It’s time for Government to take a much stronger stance and avoid being taken in like Little Red Riding Hood as the leasehold wolves dress up like Granny.

James Brokenshire announces industry pledge to crack down on toxic leasehold deals…….

CLICK HERE TO READ ‘PLEDGE’

NLC have prepared the following repsonse to this pledge.

Hot on the heels of the damning Select Committee Inquiry report into the leasehold scandal the developers and freeholders come out fighting like a wounded animal by signing a pledge to behave themselves. This exercise in style over substance demonstrates the increasing influence of the National Leasehold Campaign, with the Facebook Group now approaching 14,000 members.

This pledge is the “as little as they think they can get away with” response that the NLC predicted when asked what we think developers and freeholders will do to try to resolve the leasehold scandal they created, and until recently denied existence of.

The Select Committee Inquiry report noted that “too often leaseholders, particularly in new-build properties, have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit”. Converting doubling leases to RPI does not solve the problem.

Many thousands of onerous leases with ground rents above 0.1% of property value remain. There is no mention of removing onerous permission fees or taking a more ethical approach on excessively increasing service charges. There is no commitment to end the new and growing fleecehold scandal where new supposedly freehold homes are sold with estate maintenance charges.

It is a sad reflection of our broken housing market that this pledge has to be made at all. It’s time for Government to take a much stronger stance and avoid being taken in like Little Red Riding Hood as the leasehold wolves dress up like Granny.

We’ve seen developers posting obscene profits; they can afford to do the right thing, they choose not to.

Listen to Jo Darbyshire & Clive Betts talk about this announcement on BBC radio 4 You & Yours

You & Yours click here

NLC urges ALL leaseholders to email their MPS & ask them to support the Select Committees Recommendations.

The government now have 2 months to respond to the report.

NOW IS THE TIME TO KEEP THE PRESSURE ON. WE CAN NOT AFFORD TO GO QUIET.

Even if you have contacted your MP before its paramount you do so again.

1. Ask your MP to write to MHCLG to ask them to adopt the recommendations from the Select Committee Inquiry into leasehold reform. Include the link to the report in your email:

https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/full-report.html

Select Committee Report

2. If your MP is already a member of the APPG on leasehold & Commonhold Reform, thank them and remind them the next meeting is on Thursday 9th May.

3. If not a member of APPG ask them to join. They can join as friend if they hold a position that means they can’t become a member.

If you are unsure if your MP is a member of the APPG please check here

APPG MEMBERS LIST HERE

We have created a Facebook event for this too so take a look here :

https://www.facebook.com/events/265664684375336/?ti=cl

Facebook event – please join us

“Together we can do this. This campaign has galvanised leaseholders. We have achieved so much already BUT we still have a long way to go. Stay positive & stay focussed. Real change is coming if we stick together”

Katie Kendrick (Founder of the NLC)

#peoplepower

NLC letter of thanks to the Housing, Communities & Local Government Select Committee

Dear all,

On behalf of the National Leasehold Campaign we would like to say a huge thank you for your comprehensive report into leasehold reform and your positive recommendations that will be life changing for leaseholders.

Your report is a damning indictment into the leasehold scandal that has affected so many of us in different ways. Since we launched NLC just over two years ago, those of us driving this campaign have faced regular setbacks and a seemingly impenetrable wall as we fight for justice and redress for existing leaseholders against the rich and powerful developers and freeholders with their clever advisors and professional lobbyists.

Your report has given leaseholders hope; it’s made them smile. Thank you so much for listening to us and having the courage to make such strong recommendations. The NLC supports your recommendations and is ready to help in any way we can to make them happen. We will continue to campaign for the abolition of leasehold in England and Wales.

We imagine that you went into politics to make a positive difference to people’s lives. Your report and your recommendations have done, and will do that, for millions of leaseholders. Thank you.

Kind regards,

Katie, Jo & Cath

Watch the “Select Committee Leasehold Reform Report Statement” on YouTube

Unanimous cross party support in Parliament describing the situation as a “SCANDAL & RACKET”

We would recommend you watch the Select Committee Report being presented to Parliament by Clive Betts.

MPS feel strongly about what has gone on. MPS want existing leaseholders to get redress. Our voices are being heard at last.

Several MPS played tribute to the work of the National Leasehold Campaign (NLC) & Leasehold Knowledge Partnership (LKP).

We NEED the recommendations to be implemented by government ASAP.

Please write to your MP to ask them to write to the Secretary Of State James Brokenshire to asking for these recommendations to be implemented.

We ask everyone to continue to sign & share our

ABOLISH LEASEHOLD PETITION

https://petition.parliament.uk/petitions/238071

We can do this. We will NOT give up. We MUST keep the pressure on government. This MUST be relentless.

#peoplepower

Damning Leasehold Inquiry Report reLEASED

Can Leaseholders be reLEASED from the shackles of Leasehold???

“Leaseholders have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit”

The Leasehold Reform Inquiry is now concluded and their damning report was published this week on 20th March 2019.

The House of Commons Committee report made recommendations to the Government, the Competition and Markets Authority and the Law Commission.

They have two months to respond.

READ DAMNING REPORT CLICK HERE

“Reflects a serious cross market failure of oversight of sales practices”

NLC STATEMENT TO THE REPORT

The Housing, Communities and Local Government Committee report into leasehold reform is a damning indictment of the leasehold scandal that has turned the dream of so many homeowners into a living nightmare. We hope that Government will act swiftly on the many recommendations the Committee have put forward, particularly an investigation into mis-selling by the Competition and Markets Authority (CMA) and the many legislative changes recommended to protect consumers.

We at the National Leasehold Campaign are hugely proud of the significant contribution that we have made to highlight the multitude of leasehold abuses and mobilise leaseholders to work together to raise awareness and bring about much needed reform. The National Leasehold Campaign will continue to campaign for the abolition of leasehold in England and Wales and we will be watching the Government’s response to this independent committee’s report closely to ensure that this scandal is resolved and the millions trapped by these feudal laws get the fair treatment and redress they deserve.

Katie Kendrick, Cath Williams & Jo Darbyshire

Please do take the time to read the full report.

Many will want to know if this report helps existing leaseholders :

  • It would be legally possible for the Government to introduce legislation to remove onerous ground rents in existing leases.
  • Existing ground rents should be limited to 0.1% of the present value of a property, up to a maximum of £250 per year. They should not increase above £250 over time, by RPI or any other mechanism.
  • Introduce legislation to restrict onerous permission fees in existing leases.
  • Where leaseholders have paid unreasonable permission fees or ground rents over the course of their leases so far, they should have those refunded by freeholders with interest. In such circumstances the government should establish a clear and easily accessible route to compensation for affected leaseholders

Other recommendations include:

  • Introduce low-interest loans—a Help to Buy scheme for leaseholders—so that leaseholders who want to enfranchise or extend their leases, but cannot afford to or obtain the necessary finance, have the opportunity to do so.
  • Invite, and fund, the Law Commission to conduct a more comprehensive review of leasehold legislation.
  • Ensure that commonhold becomes the primary model of ownership of flats in England and Wales, as it is in many other countries.
  • CMA to investigate mis-selling in the leasehold sector and make recommendations for appropriate compensation.
  • More appropriate to refer to this tenure as ‘Lease-rental’.
  • Alternative the government should establish a compensation scheme for the mis-sale of onerous ground rents, funded by the relevant developers and the purchasers’ solicitors.

We would like to thank each and everyone one of you for your continued support. We got this Select Committee Inquiry because leaseholders galvanised together. It is a true illustration of People Power at its best. This is not the end of our fight, this really is a David V’s Goliath Battle. But it is a battle we will win. The momentum is there, it is up to leaseholders nationally to ensure we continue to keep the pressure on and make as much noise as possible.
WHAT CAN YOU DO NOW….

We would like everyone to contact your local MP with a copy of the report. Ask them to continue to raise this in the Chamber. Ask them to write to James Brokenshire supporting the Select Committees recommendations. We need these recommendations to be actioned. Words are not enough, we need Action.

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NLC URGES ALL LEASEHOLDERS TO COMPLETE THE COMMONHOLD CONSULTATION – CLOSES 10TH MARCH 2019

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“Bolstered by calls for leasehold reform from the public and media, commonhold has been brought back on to the political agenda”

PLEASE TAKE THE TIME TO SUBMIT A RESPONSE TO THIS CONSULTATION.

COMMONHOLD PROJECT CLICK HERE
IS THIS FOR FLATS OR HOUSES?

The success of the National Leasehold Campaign is PEOPLE POWER & SOLIDARITY.

Leaseholders have been abused and will continue to be abused unless ALL leaseholders unite together to have their voices heard.

The message we want to get across is irrespective of if you are a leaseholder of a flat or a house we are all victims of this horrific feudal outdated & abusive system. Commonhold is a viable alternative and should be mandatory.

We appreciate the consultation is difficult to understand.
EVERYONE can complete it by filling in their personal details and going straight to Additional Comments at the end of the consultation if you don’t feel able to answer any of the technical questions. The final comments box says “If you have any further comments on issues raised in our Consultation Paper, please share them with us”

This is your opportunity to say that Commonhold should be mandatory moving forward. Explain your situation to them. You may want to identify here that if Commonhold was an option when you purchased your property you would of chosen this option. Because it wasn’t you are now left in this awful position.
REALLY HELPFUL SUMMARY CAN BE FOUND HERE

Commonhold is an alternative form of property ownership which allows homeowners to own the freehold of their flats. The Law Commissions commonhold project looks at aspects of the law of commonhold which may be preventing its uptake.

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You do not need to answer all the questions if they are only interested in some aspects of the consultation.

A Summary of the Consultation can be found here: Summary Report

We have highlight some important questions to answer are Q1 Q93, Q94, Q105
Q1 Consultation Question 1 (para 3.31):

In order to protect freeholders, we provisionally propose that it should only be possible to convert to commonhold if either:
* the freeholder consents; or
* the leaseholders satisfy the qualifying criteria for collective enfranchisement, and acquire the freehold as part of the process of converting to commonhold.

You may want to say that keeping the 25% rule on non-residential premises is wrong. Mixed use schemes are common in the city centres. This would exclude so many leaseholders from moving to a better system.
Q94 Consultation Question 94 (para 16.9):
What advantages do you think commonhold could offer over leasehold?

You may want to comment on some of the advantages as stated in Law Commissions Summary Page 9 & 10


Consultation Question 105 (para 16.43):
Which of the following statements best reflects your views on the provisional proposals in this Consultation Paper?

If these proposals are adopted, then developers will be willing to use commonhold for a substantial number of developments.

Even if these proposals are adopted, developers will not be willing to use commonhold unless Government introduces financial incentives for them to do so, either directly by offering financial incentives for the developers, or indirectly, by offering incentives for purchasers of commonhold units.

Even if these proposals are adopted, and financial incentives are given, developers will not use commonhold for developments unless they are prohibited from selling flats on a leasehold basis and they are thus forced to use commonhold.

Leasehold Knowledge Partnership have provided some excellent video guidance on completing the consultation.

Click on the link below to watch

LKP VIDEO GUIDANCE

We would like to thank Stewart Moxon from Hopton Build for leading the way in Commonhold. He is an ethical builder who is committed to

“Selling Homes Not Leases”

We would like to see the list of “ethical builders” grow.

Selling Homes Not Leases
http://hoptonbuild.co.uk/

“I’ve been a leaseholder and seen the problems that the outdated leasehold system causes. We’re building a commonhold development because we want to give our buyers real ownership and real control of their homes – not just a right to live there which is controlled by someone else. We’re selling homes, not leases.” Stewart Moxon, Hopton Build (Yorkshire) Limited Leeds

How is commonhold different from leasehold?

Commonhold provides an opportunity to think afresh and provide a specifically-designed democratic system for managing buildings. Commonhold contains bespoke provisions which cover every aspect of management. For example, leasehold owners pay a service charge set by their landlord towards the cost of managing and maintaining the building. Service charges are based on the assumption that the landlord of the building is an external party. In commonhold, however, there is no external landlord. Shared services are funded through commonhold contributions, which, importantly, the unit owners control themselves

WE HAVE BEEN GIVEN AN OPPORTUNITY TO MAKE COMMONHOLD WORK. PLEASE SUPPORT COMMONHOLD. IT CAN WORK. WE DO NOT NEED STEWARDSHIP.

COMPLETE CONSULTATION BY CLICKING HERE

Even if you only answer the “Additional Comments” box to say Commonhold should be mandatory please do so.

Every Single submission counts.

“Two years and almost 13,000 members later, her National Leasehold Campaign group on Facebook is galvanising record responses to a raft of official consultations that could finally reform leasehold law. Yet powerful freeholders have already threatened judicial review to the government, which risks facing compensation claims of billions of pounds. It is a pivotal moment for the feudal practices that still control at least a fifth of homes in England and Wales” The Home Front, By Martina Lees

ABOLISH LEASEHOLD PETITION reaches 15k in 15 days

There has been alot of support for our petition which was launched on the 1st February 2019 to ABOLISH LEASEHOLD

CLICK HERE TO SIGN PETITION

Supporters have been sharing on numerous social media platforms including Facebook & Twitter.

Keep going…….

We must keep up the pressure, it MUST be relentless

‘ABOLISH LEASEHOLD’ PETITION REACHES 5K IN JUST 48HRS.

The National Leasehold Campaign (NLC) Launched a new petition on Friday 1st February to ABOLISH LEASEHOLD.

Pressure is certainly mounting and people are uniting together to fight this feudal outdated abusive system.

It’s a wonderful illustration of PEOPLE POWER at it’s best.

England & Wales remain the last redoubt of a system regarded as a feudal relic everywhere else.

Scotland abolished leasehold in 2012 where they automatically converted remaining long leases to outright ownership.

Its time England & Wales did the same.

We urge everyone to get behind this petition and share far and wide.

We can do this!!

CLICK HERE TO SIGN

NLC RESPONSE TO LEASEHOLD CONSULTATION.

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NLC RESPONSE TO GOVERNMENT’S LEASEHOLD REFORM CONSULTATION 26/11/2018

Implementing the ban on the unjustified use of leasehold in new build houses

Q1: Do you have views on any further means to implement the ban on unjustified new residential long leases being granted on non-exempt houses?
A1: Yes
If you do, please explain:
The NLC supports the ban on new leasehold houses but is concerned by the softening of language, introduction of proposed exemptions and the proposed cap on ground rents of £10. The previous Secretary of State for Housing, Communities and Local Government, Sajid Javid, was unequivocal in his desire to ban leasehold houses and reduce ground rents to zero. Government needs to be strong in the face of fierce lobbying by those with a vested interest in keeping the status quo. Creating exemptions and a leasehold asset give those who have already abused the leasehold system for financial gain, further opportunities and loopholes to continue such practices.
Changes in legislation for leasehold properties also provide an opportunity to legislate against new money making schemes that developers have used to replace the income they expect to lose from the banning of leasehold homes and zero ground rent, including:
• A ban on fee generating permissions on supposed “freehold houses” (also known as “fleecehold”).
• A ban on estate rentcharges on freehold houses.
• Legislation to force the adoption of public services by Local Authorities, This will prevent the growth of income streams of estate management fees that developers can and will sell on.
Government needs to act on these newer abuses of consumers to ensure that other new build scandals don’t fall closely on the heels of the leasehold scandal.

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Click on this Photo to take you to his tweet.

Q2: Do you have any views on how to provide appropriate redress for the home owners should (a) a long lease be incorrectly granted upon a house or (b) a long lease be granted at a ground rent in excess of the cap, after the legislation has taken effect?
If you do, please explain.
A2: In both cases, appropriate redress should be provided by the developer who has broken the law. There should be no costs to the consumers, who are not at fault. Care should also be taken that developers are not simply pointing the finger at the conveyancing solicitors for failing to point out their dubious business practices. This has been a common feature of the current leasehold scandal.
Introduction of a mandatory point of sale document, similar to the type of “Key Features” documents seen in financial services, could help prevent breaches of legislation in the first place.
Q3: To ensure there is a workable definition of a ‘house’, we would welcome your views on the type of arrangements and structures which should or should not be considered to be a ‘house’ for the purpose of the ban on new leasehold houses.
A3: The vast majority of houses can be identified as such. Simplicity is key to prevent the creation of loopholes that can be exploited. Anomalies can be dealt with as and when they arise that can then be used to supplement your definition and set case law.
Q4: With the exception of community-led housing, do you agree that any exemptions provided which allow the continued granting of new long leases on houses should have their ground rents restricted as proposed?
A4: No
If you do not agree, please explain why.
The NLC does not support an exemption for community-led housing or any other type of houses. Creating exemptions gives those who have previously abused and exploited the leasehold system more wriggle room to continue to do the same. Countries all over the world have community-led housing without the need for leasehold.
The question pre-supposes that the NLC supports exemptions and the £10 proposal for ground rent restriction. We do not.
Ground rent must be no more than a peppercorn. Any financial value, no matter how small, creates an asset class in ground rents. At £10, you give freeholders and management companies ammunition that it will cost more than £10 to collect and therefore needs to be higher. You will also face lobbying and challenges from an inflationary perspective, as a fixed financial amount does not increase in line with inflation. It is a short slippery slope down from there to decide that it should be “reasonable”, rather than £10, and we will soon be back to where we are now. The tribunal system is not fit for purpose and does not give leaseholders effective dispute resolution.
Leading property barrister Philip Rainey tweeted on 18th October 2018: “£10 is NOT “nominal”. Clearly driving force is to justify keeping £10 ground rents in right-to-buy leases which are paid to local govt. £10 fixed is a danger to #leaseholders but no use to investors. Peppercorn rent please.”
Ground rent is a charge for no service. If developers need funds to maintain services; they should be charged to residents via a transparent and clear service charge. The distinction between ground rents and service/estate management charges is deliberately blurred by those wishing to retain ground rents. This needs to stop.
Q5: Are there any other conditions that should be applied to exemptions from the leasehold house ban to make them acceptable to consumers?
A5: No
If yes, please explain what these conditions are.
Q6: Do you agree that there should be an exemption for shared ownership houses?
A6: No
If you do not agree, please explain why, including what alternatives to leasehold
arrangements could be employed to fulfil the requirements of shared ownership houses.
Shared ownership has already been reported by the Times as “what could be the next housing scandal” (The Times Shared Ownership scandal). Ground rent is a charge for no service. If developers need funds to maintain services; they should be charged to residents via a transparent and clear service charge. The distinction between ground rents and service/estate management charges is deliberately blurred by those wishing to retain ground rents. This needs to stop. Those in shared ownership should be clear about the expected increases in service charges.
Leasehold is a feudal tenure used in only a handful of countries around the world. Other countries have similar challenges with helping home owners onto the housing ladder without using leasehold tenure. It is essential that what is seen by Government as a central pillar of fixing the broken housing market does not continue to fuel this outdated archaic leasehold system. Commonhold can be adopted and other countries will have alternative models that can be implemented.
Q7: Do you agree that there should be an exemption for community-led housing developments such as Community Land Trusts, cohousing and cooperatives?
A7: No
If you do not agree, please explain why, including what alternatives to leasehold arrangements could be employed to fulfil the requirements of community-led housing.
The NLC does not support an exemption for community-led housing. Creating exemptions gives those who have previously abused and exploited the leasehold system more wriggle room to continue to do the same. Countries all over the world have community-led housing without the need for leasehold.
Q8: We would welcome views on the features or characteristics that should be included within a definition of community-led housing for the purpose of an exemption.
A8: We do not consider this question to be applicable given we do not support an exemption for community-led housing.
Q9: Do you agree that there should be an exemption for land held inalienably by the National Trust and excepted sites on Crown land?
A9: No
If you do not, please explain why, including what alternatives to leasehold arrangements could be employed to fulfil the requirements of the National Trust and owners of Crown land.
Countries all over the world have housing in National Parks and in areas of outstanding beauty without the need for leasehold. If the National Trust and the Crown do not want to sell the properties or the land then properties can be rented out on a long term basis. With this model, tenants are clear that they are renting, unlike leasehold, where many leaseholders find out they are tenants after they have bought the property.
Q10: Do you agree that the law should be amended to allow the inclusion of newly created freeholds within existing estate management schemes?
A10: Yes
If you do not agree, please explain why.
Q11: Are you aware of any other exceptional circumstances why houses cannot be provided on a freehold basis that should be considered for an exemption, in order to protect the public interest or support public policy goals?
A11: No
If yes, please state what further exemptions may be required and why, and if possible provide examples or further evidence.
Please include your evidence of how prevalent this issue may be (for example, the number of developments/units likely to be affected) and why alternative arrangements to leasehold cannot be employed, as well as how such a development might be defined for the purposes of an exemption.
Q12: Do you agree that there should be no further transitional arrangements after the commencement of the legislation to permit the sale of leasehold houses?
A12: Yes
If not, please explain why transitional arrangements are needed and what they should be
Implementing the reduction of future ground rents to a nominal value
In answering Yes to this question we assume that you mean there should be no further transitional arrangements after the commencement of legislation to ban the sale of leasehold houses.

Implementing the reduction of future ground rents to a nominal value
Q13: Are there justifiable reasons why ground rents on newly created leases should not be capped as a general rule at a maximum value of £10 per annum, but instead at a different financial value?
A13: Yes
If so, please explain (a) what that rate should be and (b) your reasons in support of that value. Please provide any evidence to support your reasons.
Ground rent must be no more than a peppercorn. Any financial value, no matter how small, creates an asset class in ground rents. At £10, you give freeholders and management companies ammunition that it will cost more than £10 to collect and therefore needs to be higher. You will also face lobbying and challenges from an inflationary perspective, as a fixed financial amount does not increase in line with inflation. It is a short slippery slope down from there to decide that it should be “reasonable”, rather than £10, and we will soon be back to where we are now. The tribunal system is not fit for purpose and does not give leaseholders effective dispute resolution.
Leading property barrister Philip Rainey tweeted on 18th October 2018: “£10 is NOT “nominal”. Clearly driving force is to justify keeping £10 ground rents in right-to-buy leases which are paid to local govt. £10 fixed is a danger to #leaseholders but no use to investors. Peppercorn rent please.”
Ground rent is a charge for no service. If developers need funds to maintain services; they should be charged to residents via a transparent and clear service charge. The distinction between ground rents and service/estate management charges is deliberately blurred by those wishing to retain ground rents. This needs to stop.


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Q14: Are you aware of a separate ground rent being charged in addition to a rent on the retained equity in shared ownership leases?
A14: No
If so, do you know how much ground rent is charged? Can you say how widespread this practice is? If known, what is the justification for such a practice?
Q15: Do you represent a community-led housing provider which does not rely on ground rent income?
A15: No
If so, what alternative methods of funding have proved successful and could be replicated elsewhere?
Q16: Do you agree there is a case for making specialist arrangements permitting the charging of ground rents above £10 per annum for properties in new build retirement developments?
A16: No
Please give your reasons.
Ground rent is a charge for no service. If developers need funds to maintain services; they should be charged to residents via a transparent and clear service charge. The distinction between ground rents and service/estate management charges is deliberately blurred by those wishing to retain ground rents. This needs to stop. Claiming ground rent is necessary for shared services is confusing for consumers, particularly those who are older and potentially more vulnerable. Service charges fund services, and this should be clear to consumers.
If developers building retirement developments do not retain freeholds, then the argument that this income is needed for shared services is flawed.
Q17: What positive or negative impacts does paying ground rents have on older people buying a home in the retirement sector? Please give your reasons and if you think the impacts are negative explain what measures might mitigate them.
Positive impacts
None
Negative impacts
Confusion about what the ground rent is for; particularly confusion between ground rent and service charges.
Simply paying groud rent and late payment fees can be an issue for older people who tend to have more issues with memory loss, mobility issues and can be uncomfortable with technology (e.g. online banking).
Threat of forfeiture.

Q18: Do you agree with our approach to the treatment of mixed use leases?
A18: Yes

Q19: Are there any other circumstances in which mixed use (a) should be within scope of the policy or (b) excluded from the scope of the policy?
A19: Mixed use leases must not be open to abuses seen to date. Ground rent should be a peppercorn and good reasons must be given as to why more than 25% of a building is reserved for commercial use to counter any collective enfranchisement claim.
Please explain your reasons.
Q20: Do you agree with the circumstances set out in paragraphs 3.34 to 3.37 in which a capped ground rent will apply in replacement leases?
A20: Yes, but capped ground rent must be a peppercorn.
Are there any other circumstances in which it should or should not apply? Please explain why.
No
Q21: Do you agree there should be no further transitional period after commencement of the legislation permitting ground rents above £10 per annum?
A21: No
If not, please explain why.
We agree that there should be no further transitional period after commencement of the legislation, but do not accept your £10 proposal for reasons given above. Ground rent must be restricted to a peppercorn.

Implementing measures to ensure that the charges that freeholders must pay towards the maintenance of communal areas are fairer and more transparent
Q22: Should we provide freeholders with a right to change the management of the services covered by an estate rent charge or contained within a deed of covenant arrangement?
A22: Yes
If so, what should this look like?
Government should legislate against the creation of private estates without good reason. Local Authorities should be forced to adopt public areas and developers must remunerate them to be able to do this. This will eradicate most of the problem going forwards as there will be no incentive for developers to create a token area of land and sell off another income stream.
Legislation should ensure that existing freeholders have freedom of choice to change the management of their services in a straightforward way at minimal cost. Developers must not be able to contract home owners into deals with management companies that they cannot escape from.
The tribunal system needs a complete overhaul and is unfit for purpose. Abusive management companies know that there is a premium they can apply to management costs below which it is not worth pursuing through tribunal. They also can repeatedly increase management charges on an annual basis knowing that many leaseholders (and freeholders) will not have the time and energy to keep going to tribunal every year.

Implementing measures to ensure that the charges that freeholders must pay towards the maintenance of communal areas are fairer and more transparent
Q23: What will be the impact of these proposals (paragraphs 4.8 to 4.10) on companies or bodies that provide the long term management of communal areas and facilities?
A23: This is currently a poorly legislated area and the NLC has numerous examples of freeholders being overcharged, exploited and abused by management companies providing little to no service. A regulator with teeth is required to hold these companies to account. Legislation should include an end to estate rent charges and force the adoption of communal areas by local authorities. If this area is not subject to much stronger legislation and protection for consumers, this will be the next housing scandal.
Q24: What would constitute a reasonable deadline for managing agents and freeholders to provide leasehold information?
A24: Less than 10 working days
Q25: What would constitute a reasonable maximum fee for managing agents and freeholders to provide leasehold information?
A25: Less than £100
Q26: What would constitute a reasonable fee for managing agents and freeholders to update leasehold information within 6 months of it first being provided?
A26:
If more than £50 – please specify the fee:
Fees should be minimal. If given a minimal fee amount, companies will adjust and streamline their processes to ensure they are as efficient as possible and make as much margin as they can.


Further Information/Evidence

The NLC welcomes the banning of new leasehold houses and urges the Government to remain committed to banning all leasehold houses and capping ground rent at a peppercorn. The NLC is campaigning for the abolition of leasehold; replaced with freehold houses and commonhold flats and apartments.
The NLC urges the Government to do more to help existing leaseholders as the current work on leasehold reform being undertaken by MHCLG and the Law Commission do not go far enough. Mortgage lenders are tightening mortgage lending criteria, including those for leasehold properties where ground rent exceeds 0.1% of property value. There needs to be recognition that ground rents that exceed 0.1% are onerous and the Government must undertake a full independent inquiry into the widespread and systematic mis-selling of leasehold properties. Developers, many of whom have made huge profits and awarded senior Executives multi-million pound bonuses, must be held to account for the creation and sale of onerous leases. Current redress schemes go nowhere near far enough. We recognise that the Government is committed to increasing the supply of housing and thus must act to force developers and freeholders to change lease terms to bring the thousands of leasehold properties that are now unmortgageable and unsellable back into the supply chain. Onerous lease terms could be viewed as unfair contract terms and the leases converted to freeholds. Freeholders will undoubtedly want compensation for this and it should come from the developers who have profited from their creation.

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SELECT COMMITTEE INQUIRY EVIDENCE

Everyone had the opportunity to submit their evidence to the Select Committee.

Clive Betts states “we had so much evidence, more than any other inquiry we have EVER done”


Session 1 – 5th November 2018
Evidence given by Sir Peter Bottomley MP, All-Party Parliamentary Group on Leasehold Reform, Jim Fitzpatrick MP, All-Party Parliamentary Group on Leasehold Reform, Martin Boyd, Chair of Trustees, Leasehold Knowledge Partnership Jo Darbyshire, National Leasehold Campaign, Katie Kendrick, National Leasehold Campaign, Shula Rich, Director, Federation of Private Residents’ Associations

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Transcript of Session 1

Session 2 – 19th November 2018
Evidence given by Jason Honeyman, Chief Executive, Bellway, David Jenkinson, Group Managing Director and Main Board Director, Persimmon, and Jennie Daly, Group Operations Director, Taylor Wimpey; Richard Silva, Executive Director, Long Harbour, Mick Platt, Wallace Partnership Group Ltd, John Dyer, Director, Savills, and Chair of Residential Management Committee, British Property Federation, and Dr Nigel Glen, Chief Executive Officer, Association of Residential Managing Agents.

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Transcript of session 2

CHAIR SAYS TAYLOR WIMPEY WERE EMBARRASSED INTO ABANDONING SELLING HOUSES AS LEASEHOLD.

Chair: We still have not had an explanation of what you collect ground rent for. What do you give to the householder in return for this money you are taking from them?
Jennie Daly: In respect of leasehold houses, that is a fair question. It is one of the reasons that, when these matters came to our attention in autumn 2016, we made a very quick decision to convert the homes that we sell to freehold.
Chair: You do not think you are giving them anything, basically.
Jennie Daly: We believe that they are unnecessary for leasehold houses in the majority of circumstances.
Chair: You were embarrassed into abandoning them, then, because you could not justify them.

David Jenkinson: The problem is that there is no real definition of what an onerous ground rent is. If you look at the definitions, there is not really any definition of what onerous is or of what new build is. That has led to a bit of confusion around the numbers and the scale of the problem. That confusion has led to a bit of confusion for the customer. My own view of what an onerous ground rent would be is one that materially affects the customer’s ability to sell or to dispose of their home. Personally, I am not aware of any Persimmon leases where that is the case. I am not really sure where the definition comes from.

PERSIMMONS DO NOT SELL THE FREEHOLD’S ONTO 3RD PARTIES SINCE 2014…

Persimmon: We identified a problem mainly with event charges back in 2014, and the company made the decision to not dispose of any ground rents to any third party. We have not made any disposals since 2014. We held them within the business, to ensure our customers got treated fairly to do with them.
Once it became clear after that, we also wrote to all our customers in July 2017 and offered them a right to buy. For ground rents that had materialised since 2014, we offered each customer an opportunity to buy the individual ground rent after two years. That purchase was going to be at the lesser of 25 times the ground rent or the market value of the rent at the time. Interestingly, not that many people have taken up that offer. Only 160 people have taken that offer up. Once they knew they could buy that for a sum that equates to roughly 0.5% to 1.5% of the value of the property, they did not want to take it up. They just wanted to know the comfort of it.
Secondly, we have controlled the event charges in there, so there can never be more than £250 for a major extension. Minor issues are free and structurals are £75. We also put these clauses into future leases, to protect not just our current customers, but the ones beyond the first sale.
Thirdly, we reviewed all the leases that we had, to see if there were any that we considered to be onerous leases. We identified 60 potential leases where we had a problem, wrote to our customers and changed their leases to terms that were acceptable at no cost to them.

Mr Dhesi MP: Taylor Wimpey seems to be ahead of the curve on this particular aspect. Gentlemen, in terms of Bellway and Persimmon, do you have any similar plans to introduce such compensation schemes?
David Jenkinson: “Ahead of the curve” is not quite the right line. It is behind the curve, almost, because we are not in that position. We did not have the leases, exactly the same as them. We were not in the same position as they were, so we did not have to carry out the same actions. We did not rest on our merits. We noted back in 2014 that there was an issue with event charges. Therefore, we did not sell the freeholds. They were kept by us. Therefore, third parties were not able to charge the amounts that have caused so much concern.
We have not just done that. We have gone much further than that. We have introduced a right to buy to our customers, so if they want to buy that freehold they can buy it off us at the lesser of market value or 25 times.
Mr Dhesi: What other compensation schemes are you looking to introduce?
Jason Honeyman: We do not have any onerous leases, so we have not had the level of complaint that Taylor Wimpey has. We just do not have that volume of complaints coming through our business. All our leases are perfectly marketable, as they would be on an apartment scheme. I just do not have that problem.

APPARENTLY THEY DID IT FOR THEIR CUSTOMERS….

Persimmon: We had some doubling ground rents and it is important to understand how that came about. It was to do with customers wanting certainty on what they were going to pay in the future, but they are capped, so the actual amount of money works out the same as if it was RPI, or as near as could be expected.

ONEROUS ? NOT ONEROUS? WHAT IS ONEROUS?

Chair: Very briefly, you are saying that you do not have onerous ground rent arrangements because they are linked to RPI. You are all saying, if ground rent increases are linked to RPI, they are not onerous. That is your view.
David Jenkinson: There is no definition. It depends where your starting point is with RPI. If a £10,000 ground rent was RPI linked, it would probably affect the value of the house if it was £100,000. I am saying, to be clear, it is anything that materially affects the marketability of that house.
Jason Honeyman: If you have a modest ground rent with a rent review at 10 years on RPI, it is perfectly acceptable.
Jennie Daly: My view would be that there are very specific legal and financial accounting definitions of “onerous”, which I am not qualified to advise the Committee on. I can say that the 10-year doubling ground rent lease that Taylor Wimpey introduced is not consistent with our high standards of customer service. We felt uncomfortable and wished to work on behalf of our customers to resolve the matter.
Chair: Linked to RPI, it is not onerous. That is your definition. It is not onerous if you have a ground rent increase linked to RPI.
Jennie Daly: It is a combination of factors. As I have said, I am not legally qualified to advise members on the definition of what is onerous.
Chair: You can tell the Committee whether you think your arrangements are onerous or not.
Jennie Daly: The Government’s work on—
Chair: I am asking for your view, not the Government’s view.
Jennie Daly: My view is that “onerous” has some very specific definitions in legal and financial terms. We are uncomfortable about the doubling ground rent that we introduced and we are working to resolve that.
Chair: Linked to RPI, your ground rent rates are not onerous.
Jennie Daly: The RPI form of lease that we are returning our customers to, I am satisfied, is marketable, saleable and affordable.
Chair: It is not onerous.
Jennie Daly: It is not onerous.
Chair: Does that go for your rates as well?
David Jenkinson: As I have said previously, there is no definition of what an onerous ground lease is. You have asked me what I think it is. My personal view is that, if it is a lease that affects the marketability of the house, it is onerous.
Jason Honeyman: I am satisfied that our lease is CML compliant. It is satisfactory for purchasers and it is fully marketable.

BACK TO THE ISSUE OF ONEROUS….

Bob Blackman: I am going to come back on this issue of what the definition of “onerous” is, because, Mr Jenkinson, as you are quite rightly saying, it is whether it is marketable or not. Would you accept that marketability is dependent on the lenders being willing to lend money for the purchase of that property?
David Jenkinson: I could not agree more. That is a perfect assessment.
Bob Blackman: The definition of that is 0.1% of the value of the property. If the ground rent is above that, it is considered onerous.
David Jenkinson: Those were the rules that Nationwide introduced. If you have a look at what that rule says itself, it says, on affordability, “Lenders need to establish if the lease will have any impact on the borrower’s affordability. It is a regulatory requirement for lenders to take account of all known future changes […] As such, understanding the level of ground rents, how they increase over the mortgage term and other known charges due under a leasehold agreement are relevant to lenders’ assessments of affordability”. If ground rents and other charges appear to have an impact on the value and saleability of the property, this needs to be taken this into consideration in deciding whether, and how much, to lend.
That is basically saying, if the ground rent, due to its terms and conditions, affected the saleability of that property, they should not lend on it. To me, that is a reasonable assessment. If any of our ground rents had criteria in them that meant they had to be valued in accordance with those conditions and, therefore, they would not have been able to lend—
Bob Blackman: If any of your customers—they are still your customers, because they are leaseholders as opposed to freeholders—cannot sell their property because other people cannot get a mortgage due to the ground rent issue, you would accept that that is onerous.
David Jenkinson: I totally accept that point. If they cannot, I am more than happy to look into it. I have had a look, over the last two years, at how many of these we have had.
Bob Blackman: I am happy that you are prepared to do that, because we have had lots of evidence from your customers saying that they cannot sell their properties.
David Jenkinson: I am more than happy to look at individual cases for you.

HOW DO DEVELOPERS CALCULATE THE FREEHOLD ???

Chair: What calculations do you all do about the difference between freehold and leasehold when you are selling? What is the percentage uplift in a freehold property and how would you calculate it?
Jason Honeyman: It varies, but typically it would be 20 times the annual ground rent. That is a typical calculation we would do in valuing the freehold.
Jennie Daly: When we converted to freehold—and I would explain that we really only sold leasehold properties in the north‑west of England, where it was established custom and practice to sell on a leasehold basis—we set a premium that was roughly around the 20 times £5,900 that Jason has referred to. When we made that change for freehold, the property prices were increased.
David Jenkinson: We did something very similar.
Q112 Chair: If anyone wants to come along and buy the freehold from you, then, all they have to do is pay 20 times the ground rent. Is that right?
David Jenkinson: I will talk about what we have done later, but it is similar. We have a policy along those lines.

Leaseholder’s were very happy that the letter below was sent to the developers after this session. There remains a lot of unanswered questions, and a lot of the evidence they gave contradicts the hard evidence that leaseholders have.

Committees letter to Developers post session

The next Select Committee Inquiry Session is Scheduled on 10th December 2018.

Watch this space……………..