A fulsome denunciation of the present rip-off leasehold system has been made in the starkest Corbynista terms … by Tory MP Crispin Blunt, who represents leafy Reigate, in non-leasehold Surrey.
He says:
“Present-day “onerous ground rents” are, more likely than not, the resultant of unconscionable conduct carried out by one sector of society who have superior information flow (developers, freeholders’ funds, financiers, solicitors) at the expense of an unsuspecting and more naive part of society (consumer homebuyers).”
He adds that leasehold title property ownership is possesses “structural disadvantages to the consumer homeowner that can be avoided by legislative reform”.
He urges that leasehold houses be transferred to freehold immediately, and that leasehold flats become commonhold.
Failure to legislate that all new properties be subject to commonhold ownership “has resulted in a collective social cost”, says Mr Blunt.
Bringing it in would also help small and medium sized developers.
His comments form part of the consultation on “Tackling unfair practices in the leasehold market” and were made in September.
They are more remarkable because Mr Blunt does not represent an urban constituency and is not a member of the All Party Parliamentary Group on leasehold and commonhold reform.
The full letter is reproduced here, but here are a few highlights:
“The Commonhold and Leasehold Reform Act 2002 introduced commonhold ownership and should have put an end to the problems many homeowners faced but, because this was not made mandatory by law, developers have continued with the practice of creating title instruments using the feudal system of freehold and leasehold.
“It is known that the dominant reason for developers wishing to maintain status quo of the feudal system is because there is an economic arbitrage opportunity that can be exploited by splitting a piece of land into the multiple land interest.
“Failure to legislate that all new properties be subject to commonhold ownership has resulted in a collective social cost.
“For example, increased number of leasehold disputes going through the tribunal system, as well as emotional stress and economic cost to individual homeowners who regard their dwelling as shelter for themselves and their families.
“Profit making businesses such as housing developers cannot be expected to wish to freely and voluntarily disclose their own “monetization maximization” model.
“But given the prolific growth and activity of splitting the same land into two or more property types it is self-evident the parts are economically greater than the sum.
“The arcane feudal system that remains in existence in England and Wales (unlike in Scotland where the Scottish Parliament passed the Abolition of Feudal Tenure (Scotland) Act in 2000) is conducive to the developers maximizing the land value to the financial detriment of the consumer.
“If developers justify their play on freehold and leasehold titles as serving to plug a credit cap for otherwise would-be unaffordable houses for the average consumer, then there’s no reason why the developers should not abide by the same suite of regulation that befalls all other credit providers.
“I advocated there should not be any ground rent as property title should be either freehold or commonhold in the future.
“Titles to people’s home is demonstrative of their ownership to their home that is to serve as a physical shelter and emotional safe haven for the family. Shelter and security is a fundamental need.
“In the long run the government, by ridding the property market of the possibility of monetising and financially structuring a financial payout profile using feudal tenures, the larger developers who traditionally have been successful in capturing greater capital and liquidity will have less of a funding advantage than small and medium house builders.
“The switch to commonhold title would not only result in a fairer distribution of land wealth amongst each class of society, but it will also level the playing field for smaller housebuilders.
“Present-day “onerous ground rents” are, more likely than not, the resultant of unconscionable conduct carried out by one sector of society who have superior information flow (developers, freeholders’ funds, financiers, solicitors) at the expense of an unsuspecting and more naive part of society (consumer homebuyers).
“This relationship is not equal.
“Government can support existing leaseholders with onerous ground rents by passing legislation to unwind and nullify those payment obligations.”
The letter can be read in full here: CrispinBluntLetter
Related posts:
Tory maverick MP Crispin Blunt is urged to back Help To Buy ONLY on commonhold
Seize ‘golden opportunity’ offered by Help To Buy 2021 to end taxpayer-funded spread of toxic leasehold, urges Tory MP
Lawyers to Communities Select Committee: Stop ‘sticking plaster reforms’. End ‘draconian’ forfeiture. £10 ground rents a ‘mistake’. Make legal costs fair to leaseholders. Commonhold failed because developers make money out of leasehold …
MPs tell government consultation: End leasehold houses. Scrap new ground rents. Ignore pleas for self-regulation. Ban Help To Buy on rip-off leaseholds
MP urges Commons to condemn developers selling leasehold houses with onerous ground rents. And names Taylor Wimpey, Persimmon, Bellway and Adriatic Land …
Barclays turns down mortgage on flat where ground rent doubles every 25 years
Kim, may things go well on Wednesday in court. I have tradesmen at my place tomorrow so best to wish you well today.Look forward to hearing outcome on Thursday.
Dear David
Thank you. As I have previously stated, I shall request that the Judge strikes out this specious vexatious claim.
Failing that I shall instruct specialist lawyers in “ Defamation “ and “ Harassment “. The truth will out……
Good to have Crispin Blunt’s weight added to the argument. So he writes:
“Present-day “onerous ground rents” are, more likely than not, the resultant of unconscionable conduct carried out by one sector of society who have superior information flow (developers, freeholders’ funds, financiers, solicitors) at the expense of an unsuspecting and more naive part of society . . ”
From my experience, I would comment that ‘superior information flows’ would be a polite euphemism for the real problem: lawyers getting away with FRAUD on the one hand, and condoning it on the other.
I would re-iterate my warning that self-regulation among the legal professions is the main root cause of this mischief; and that however much we change Property Law, the problem will mutate rather than end if we continue to allow lawyers such a free hand, e.g. if we remain naïve enough, still, to entrust lawyers with enforcing new Housing Regulations against each other.
I am not suggesting that lawyers are ‘corrupt’. It is much worse than that!
From my own case I know that the Law Society is failing to ensure that solicitors are properly educated and examined in Land Law before being allowed to practice; and that nothing is done to re-educate those who behave less than honestly or who advise clients badly once in practice.
I had it on written authority from a ‘Land Law expert’ solicitor (supposedly on MY side), for instance, that
“we cannot enforce specific performance against a previous freeholder to ask them to do any actual repairs as Section 140(1) of the Law of Property Act 1925 specifically severs those obligations which run with the land at the time of sale.”
This of course is absolute piffle, but it was obviously a common mistaken view among senior solicitors prior to my case. FOUR local authority solicitors all tried to tell me similar fairy tales (and the ‘Legal Executive’ who bought our freehold blatantly tried to obfuscate and deny the lessor covenants to maintain and insure the structure).
Such is the mechanism through which housing disasters and loss of life can occur. The blame for such ignorance must rest squarely with the Law Society. We therefore have far deeper problems, in English Law, than just with property.
Leasehold abuse is merely one symptom of a widespread general lapse in professional standards – albeit an extremely important one of course.
You are quite right. This has been my experience also with a number of corrupt property lawyers.
Unfortunately the SRA only ever resorts to any disciplinary action in extreme cases, and even then, their record is usually wiped clean after 2-3 years.
Fraud and tax evasion are practically endemic within certain circles.
Thanks Sophie. Interesting to know that you’ve had similar experiences.
I think a lot of people have. The problem is:
1. most people may not be aware of it, because legalese is used to blind the layperson.
2.as a non-lawyer there is not really much you can do about it, it usually takes another lawyer to report the fraudulent lawyer, and who has the money for that?
3. and ultimately, who has the balls to take on organised groups of property lawyers? There is often little gain but everything to loose.
That of course is what they rely on. There is always crowdfunding. I would certainly contribute.
After the ‘call for evidence’ we have all just completed on leasehold problems it seems there is now another one up and running on ‘Improving the Home Buying and Selling process’ open until 17th Dec. So here we go again!!!
If anyone wants to know just how ineffective the SRA can be, just look at the case of Benjamin Mire?
Dear Sussex
The jiggerey pokerey amongst these second rate lawyers is widespread and must come to an end. It is honestly my belief that some of them sail so close to the wind that their collars should be felt.!
The positive thing is that everything has a beginning , a middle and an end.
This I believe will be end of Unscrupulous Freeholders, Venal Managing Agents and their bent enablers.
Hurrah!!
Well done Crispin. You get my vote for Housing MInister.
Shame that more MPs don’t speak up on what is a serious consumer protection and social fairness issue..
What can be more important than long term security for families owning their own home and not living in fear of inflated service charges and feudal leasehold servitude.
FTB i hope you have signed the online petition and shared with all you know.
You should be able to access it via Facebook and twitter.
If you have experienced difficulties then please post on this site and you will directed accordingly.
Petition and DCLG call to evidence done. My Tory MP is still sitting on the fence about joining the APPG. Waiting for guidance from Javid apparently.
I found the following, not scientific observation,interesting. Leaseholders/tenants in my block say that rip off charges and rent are a massive issue and will definitely influence their votes in a general election..
Sadly they also say they don’t participate in reviews/petitions and interestingly didn’t know there were any reviews taking place. They reckon Javid and Theresa May bang on about a housing crisis but do nothing meaningful.
Most had not even heard of the DCLG. I watched Dispatches and the Grenfell Tower residents had not heard of the HCA or even knew they were responsible for social housing and complaints. These were residents who had complained to KCTMO about the building defects and fire hazards ! DCLG , HCA and LVT are faceless acronyms and give the impression to a majority of tenants that they exist to support an elite group of developers and landlords.
FTB Please sign and share the petition if you have not already done so. Every action ( signature) is a step further to justice.
I urge you to get your friends , families and enemies to sign.
Thank you.
Yes FTB,
the Ch4 Dispatches programme was very good: not only explaining how the very existence of the Homes and Communities Agency – let alone its complaints channel – is kept very quiet; also explaining how relatively cheap public land is sold off to developers, with provisos about ‘affordable housing’ ratios that are later circumvented. Not to mention that few complaints are investigated, let alone upheld.
The ongoing wider battle is to keep tackling corruption in all its forms. As Philip Wood illustrates in The Fall of the Priests and the Rise of the Lawyers, the size of that task grows exponentially, as society becomes urbanised and ever more complex.
(Good luck with your case, Kim, Hope it goes well today.)
Thanks Sussex.
I have posted a summary of my debut!,
Oops, just properly read your comment. EXCELLENT. Thank you for signing.please share and together we will make a difference.
Hello Comrades.
EXTRA EXTRA!,,
“ Defamation “ and “ Harassment” Court Hearing update!,,,,,
1. The case was not struck out today as requested. ☹️The judge reasonably said she had not read all the stuff to make such a decision today but that I could make a formal application.( I will talk to counsel)
2.An Interim Injunction requested by the other side was refused. The Judge stated that my right to free speech must not curtailed.????
3. There will be a Trial next year and I will now instruct counsel
4. I agreed to the Judges suggestion that I should sign a “ General form of undertaking” that I will not contact the claimant directly or indirectly and that all communications relating to the management of the property must be through the solicitors appointed by the Agent on behalf of the Freehold company. The solicitor will of course charge for this service through the service charge……..
5. I shall therefore NOT make any further requests for the 2017 budget or to Inspect the invoices / vouchers relating to the service charge, thereby depriving the solicitor of extra revenue.
6. I am as pleased as I can be without the case being struck out today.
I was “ up against” a solicitor and a barrister in the Court room and believe that I equipped myself rather well for a lay person.
ABOLITION OF LEASEHOLD/ STRICT REGULATION OF MANAGING AGENTS. NOW!
Kim, you are a man – I mean that in the nicest possible way. I believe this case is indeed vexatious and specious as you have stated, how can I possibly say this? Instinct and of course the knowledge that this is how these guys operate with legal threats and attempts to intimidate. Good that you have not been gagged. When are you going to formally apply for the case to be struck out? Of course if your application is successful then no case next year, that would count as a win.
Sorry to be pedantic, “I acquited myself rather well for a lay person”
Dear David
Thank you and I take your comment in the spirit it was intended.
I have often been told that “ You have huge balls” and how can that be possible as you are such a gorgeous feminine girlie girlie…….. Indeed.
Dear David
I honestly meant “Acquited” however I had been invited to lunch after the hearing by a bencher at Middle Temple, drank some serious Krug and posted too soon.
Pendency is not a crime. Thanks for your support matey! Off to bed to watch peaky blinders.
David you know what the hell i mean……pendatic – who Cares?…
I should have drank from the finger bowl and you should not have drunk so much Krug.
You say you will speak with counsel before formally requesting case to be struck out, I sincerely hope that the combination of a formal request and the judge having read the papers will indeed result in case being struck out.
I despise the legal system, it is so slow and most often it has nothing at all to do with justice.
Dear David
Is it at all possible to “ Drink too much Krug .. Particularly Vintage Krug. Have you taken leave of your senses?
Dear David
Very witty!, Indeed , I too hope that the case is struck out if my counsel advises a formal application. It would seem inconceivable that the Judge having read the papers including my “ Dossier” would think there was a case to answer.However , one never knows.
The Judge did inform both sides of the joys of mediation….
Of course, the advantage of the case not being struck out is that your defence is put in the public domain and becomes a matter of record (whatever the result)..
Kim, Further to the issue of defamation, if for example were to accuse Firstport of being dishonest, for it not to be defamation(if untrue) I would have to satisfy a court that I had reason to form the opinion that said company were dishonest. Whilst it would not be sufficient to say “I had grounds to believe they were dishonest because my Aunt Maude told me they were dishonest” you are on thin ice.
But if you can say ” I had grounds to believe they were dishonest because of my following experiences, and because of widespread media coverage through the press, radio and television and from condemnation of this company in Parliament, not to mention sites such as About Peverel”you will then have a very strong case indeed.!
PS Have you thought of contacting About Peverel and asking permission to use anything published on their site?
Dear Master Epstein.
Thank you for your advice. Much appreciated.