume retirement housebuilders that ground rents are essential to their business model. Detractors say: change the model.
A curiosity of the meeting is that it is chaired by former civil servant Jeremy Porteus, of Housing LIN Limited and Housing LIN Enterprises Limited, which he wholly owns.
He told LKP that he is chairing in a “personal capacity” and that the event is organised by Shakespeare Martineau.
LKP asked whether Housing LIN Limited receives any public money, but Mr Porteus did not respond.
HousingLINChurchillRetirementLivingExplained
Related posts:
ARCO snubs McCarthy and Stone / Churchill by saying there is no need for ground rents
Government will cave in to retirement house builders over ground rents, says Times
McCarthy and Stone says ground rents essential, but why sell freeholds to murky Adriatic Land?
Please exempt retirement housebuilders from ground rent ban, pleads Sir Desmond Swayne
Pensioners hammered with 88% rise in ground rents, says Better Retirement Housing
It is no surprise McCarthy & Stone want to retain Ground rent income?
If McCarthy & Stone sell 1,722 units in a year attracting an annual ground rent of £495 that would equate to an annual “income” of £852,390. Not an inconsiderable sum?
No doubt it will be argued that ground rent income is used for the upkeep of the McCarthy & Stone developments.
But surely, the ground rent should solely be for what it says it is? Namely the rental for the land the property sits on?
Anything else should be covered by the service charges.
Never The Twain should the ground rent and service charge meet!
Not all Ground Rents are contentious – our first 33 years out of 99 has been £48.00 a year, then in 2020 it will double to £96.00 a year, then in 2053 it doubles again.
Why has Leasehold Housing seen a fivefold increase from day one at some developments.
Has this been where the Freeholder and the Landlord may had links?
So what you had was a virtual peppercorn ground rent. this is what ground rents were always supposed to be. By introducing ground rents of between £100 and £500, freeholders at a stroke of a pen have created an artificial, arbitrary asset.
They increase the cost of lease extension or enfranchisement and they increase the amount the freeholder can borrow.
Peppercorn or not, the real value to the freeholder is not the ground rent income.
It remains the ability to appoint themselves as managing agent, to insure blocks, to decide what work needs doing etc?
McCarthy & Stone have taken the management role “in house”. presumably to avoid a repeat of the fate of the older Mcarthy & Stone developments that fell under the management of Peverel/Firstport..
But, having everything “in house” has its inherent dangers.
Lightening can and does strike twice!
Here is a funny thing?
In their last published accounts Churchill Retirement make the following statement:
DCLG have recently ran a consultation on the appropriateness of leasehold as a tenure and the appropriateness of GROUND RENTS CHARGED.
Whilst this focused on leasehold houses and doubling ground rents any decision has the potential to affect our business.
Churchill Retirement have made a donation to the Conservative party of £50,000. Coincidental?
Incidentally though the Churchill retirement website summarises the charges attaching to living in one of their developments, no mention is made of ground rent payable?
Many who have bought McCarty & Stone new properties have lost a lot of money when they came to sell. They keep saying we need to build more retirement property but there are always plenty to buy as people are worried about the Service charge going up as well as the ground rent. A retirement block near me have at least 6 apartments for sale some have been on the market for a year.. I was recently told First Port are selling up and that two of their senior staff have already left