But …
Landmark Investments claims it has saved leaseholders over £1m by telling them they do not need to engage their own legal advisers in dealing with freehold purchases
It tells MP that its practices have made enfranchisement ‘cheaper’, ‘quicker’ and ‘easier’.
LKP are ‘pathological liars’ over leasehold abuses, says Landmark’s Mark Hawthornthwaite
It is ‘Machiavellian’ in exploiting leaseholders to further its campaign, and has a ‘vendetta’ against Landmark Investments
It has a ‘track record of exaggerating and spreading misinformation’
The freehold of a house built by Elan Homes more than doubled in price from £7,500 to £15,900 four months after being sold on to ground rent speculators Landmark Investments.
The increase happened last December – more than two years after the scandal of leasehold houses came to national attention.
The leaseholders, Ian Rice and his wife, Deborah, who own an Elan Homes leasehold house at Borromeo Close in Liverpool, were offered the price of £7,500 for the freehold in September 2018 by Elan Homes.
Elan Homes CEO John Kendrick has confirmed to LKP that the price of 30-times annual ground rent of £250 would have been correct: ie £7,500. The ground rent is linked to RPI every ten years and the lease length is 999 years.
But in December 2018, Elan Homes sold the freehold to Bolton-based ground rent fund Landmark Investments.
When the Rices inquired about buying the freehold in January this year – for which they paid £50 to Landmark Investments – they were told the price was £15,900.
That amounts to more than 63 times annual ground rent.
The higher figure is only valid for 28 days – after which one assumes another £50 may be required – and a further £540 would need to pay for Landmark Investments’ legal fees.
Ian Rice told LKP:
“In my opinion, Elan Homes are largely responsible for this! They knew I requested the purchase and knew I was getting the finance together, yet they deliberately sold the freehold on to these monetisers.”
Elan Homes emphasises that its homes are available to purchase with the taxpayer funded Help To Buy scheme: https://www.elan-homes.co.uk/buying-with-elan/
LKP raised the Rices’ case with Mark Hawthorn / Hawthornthwaite (he uses both names in his businesses), the chief executive of Landmark Investments, and John Kendrick, of Elan Homes.
The correspondence was marked ‘For Publication’ and copied to local Labour MP for Liverpool Riverside Dame Louise Ellman and Communities Secretary James Brokenshire, as well as LKP’s patron MPs.
While Mr Kendrick confirmed the details of the offer to the Rices, Mr Hawthorn / Hawthornthwaite responded less temperately in a series of emails.
Having previously termed LKP “pathological liars” on Twitter, Mr Hawthorn / Hawthornthwaite doubted there was any evidence for the Rices’ complaint and referenced LKP’s “track record of exaggerating and spreading misinformation”.
This article has appeared in the Liverpool Echo since the piece appeared on LKP’s website:
Builder says his dream new home has ruined his life
A builder has said that he has experienced two years of ‘stress and misery’ since he moved into a new build house in south Liverpool. Ian Rice paid £270,000 for the three-bedroom detached property in Borromeo Close on the Aigburth Grange estate two years ago.
He added:
“Suffice to say should you publish anything incorrect we will take action to defend our good name.”
After evidence from both Mr Kendrick, of Elan Homes, and the correspondence from Landmark Investments addressing the offer to the Rices, Mr Hawthorn / Hawthornthwaite responded more fully.
He acknowledged:
“We weren’t informed that Elan had offered to residents. The price hasn’t doubled, they were offered a large discount by Elan which were were unaware of and unable to honour.”
He subsequently sent longer statements both to Sebastian O’Kelly, CEO of LKP, and Dame Louise Ellman. (In full, below.)
Mr Hawthorn / Hawthornthwaite told Sebastian O’Kelly on April 8 that the Rices had accepted the £15,900 offer from Landmark Investments, but that their email had gone into the spam folder.
“It may simply be that, like many leaseholders, they were content with the position until they became an unwitting proxy in your vendetta against us …”
Mr Hawthorn / Hawthornthwaite added that the developer had offered the Rices a discount on the freehold as “a gesture of goodwill with them being customers”.
“If we were to sell the asset we would need to replace the income with something similar. Whilst there is no direct comparable, the closest option would be a long term Government bond which would require a sale price of around £20/22,000 to allow sufficient funds to replace our income stream … “
Mr Hawthorn / Hawthornthwaite also addressed the issue of Landmark Investments advising leaseholders that they do not need to engage a lawyer in dealing with freehold purchases.
He claimed this had save leaseholders over £1 million in legal fees over 10 years.
“You are correct in that we advise residents that there is no requirement for them to engage their own lawyer.
“It is important to determine that we do not advise them not to use a lawyer, it is entirely at their discretion.
“We have done over 1,000 of these transactions over the last decade or so and the majority opt not to use a lawyer.
“We have had no issues at all and leaseholders will have collectively saved over £1,000,000. We have been committed to making it cheaper, easier and quicker to acquire the freehold, as per the Governments intent, throughout our almost 20 year history.”
Mr Hawthorn / Hawthornthwaite also responded to Dame Louise Ellman:
“We occasionally experience interactions with residents who have been misinformed and wound up by a tiny band of leasehold campaigners who use these innocent homeowners as a proxy in their campaign.
“As a professional freeholder, signed up to the recent Government backed Freeholder Pledge, we abhor this Machiavellian tactic as it creates unnecessary distress for residents with no recourse to the campaigners own homes (which are often freehold).”
He explained that the £50 that Landmark Investments charges to deal with freehold purchase inquiries “is simply to ensure that the enquiries we get are serious”. He claimed it was returned on completion of the purchase.
Ian Rice said:
“We are appalled to be caught up in these games. We have a legal right to buy the freehold and will now enfranchise through the statutory formal process. I am so furious about this that I do not even care if it does not, in the end, save us money.”
The Rices have engaged the services of Louie Burns, of Leasehold Solutions, to purchase the freehold from Landmark Investments.
Mark Hawthorn / Hawthornthwaite, of Landmark Investments, to Sebastian O’Kelly, of LKP. April 8 2019Hi Sebastien [sic],
I’ve had a chance to review this now and am able to offer you a response. As I may have mentioned I am a leaseholder in my own home and also across a number of other investments we own. I have no issue with the position and play my part, I appreciate you live in a multi million pound freehold property so enjoy title absolute
I’m unsure if you are aware but the Rices accepted our price to acquire the freehold. Unfortunately they sent the acceptance email in a format which was diverted to our spam filter, we have only unearthed the email after doing an audit of communication to date. It may simply be that, like many leaseholders, they were content with the position until they became an unwitting proxy in your vendetta against us. I have no personal issue with you but, as you are well aware, I will not stand idly by whilst you spread misinformation and sacrifice innocent homeowners to further your campaign – it is just wrong. Ironically I note that you are inclined to leave alone freeholders who refuse to engage with you yet regularly launch flaccid attacks upon us despite the fact we are always open to sensible debate
We were unaware of the developer offering the Rices the option to buy and you have yet to provide any evidence, despite indicating you have it. I’m not going to frustrate you by requiring you provide something you clearly don’t have and am much more inclined to take a pragmatic approach and answer your questions
The developer has offered the Rices a discount, I would expect as a gesture of goodwill with them being customers coupled with the fact that the developer has no base cost for the asset so can afford to. If we were to sell the asset we would need to replace the income with something similar. Whilst there is no direct comparable the closest option would be a long term Government bond which would require a sale price of around £20/22,000 to allow sufficient funds to replace our income stream. Of course we have not requested this figure, although many would and investment logic would support, as we are reasonable people
The £50 valuation fee, which includes £10 of VAT, is for our time in reviewing the lease and other contributing factors to determine a price. There is no margin in this work but it is necessary if we want residents to avoid having to go down the much more expensive formal route. In addition the fee is discounted from the purchase price so is effectively free should the residents proceed
You are correct in that we advise residents that there is no requirement for them to engage their own lawyer. It is important to determine that we do not advise them not to use a lawyer, it is entirely at their discretion. We have done over 1,000 of these transactions over the last decade or so and the majority opt not to use a lawyer. We have had no issues at all and leaseholders will have collectively saved over £1,000,000. We have been committed to making it cheaper, easier and quicker to acquire the freehold, as per the Governments intent, throughout our almost 20 year history
I trust this settles the matter
Regards,
Mark Hawthorn
Mark Hawthorn / Hawthornthwaite, of Landmark Investments to Dame Louise Ellman MP. April 8 2019Dear Dame Louise,
I hope you had a pleasant weekend are enjoying the good weather we have today
I’m sure you are very busy so will try and keep this response succinct, although I’d be happy to go into further detail should you require. You are also more than welcome to visit our offices, see our operation and hopefully learn a little more about all the good work we do which by design goes unnoticed
1. We were unaware until late last week that the residents on this site had been offered their freeholds at a discount by the original developer. Speaking from experience the developer is likely to have done this for two reasons, firstly goodwill – as the leaseholder is their original customer – and secondly because there is no base cost to the developer, unlike an investor
2. We charge a very small fee of £50, which includes £10 of VAT, for the work involved in reviewing a lease and providing a price to purchase. We do not seek to make a profit from this it is simply to ensure that the enquiries we get are serious. In addition the fee is discounted from the price so if the resident proceeds the valuation is effectively free. An alternative approach would be for us to insist that any applications proceed down the formal route which would involve third party professionals whose fees would be many times more than ours. I also understand our fee is well below the fee which many other freeholders would charge
3. We have conducted an audit of all communications with Mr & Mrs Rice (the Rices) which has unearthed an email which was diverted to our spam box. The reason this happened is because the entire content was written in the subject line and the email itself was blank. This email was the last communication we had from the Rices which was to indicate that they wished to proceed but required some additional time. We would have been more than happy to extend this courtesy had the email been received which is an error on their side rather than ours. I do find it unusual that the Rices were minded to proceed at the price but have since been somehow influenced into taking issue. We occasionally experience interactions with residents who have been misinformed and wound up by a tiny band of leasehold campaigners who use these innocent homeowners as a proxy in their campaign. As a professional freeholder, signed up to the recent Government backed Freeholder Pledge, we abhor this Machiavellian tactic as it creates unnecessary distress for residents with no recourse to the campaigners own homes (which are often freehold)
4. The price has not doubled, this is the wrong perspective to take although it is a simple leap to make. As outlined above the original developer appears to have offered at a discount. In reality if we were to replace our secure ground rent income with a comparable alternative we would need to invest into Government bonds. A 50 year bond would pay around 1.5% each year so to replace our income we would need a figure more towards £20/22,000 once we factor in tax, costs and other factors
We have been strong advocates of removing barriers for over a decade, as is evidenced in the large numbers of freeholds we have sold to residents. We are very much onside with the Government intent to make the purchase of freeholds cheaper, quicker and easier which is clearly evidenced in this instance. I’ve highlighted below a few of the initiatives used to further this cause
Cheaper – we have averted the requirement for both parties to have professional valuers which would be around £1500 – £2500 of cost
Cheaper – we have refined our process over many years so that the residents are not obligated to engage a lawyer, although they are free to if they wish. Additionally we benefit from economies of scale, which we extend to the residents, so our legal fees are kept to a minimum. If both parties were to engage lawyers I would expect an additional £1000 – £2000 of costs
Quicker – we do not uphold the two year rule, where residents need to have owned the property two years to acquire our interest
Quicker – we have refined the process so that transactions can complete within 7 – 10 days
Easier – we don’t force residents down the formal route to purchase which is far more expensive, time consuming and involved
Easier – residents can simply use our online portal to request a purchase price, pay a small fee and then make a decision from there. In this instance we were paid the valuation fee on 2nd Jan and provided the price on 4th Jan, it would have likely been slightly quicker had it not been immediately after New Year
In summary had we insisted on using the formal route available the costs would have increased by around £3,500/22% of the price, the time taken would be many months and therefore it would have been much more uneasy for the resident
Should the Rices still be minded to purchase, as they clearly were, then we would be happy to instruct solicitors and expect we could complete the matter this month
Regards,
Mark Hawthorn
CEO
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Related posts:
Press reports how freehold doubled in price to £15,900 after being sold to Landmark Investments
Gleeson tells ground rent speculator Landmark Investments to remove testimonial
Leasehold house owners thank Brokenshire after Persimmon sells freehold to leasehold house for less than £3,750
Brokenshire demanding action for 100,000 trapped in toxic leasehold homes five months ago
Last year: £64.8bn leasehold properties sold. £13.7bn was new-build. Leasehold house numbers double. Developers make £300-500 million a year from ground rent sales
£146,257 – the highest major works bill ever?
Nothing short of Extortion!
David, I will thank Crispin as you asked, he does seem to understand about immoral criminals involved, at least Dick Turpin wore a mask.
These people have not been to spec savers or anywhere else as the Leasehold Industry has risen from the Freeholder/Landlords who many years ago threw the crofters of their land so they could graze sheep.
The government with the developers and as you say suited professionals have between them seen that Leasehold Reform has been Peacemeal.
In the early 1980s, McCarthy & Stone along with Peverel as Managing Agents had an excellent reputation, this lasted until the 1990s when M&S was found guilty of False Advertising and were fined £2,000. This was during a disastrous Law Suite against a newspaper who had accused them of charging Excessive Fees. M&S lost the case in court which forced them and Peverel to separate, but the lessons (SCAMS) had been learned and new ones are still cropping up as the Operating Costs are slowly been moved to the Service Charges.
These SCAMS, such as Indepe include Independent Surveyors being paid between 10% to 17% (for Large Contracts), and up too £1,000 each time a new Development Manager (DM) is trained, we have had 7 DMs since 2008/09, now we do not a DM, but the Management Fees for both remained the same?
Landmark Elan have no moral compass but then they are good at what they do- making leaseholders pips squeak. They get encouragement from successive Housing Ministers who pretend to care about the 6 million odd leaseholders but in reality do nothing to help.
It seems a long time ago since the Javid promised the end of ground rent robbery and got some great headlines for empty words.
Nikki, I believe we are on the 8th Housing Minister in the past 10 years. The Junior Position is seen as a stepping stone for budding Ministers as long as they toe the line and don’t go native.
The 8 Housing Ministers all failed to resolve Leasehold Exploitation. As you say, empty words are the norm and pretending to care another.