… It sacrifices its own 10-year doubling ground rent portfolio to preserve the rest of its freeholds
… Unnecessary leasehold properties have been built, it admits
… 10-year doubling ground rents have ‘prevented proper value and sales’
… It pledges not to buy more 10-year doublers (actually, there are not likely to be many)
… But it repeats PR school sanctimony about thanking government and media for bringing its own unfortunate business practices to public scrutiny
Leasehold tycoon: man whose firms control 40,000 UK homes
He does not appear on any rich list but he has built a property empire that rivals that of the Duke of Westminster. Companies controlled by James Tuttiett, aged 53, have quietly snapped up the freeholds of tens of thousands of houses and flats in almost every city in England and Wales, which are now at the centre of controversy over spiralling ground rents.
The freehold investment fund E&J Capital Partners is in full retreat this afternoon over its ownership of rip-off ground rents.
And it makes highly strategic concessions aimed at keeping the ground rent gravy train in flow.
In a letter to Jim Fitzpatrick MP, chair of the APPG on leasehold reform and patron of LKP, James Tuttiett, the CEO of E&J Capital Partners, says he is surrendering the doubling ground rent assets in the portfolio.
E&J Capital Partners has contacted 423 leaseholders at freeholds that it owns to revise the lease terms from 10-year doubling ground rents to RPI. A further 96 need to be revised.
However, in total E&J Capital Partners has 1,961 leases – 3.9 per cent of the portfolio – where doubling ground rents apply every 10 years.
Presumably, the bulk of these are owned by anonymous investors who won’t be revising the 10-year doubling ground rent clauses any time soon.
Mr Tuttiett says that E&J Capital Partners won’t be buying more doubling ground rent freeholds (although there are unlikely to be any).
By sacrificing a minority of its 10-year doubling ground rent portfolio, E&J Capital Partners is hoping to draw a line under the public furore.
Last Saturday, Mr Tuttiett was dubbed a “fatcat” in The Sun newspaper along with other developers and ground rent investors, and his portrait was super-imposed on the photograph of an obese cat.
The Guardian in more restrained form has also addressed Mr Tuttiett’s business affairs.
James Tuttiett’s tangled web of E&J freeholds scrutinised by the Guardian
“In June 2016, we launched review of lease terms across our entire portfolio and found 1,961 leases, representing about 3.9 per cent of the portfolio had been drafted by developers to contain a 10-year doubling of ground rent.
“Since then, we have been working hard to change all of these leases such that the ground rents will rise by no more than inflation.
“This has been a complex process. In respect of the 519 leases where the lease income is under our control [presumably this means where E&J Capital Partners own the freeholds] we have agreed amendments with 420 leases such that the ground rent will not go up by more than inflation.
“We have contacted every other leaseholder affected and hope to have completed the changes shortly.
“In respect of the leases that we administer but where lease income is contracted to third parties, we are in advanced negotiations with counterparties in order to change the lease term such that ground rents will not go up by more than inflation and expect to reach a conclusion in the coming weeks.
“We will then be contacting affected leaseholders to seek their consent in making these changes.
“In addition, since our review we have also amended our internal investment procedures and criteria to ensure no further leaseholds containing similar 10-year doubling of ground rents can be acquired administered by E&J.
“As you know, leaseholds have grown rapidly in the UK since the turn of the century as housebuilders have sought to meet the needs of housing.
“The leasehold structure is highly effective where multiple dwellings share common services, such as in new-build flats, and there is also clear legislation to protect leaseholders.
“But there are also examples of unnecessary leasehold structures, for example in new build houses which share only limited common services or none at all.
“There have also been examples where leases containing ground rents that double every 10 years have prevented the proper value of sale of an affected property.
“We believe that the government and the media have played a key role in highlighting these issues, and we are fully supportive of the recent consultation into certain leasehold practices.”
The full letter from E&J Capital Partners is below: E&JCapitalPartnersStatement
Related posts:
Ground rent baron James Tuttiett gives £8,500 to the Tories (which is a bit stingy, considering …)
Scandal makes Ground Rents Income Fund plc fall £6m since March but … it has paid out 40.6% in three years
Pensioner paid £38,000 for Taylor Wimpey freehold to ground rent speculators E&J Capital Partners
James Tuttiett: I have lost two buyers of my flat through ground rent scams. Can you hurry up changing my terms?
E&J Capital Partners ‘compelled’ to sell freehold to Taylor Wimpey house to pensioner for £38,000 (plus £4,000 costs)
Countryside Properties plc cracks over ground rents scandal …
Converting doubling every ten years (equivalent to 7.16% RPI) to RPI is not the whole story. What are the new intervals? Still ten years? Won’t pass the nationwide smell test unless more than 15 years.
Bearing in mind the capitalisation (PV) of a GR applying a traditional 33 year interval with fixed doubling would be three times lower than an RPI GR incrementing every 15 years at an average 4.5%. Would be two times lower than avg 4.5% every 20 years.
Is 4.5% unlikely? The interval has to be long to avoid RPI indexing ever becoming silly.
I’m sure (or at least hopeful) DCLG would be alert to the way GR works and not just follow the headlines.
Conniving toerag should instigate 33 Yrs & be done with it, espcially as he & his mates have openly abused the LVT so as to create case law precedents in his favour aided by a long stuck-off Sol!
Meant to say “going up with inflation” is a big church. If you indexed the GR every year by RPI it would not be going up with inflation. But run the numbers.
Correct: it WOULD be going up with inflation!
Is it not the case that E&J assets and future income streams are pledged to Rothesay Life?
Such changes as proposed by E&J could only go ahead by agreement with Rothesy Life.
So it is more likely that this action is at the behest of Rothesay Life, who wish to protect as much of their investment as possible.
Funnt thing this… Wnen one looks at the SF Charge in greater detail there is no actual mention of the appointed MA (contract left blank) – therefore how would he propose to raise invoices Etc without the same….?! Just a thought.
Isn’t the object of LKP to make ground rent, and those who live of ground rent, history? That these creatures are responding to the attention they are getting is good, but they are fighting to retain their morally criminal income flow. My situation is not a big problem at all (999 year lease and fixed GR of £35 each year), but I am beyond outraged that leasehold exists at all. Nothing other than abolition of leasehold is good enough, and with a retrospective element. Achievable?
David I totally agree with your post and yes abolition of Leasehold is achievable so long as Leaseholders ( mainlly flats) stick theirs heads above the parapet and campaign for change.. Excuses such as – “Too busy” – “Family to take look after” Yadda Yadda , is NOT GOOD ENOUGH. Fight for Justice or sleepwalk into disaster……
I would say the object of LKP is to be in a position where there is no need for LKP!
That, ME, is the best one liner I have ever heard. Spot on.
So much declaration in so few words
Good point by both David & Kim.
It is about time that flat owners stood up and be counted.
Don’t expect everyone else to fight your battles… you HAVE to get involved and you can start by filling in the LKP questionnaire that was sent out a few weeks a go.
If you haven’t got a copy, you can download it or register on this site and also the National Leasehold Campaign Facebook Page or the Hornets FB Page – ‘Homeowners Rights Network’ the latter dealing in service charge and lease clause issues for leasehold properties.
Make sure you get your voices heard… there will never be another time to do it, don’t delay….. do it today!
Hear Hear! ACTION THIS DAY.
I really hope that the government see through this sycophantic PR tactic of feigned outrage over doubling ground rents. It is a highly manipulative strategic concession that I hope any ministers reading this will be insulted by.
Any variation in how the ground rent increase (including RPI) is outrageous when there is no reason for a new build house to be leasehold in the first place.
They’re using NLP – change the perception. Thing is E&J are based around Wrongful Trading & Fraudulant Trading.
Could they also be in retreat because they do not want their business activities scrutinised by the Public Accounts Committee which Justin Madders MP is calling for?
The tax office should be very interested into the business models of these companies that are obtaining government funding to build homes for young families who trying to buy their own homes, only to be ripped off/lied to and deceived by the home builders/solicitors/valuers of this country who have colluded in this scam….
It is shameful that they can set up these tripartite leases, with all the web of lies that is unwritten into them, lock people in for lives and then just flog it all off and walk away.
These companies have shamed the British identity, of being an honest and open for business because we clearly are not!
All the money these thieves and scallies are earning is being swept off shore with no British taxes or input being put back into our country… and they have no conscience what so ever of the misery they are causing people.
if they think that this meagre offer of handing back a few developments is going to cut it… well we are here to tell you it won’t… we will carry on until there is an investigate into this whole sordid business.
Karen I could not endorse your views more. If these Individuals were investigated by the PCC I feel sure there would be some arrests for financial ‘Jiggery Pokery’. Look what happened to the HSBC crooks………
Not just the TAX Office – CUSTOMS & EXCISE