Self-regulation and codes of conduct have failed. Bring in commonhold and end the leasehold rip-offs.
APPG pays “public tribute” to the work of LKP in revealing these abuses
“LKP have helped hundreds of leaseholders keep their homes and continue to do so with very limited resources,” it says.
Leasehold Sector ‘cannot be trusted’
All Party Parliamentary Group on leasehold and commonhold reform has today published its uncompromising response to Communities Secretary Sajid Javid’s consultation.
The APPG, which has 110 members, demands an end to leasehold houses and urges the scrapping of new ground rents, which are for no service whatsoever.
The property industry’s pleas for giving self-regulation another chance with a “code of practice” is emphatically rejected.
The solution is to bring in commonhold and end the creation of leasehold tenancies, which cause such misery for so many who buy them.
It adds:
“There is a question not asked in the consultation:
“Why has it has taken so long for parliament, the civil-service advisers to ministers and government to stop the leasehold situation getting worse and to start dealing with the historic issues, which have been and are in plain sight?”
The APPG continues:
“The government has made clear that it accepts that we have a “broken housing market” and that there are “unfair practices” in the leasehold sector, which need to be addressed.
“Action is needed urgently, so that millions of leaseholders can be given greater protection and security and be treated more fairly within a sector which is presently open to abuse despite the systems that exist under current legislation.”
The APPG brushes aside one of the favoured arguments of developers and leasehold sector professionals that leasehold properties are cheaper than freehold ones:
“The APPG’s interim report (April 2017)8 found there seems little direct evidence that offering leasehold houses results in lower costs to home buyers.
“No developer has been willing, nor do we think able to provide specific evidence that ground rent income streams are needed to make a development viable.”
The APPG quotes Jolyon Harrison, CEO of Gleeson Homes, saying that there is no justification for leasehold houses.
It cites Bob Bessell, founder of retirement housebuilder Retirement Security Limited saying there is no justification for ground rents, either.
Faced with the question, in what circumstances do you consider that leasehold houses supported by Help to Buy Equity Loan could be justified?
The APPG replies: “None.”
“The APPG is aware that providers in the sector are likely to come forward with some form of self-regulating code of conduct. There is no evidence historically that self-regulation has been effective.
“There is evidence the sector may have already begun to move on from generating ground rent income streams. We are now seeing an increase in onerous covenants in freehold titles that seek to reflect many of the charges that had recently been imposed on leasehold houses.
“The fact that the sector has moved so rapidly to find new income streams should alert the government to the sector’s approach to self-regulation.
“Too many cannot be trusted,” says the APPG
Regarding those trapped in unsellable leasehold properties, the APPG says:
“The government might wish to consider whether what has taken place constitutes miss-selling of new build homes in England and Wales.”
Further points are made concerning the retirement housing sector not working as it should; that leasehold property managers, who are entrusted with hundreds of thousands of pounds, require regulation, and that the cost regime of the property tribunal is weighted against leaseholders.
Referring to charity freeholders, such as the National Trust, MPs argue that as they are exempt from leaseholders exercising their right of enfranchisement to buy the freeholds to their homes, they should not be subjecting their leaseholders to onerous “modern” ground rents.
The full APPG submission to Sajid Javid’s consultation is here: APPG response unfair practices consultation (fv)
Related posts:
Leasehold houses to be banned and future ground rents set to zero, announces Sajid Javid
Gavin Barwell: ‘No excuse for leasehold houses or punitive ground rents and we will stamp them out’
Labour to cap ‘legalised extortion’ of ground rents and end leasehold houses … Opposition and government now compete to reform leasehold
Lords hear how LKP warned government over ground rents and leasehold houses … in 2015
Government to ban leasehold houses and set ground rents ‘as low as’ zero
Ground rent speculator in leasehold homes laments losses in FT
Sussex lessee, I have an in payment pension which was frozen four years ago and will remain frozen until I die – unless I live to my late nineties. Why do I mention this? Because I am the victim of well intentioned(?) government pension law and its fixed nature. There may well be (there may not be) victims if leasehold is abolished, but the overwhelming general good will be served if (when) leasehold is abolished.
I know what you mean. But also, if the Grantor does not like its leases as in my case, so much that they did not repair or insure the buildings, then I think ‘forfeiture’ should be available the other way round, for fundamental breach. Academics argue that there is no reason in principle, within the normal law of contract, for lessees either to have their money back or have the freehold. Such cases do not occur, because of the lack of funding for housing law, as I outlined in answer to Paddy. The law of contract is good in theory*. You just cannot get at it.
*Apart from s. 151 of the LPA 1925, allowing non-consensual sales of the freehold. That ain’t lawful, in contract, but this section (that allows it) dates from 1705, when Parliament was ultimately in the pocket of just 5 or so great landowners of the realm. In its preamble, the 1705 Act claimed that tenants were ‘attorning’ to false landlords. We don’t know if that was really true, but possession was everything in those days, some argue.
no reason why lessees should NOT have their money back, or the freehold, I meant to write!
I’m saying nowt!
Thank you Kim. Your very kind words to a struggling fellow lessee the other day do you great credit. Love you too! xx
Sussex Lessee thank you for your kind comment. Let us hope that we will have a reason for genuine cheer when the ‘ results’ of the consultation are eventually announced.
Positive karma to you and all fellow leaseholders. Xx
Buying lease of persimmon homes. Keeping permissions fees his worth buying
Kim, I still think the petition would be better on government site, Mary (above) thinks the same. As Chief Whip can you have words with the appropriate people.
David I have just replied to you and Mary ( chief whip hat) explains why I do not think it a good idea to initiate another pettition oaticularlyba ‘ Government’ one! I think it will read approx 37?comments from top of this page. I believe the oetition currently has 2,140 plus in 3 days- not terrific but we are working on really bringing in the numbers which I am sure we will!!!!
Excuse grammar mistakes but have been emailing quite a lot today. I’m sure you get the gist.
Would not suggest starting another petition…
1. Loads of leasehold petitions show up on Google.
2. Gov site stops petitions if general election is called.
3. Numbers mean little if gov isn’t listening
4. 2000plus now would not sign again.
What now matters are the 6000 plus responses.
Just wondering how many of those agitating for leasehold reform are buy to let landlords who no doubt will be reducing the rents charged to their tenants in anticipatiion of the success of their campaign.
Hello John
I hope you have/ will sign the petition and share it with everyone you know!
Hi. Kim.
Without the information asked for above I am not sure where my sympathies lie, so I will not be signing the petition at this stage. I would not want to influence others.
Hello John.
I am unsure of the correlation between leasehold being abolished, Struct Regulation for Managing Agents and what private landlords charge their tenants? Surely if they charge them too much then they will not get a tenant for their ‘ buy to let” flats?
If YOU believe that leasehold should be abolished in England and Wales as it is everywhere else in the Western world and that Managing Agents should be strictly regulated then sign the petition. It shouldn’t matter to you what “those agitating for leasehold reform” will do. It is a matter of conscious for you alone.
I
Oops meant ‘conscience!!
Hi Kim.
Seems to me that a simple abolition of leasehold with the freehold passing to the present leaseholder would be equivalent on, for example, a 350K london flat. gr. 1K pa. 70 Yrs. on lease, to a transfer of 50K plus to the present leaseholder made up of cost of 90 year statutory lease extension plus an unknown but not insignificant increase in the property value,c/f leasehold, leading to a further increase in property prices generally.
My conscience tells me that for a buy to let property a part of this benefit to the present leaseholder should pass to their tenant/s (who after all are paying for the whole ‘shebang’ plus their landlord’s return out of their taxed wages), in the form of reduced rent.
Dear John
I take it the petition will not be getting your vote? Cest la vie. Why not share the petition with your friends and family as they might think differently??
Here we go again.
I think “John” and “Stephen” should form their own website and call it whatever “their dreams” mean.
This site is all about abolishing totally unnecessary (except in extenuating circumstances) leasehold houses and changing apartments/flats (multi occupancy) to a minimum of common hold.
If you don’t support that, and don’t support the petition please – move on
Methinks John would find any ‘excuse’? Might be a freeholder? Who knows. Who cares.
Leaseholders pay FULL market value (no argument this is fact) for their home. Some may decide to sub let if their lease permits – but they pay an inevitable back-hander to the freeholder for consent. At least they also paid full market value for the opportunity, not 1-5% of total value like freehold investors. And unlike freeholders they have to repair their own ‘asset’. What do freeholders pay for all the tears being poured by those like our John about their property rights?
Just because it is legal don’t make something right. Good folk like our kid John for example seem to have a blind eye to feudal tenure.
Freeholds are traded as if the home owners are captive assets (and boasted of as such). Freeholders expropriate the hard earned wealth of those who buy their own home. As said by Kim of this manor, the rest of the world saw through this feudal scam long ago – including the Scots and Irish.
It’s a scam, it’s exploitation, it’s a rip-off. A nice little earner undoubtedly. For now.
What all this boils down to is something relatively simple (So it is time for someone relatively simple to comment!)
Be it called leasehold or commonhold, of course a system needs to be in place to maintain flats,insure blocks, maintain covenants on new build developments or to maintain landscapes. And some covenants are totally justified in order to preserve the integrity of the development or good order in a block of flats.
The real issue is that these necessary requirements are being ruthlessly exploited by third parties, at leaseholders and quasi freeholder’s expense.
If control was brought back to leaseholders then all that is needed can be achieved on a not for profit basis. It is only in England & Wales that allows leaseholders to be exploited in the way they are.
In Australia, the Strata title system is same as our Commonhold title system which means no ground rent is paid to a superior landlord.
With Strata Title came the “Body Corporate” which is responsible for maintenance of the building and gardens. The Body Corporate was replaced in 2007 by the “Owners Corporation” as described in attached website :
https://www.consumer.vic.gov.au/housing/owners-corporations/buying-into-an-owners-corporation/what-is-an-owners-corporation
We should ask the CMA to pronounce the requirement of ground rent for any Lease term over 21 years is an “unfair contract term” in the LEASE.
The current development at Lincoln Square , London WC2 is selling new studio and 1 bed flats and prices starting from £1.o4 Mil and requires annual ground rent starting from £500 p.a .
Why is it necessary to ask for for freeholder to demand £500 p.a ground rent ??
Correction : Not we , but APPG should ask CMA
Hello Ollie,
I agree lets ask APPG to ask the CMA to pronounce the requirement of ground rent for any Lease term over 21 years is an “unfair contract term”. This would affect many hundreds of thousands of leases.
Why arent lease contracts already subject to existing consumer legislation ?
If we need to chip away at leasehold bit by bit, until its eventual abolition lets do so as it may quicken its end.
Glad to see someone recognises a way to skate around the major obstacles.
Lets ask the APPG to ask Civil Justice Council to modernise and recommend removing the 2 years waiting period before allowed to seek statutory 90 years lease extension .
Buyers of new leasehold property should NOT be required to wait 2 years from purchase of lease. They should be allowed to choose a leasehold price with Nil ground rent at the time of purchase which can be included in the mortgage.
If the CMA pronounce the requirement of ground rent for any Lease term over 21 years as an “unfair contract term”.
Why not also get this applied retrospectively because it does not matter when the contract was signed if it was unfair.
This would have a positive effect of many hundreds of thousands of leaseholders. .