The Charles McCadden £600,000 forfeiture case is being referenced in the Sunday Times and MoneyWeek by two influential commentators, Helen Davies and Merryn Somerset Webb.
Both have written on the subject of leasehold in the past.
Cautionary tales of leaseholder regret – MoneyWeek
If you buy house or flat, make sure you buy one that really belongs to you. The dangers of not doing so – of buying a long leasehold instead of a freehold in England or Wales – are becoming clearer every day.
Related posts:
Fury at ‘life-shattering’ forfeiture case held in a secret court
Plantation Wharf pensioner wins 28-day reprieve on forfeiture
Sunday Times reports the forfeiture scandal of Dennis Jackson at Plantation Wharf
‘No other law so blatantly allows the wealthiest to rip off those less so,’ says the Sunday Times of leasehold
LKP tells Sunday Times reader not to buy leasehold house (and there is no excuse for them)
Commonhold is back! House builder offers flats without leasehold tenancies
I still can’t believe this can happen! So sad. Legalised theft basically.
I’m pleased that The Mail newspaper has highlighted this great injustice (15th Sept 18).
It does not appear to be an injustice in this case. Read the Tribunal determination at https://www.leaseholdknowledge.com/wp-content/uploads/2018/09/CharlesMcCaddenTribunalRulingBreachOfCovenant-1.pdf. I am a leaseholder myself and well aware of how awful landlords can be but, in this case, forfeiture seems justified. This particular leaseholder has behaved wholly unreasonably if the Tribunal’s determination is accurate.
Eddie
Firstly, I suspect that you have never attended a tribunal as many leaseholders & myself have (whilst dealing with a ridiculously greedy freeholder) experienced. Tribunals and are heavily biased towards freeholders….the freeholder breached the directions of tribunal, no penalty or consequences. However, if I (the leaseholder), breached the tribunals directions my case could be thrown out.
The Head Surveyor on the tribunal panel of my lease extension case agreed with me, that the ground rent does not double and it, is far more complex…he, had clearly read the lease as, I had. However, the judge who was paid quite handsomely for attending, clearly failed to read the bundles which included a copy of lease (which, solicitors charge horrendous sums for the preparation of), was ignored. Objections I raised at the tribunal were NOT NOTED IN THE TRIBUNALS DECISION. My experience has clearly confirmed that tribunals can be biased.
Secondly, in order for there to be fairness or justice the consequences/financial costs should be representative of the failure OR leaseholders need to be treated the same as a freeholder e.g. the leaseholder should incur the actual cost PLUS interest along with the freeholders legal expenses for breaching a lease…NOT LOSE A £600K PROPERTY!
Alternatively, if the same principles of breaching a lease was applied to a missing freeholder, they should stand to lose the freehold with no financial incentive….which is not the case as a leaseholders needs to prove they have searched for the freeholder by employing a private investigator, taking out indemnity insurance, sorting out building insurance, apply for a lease extension, apply to the tribunal and pay marriage value, therefore the FREEHOLDERS INTERESTS REMAIN PROTECTED DESPITE THEM BREACHING THE LEASE – YET, THE FREEHOLDER DOES NOT LOSE THEIR INVESTMENT. However, this leaseholders breached his lease and he loses his investment, so how is this fair or just???
Leaseholders are not treated equal or with the same rights or justice as freeholders,
Fiona, a good and suitable riposte. Eddie should get out more.
Any so called loss incurred by the freeholder should reflect the actual cost to them. The guy was trying to improve his home, which would probably have benefitted the freeholder downstairs as well, rather than letting his flat fall into ruin. This applies just about everywhere else in English law. Forfeiture/Confiscation or legal theft which is what this is, is grossly unjust and excessive. Almost like we have gone back hundreds of years to times of the Highland clearances for example.
Whether the guy was trying to improve his home is not the issue. It is the lease that is the overriding document as to what can (or cannot be done) with a leasehold flat. I read this article via the online newspaper and Eddie does not apear to be the only one to be looking at the situation with a more dispassionate eye.
As a small RMC we too are going for forfeiture because a leaseholder changed the layout of his flat from a 2-bed to a three. We have approached him on a number of occasions and have now involved the local authority as this change could well constitute fraud in terms of housing benefit. Whilst any amount of fraud probably would not come anywhere near the value of the flat, after him being given so many chances to correct the layout with no response, and him having cost our company more thousands in legal costs than was in service charge arrears (even though we won most of our case) then I have no sympathy him should we be successful. As freeholders we are expected to abide by our convenants so why should leaseholders feel they don’t have to abide by theirs?
Sharon – The damages payable to you should reflect the loss caused by the leaseholder. The leaseholder should be removed from the property for breaching so many conditions in the lease, the lease is then sold, and you receive your costs from that. The current leaseholder receives anything left over. That is a fair way to deal with it. However any law is no substitute for decent, considerate behaviour by freeholders and leaseholders, or landlords and tenants. The current law is a complicated mess, which helps people who want to be difficult on either side. The main beneficiaries are the lawyers, who are probably not in a rush to change it.
We have not gone RTM yet, our main problem is keeping the service cost at a reasonable level as charged by the mamagement company. Communal living will always have issues because a group of people have different priorities, the law needs to strike a fair balance between freeholder and leaseholder, and not help one group exploit the other. The current law does not seem to assist you very well in this case, and on the other side it is also bad for us as a group of 32 leaseholders.
Hi Simon,
II appreciate you taking the time to reply to my post.
Your suggestion certainly does appear to be a fair and reasonable one but how would you suggest removing the leaseholder without the mechanism of forfeiture?
Forfeiture is too extreme. I sub let my flat, if my tenants were a real nuiscance to neighbours, or fail to pay the rent, they can be removed with some difficulty under current legislation. My tenants have not paid say £200k for a lease. If my tenants were terrible, then I could forfeit my lease if I could not control them, or failed to get them evicted. There are a few nuiscance tenants in our block. RTM companies have issues under current law getting rid of a problem leaseholder, in that the legal route is expensive, and on the other side the leaseholder could lose all his investment. The law should perhaps reflect more a landlord / tenant relationship, so the RTM company can go to court to evict a bad leaseholder. The lease is then sold on to a 3rd party, the RTM company reclaim costs, the balance given to the evicted leaseholder. A commonhold association would have to work in the same way, where bad residents can be removed. I have just been in Italy where leasehold is not used and most people live in flats, I imagine it is a type of commonhold system. There must be a mechanism there to remove people who cause damage, noise, or fail to pay the service charge. England and Wales should look elsewhere to see how everyone else manages without using leasehold. Whichever system is used, a system of low cost eviction needs to be found, which is proportionate to the damage caused.
Again I totally agree with your observations and the time taken to respond.
Thanks Simon
Sharon
Part of me has little sympathy. Carrying out alterations to the property without permission and then not bothering to pay the fine or even (unbelieveably) failing to attend the Court hearing. However it’s grossly unfair for the lessee to lose the value of his flat entirely. Much fairer for the money due to the freeholder to be paid from the sale proceeds and then the remaining equity given back to the lessee. Needs to be similar to being repossessed by a lender on a freehold house. Lender repaid then you receive the value of the equity from the sale.
Forfeiture does however need to be a remedy. We had a leaseholder in our development who owed 3 years worth of service charges. Only the threat of forfeiture made him pay up and he cleared the lot pretty quickly. If anybody is thinking of going RTM have this in mind as only the freeholder can apply for forfeiture of the lease the RTM company has no power to do this.
Interesting Dylan, this changes my reply to Sharon below, as you say only the freeholder can apply for forfeiture. I agree with you that losing everything is grossly unfair.
Further to previous Sharon, I assume you have your own RTM company, and have not contracted out the servicing to a management company. We would contract out servicing if we go for RTM, as issues like yours may arise, and with 32 flats there is a lot of admin and coordination if we do our own managing. The main benefit of RTM to us would be the ability to employ a new managing agent, which we cannot do at the moment. You could still employ a 3rd party managing agent to deal with issues like the awkward leaseholder, and servicing of your block, if you have not done so already. The problem leaseholder in your block sounds terrible. I am not sure if your freeholder lives in your block or is a remote landlord.
Hi Simon,
We acquired our freehold by the use of compulsory acquisition as our freeholder was deemed absent and we took all the legally required steps to try and find him.
My partner is company Director.
I’ve done a lot of investgating into forfeiture as it is the right of the company to be able to use it but it contains an area called waiver, which gives the leaseholder time to make reparation as the breach of service charge arrears can be remedied.
However, this same leaseholder I have written about took us to the FTT over ‘unreasonable’ service charges. We won most of our case but the legal costs the company incurred have far outweighed the amount that was withheld. We now have the unenviable task of looking at enforcement measures which will rack up the costs even further.
I agree that as the forfeiture process stands it is deeply flawed, from my own perspective from the point of waiver although I again agree with the comments you have made.