APPG Leasehold Debate 21st December 2017 – A Roundup of Possible Leasehold Solutions

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What might be announced at the APPG Leasehold debate on 21st December 2017?

APPG Piccy

Successful campaigns have a clear target in view. By focusing on the target, and one or two close alternatives people can live with, the likelyhood of winning an outcome that everybody wants is considerably increased.

At issue is that whilst banning house leasehold for new builds is very much mooted (campaigners need to make sure this actually happens though), the situation for the approximately 110,000 (Source: Make Public) left behinders is very unclear. The truth of the matter is that there is an estimated half a billion pounds per year (rising) of easily collected income going to ground rent companies and their many offshore investors. They will fight tooth and nail to keep this.

One of the challenges with leasehold is there are so many possible ways to alleviate leasehold, that there may be a fear of overwhelm. At the same time, there is strong lobbying taking place in Parliament for the status quo. We also have the APPG Meeting in Westminster Hall on 21st December, and we may learn more about how the Government is minded to think about leasehold changes, and who is included and who may not be.

So to get us ready for the debate, the below is a round up of ideas, from all sides to give balance, based on comments by experts on all sides of the debate, who have been working on the possible resolutions.

1. An Industry Code of Practice

Organisations such as Royal Institute of Chartered Surveyors and the Association of Resident Management Agents (ARMA) have set up Codes of Practice, RICS Code relate to mainly service charges. ARMA have run into trouble with their Consumer Charter & Standards Edition 2A, and the Ground Rent Companies eschew membership as well as flagrantly ignoring terms of conduct the ARMA Charter typically calls for.

It is noticeable that so far in this campaign, there has been limited discussion over a Code of Practice by builders or ground rent companies. Others, Gambling, Drink Awareness, Telecoms, and Energy have all been introduced to varying effect. There has also noticeably not seen much warm endorsement of current ground rent codes by leaseholders.

http://www.rics.org/Global/Service_charge_residential_management_code_PGguidance_3rd_edition_2016.pdf

http://arma.org.uk/downloader/tqy/2016-09_ARMA-Consumer-Charter-and-Standards-LowRes.pdf

2. Ground rent should be limited to a peppercorn rate, increasing lease escalator terms should be reduced and/or backdated

There are very strong calls for this, and in the absence of an outright retrospective ban on house leasehold, looks to be the next best thing. However, the detail will be important, and it may have little effect on the possibility of increased service charges. To quote CBRE again: “‘Soft income’ can be generated from notice fees, insurance premium commissions, service charge management and enfranchisement premiums.” It is noticeable based on the now steady GROUND RENTS INCOME FUND PLC stock price, that the ground rent industry appears relaxed about all of this.

3. Freehold purchase fee should be returned to Builder’s original price

There has been strong house leaseholder protest over ground rent companies’ demands for freehold purchase being at several multiples of the original builder’s fee. Whilst it looks easier to prevent this going forward, simply by ordering builders to drop leasehold, or by requiring them to give the house owner compulsory first right of refusal, it is likely we’ll see a robust ground rent company pushback on any suggestion to change the existing arrangements.

4. Ban house leasehold retrospectively

This is the top priority target for leasehold campaigners, and it looks like this will be the case for new homes going forward. Attempts to retrospectively leasehold’ or come to schemes where they are phased out will be strongly resisted. It is possible that a scheme appears where the ground rent is reduced to a peppercorn rate, and lease title eventually reverts to the houseowner as was the case in Norther Ireland, though how useful this is today for holders of long leases is unclear.

5. Win compensation from own solicitor or solicitor introduced/recommended by builder

Builders, ground rent companies, and leaseholders have all been steered towards suing either the builders’ solicitor, or their own, for allowing them to be caught up in a leasehold trap. For the builder/ground rent company, this is a highly attractive way (to them) way of deflecting the problem and the tactic turns up early in any dispute. The property is sold, and the contract complete.

For the leaseholder, whilst the likely award might be a cash lump sum, possibly even significant, the issue is it is unlikely that successfully suing the solicitor resolves the long term problem. The lease escalation problem still remains, as does the service charge excesses. However, there are a substantial number of possible court cases going ahead and these will get an airing in the media in 2018.

Unlike this year’s well-trailed budget, speculation over what Sajid Javid and the DCLG might talk about on 21st December has been muted.  It is unclear what steps if any, beyond perhaps Government pressure to reduce the impact of lease doubling, and possibly an announcement reducing freehold purchase prices after a freehold has been sold to an ground rent company, may be taken to assist house leasehold owners already caught in the leasehold trap.

HALO will be live-tweeting the event, and for those who want to watch, the viewing link is here:

http://www.parliamentlive.tv/Event/Index/2ef4fcbe-b601-4dc0-8922-05d1038770c3

______________________________

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to. 

Keep fighting back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype

 

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Leasehold and Corporate Lobbying – The Secret Whisperers, and a way to fight them – Part 2

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Campaign Slowdown?

There is a campaigning hiatus taking place as all eyes turn towards 2nd February and the 2nd Reading of Justin Madders Leasehold Bill, unless DCLG agrees to incorporate the bill into their current thinking. In Part 1 we showed how during this quiet time, lobbying companies are busy working with MPs and Ministers for the mainstream builders, and stated that it was probable that fighting the leasehold rollback would likely be very high on their agenda.

This means it is very likely that whilst campaigners might be inclined to go quiet, lobbyists are every day trying to keep the builders’ agenda front of mind to maximise the chance of watering down changes to the current leasehold laws. The consultations are done, and the results are now invisible.

The Answer – Keep campaigning!

Going quiet is exactly the wrong thing to do, and the builders’ lobbyists are counting on the slowdown.  This is exactly the time to keep the leasehold scandal front of mind to all MPs during the ‘quiet’ period.

This is how activities are being done in other big campaigns.

i)  Avaaz v News Corp campaign to prevent Rupert Murdoch acquiring all of Sky News with the high chance of ‘Foxification’ of the channel.

Avaaz is going full bore to keep this issue on Minister Karen Bradley’s desk, whilst the next phase of this, her decision, is awaited.  Two weeks ago Avaaz held a well-attended Panel discussion chaired by Professor Steven Barnett including three Fox News employees, two journalists, and the 2nd in command to the late Roger Ailes, fired in disgrace. Their witness stories about Fox were filmed for broadcasting and publication. In the meantime, Avaaz are pursuing a Judicial Review against OFCOM over their decision that James Murdoch was in compliance with Broadcasting Standards, given the history of Fox News and the Murdoch empire more generally.  The ex-Fox employees then met Labour Deputy Leader Tom Watson (Dial M for Murdoch) shortly afterwards.

ii)  Hacked Off v News Corp over Leveson Part 2 and holding the press accountable

On another essential decision involving the Murdochs, Hacked Off keep the issue squarely on Parliament’s doorstep through regular updates to members, tracking and publishing the failures of IPSO, and as with Avaaz, holding regular conferences to highlight the issues.

iii)  Black Cap Foundation v developer Stephen Cox over Camden Town’s iconic Black Cap Pub

This is about an LGBT Pub closed for conversion to apartments and a coffeeshop, originally backed by two Russian billionaires, and now backed an unknown, but  believed European billionaire.  This is one of our other campaigns

Mr Cox, owner of the Faucet Inn pub chain, had failed on every front to beat the army of campaigners and activists, because foursquare in this campaign is the drip-drip commitment that every week campaigners act in some way to maintain community and council support to stop him.  This is done via vigils, petitioning, attending Council and Night Mayor meetings, and regular contact with the Press.

These methods and campaigning have inspired Tower Hamlets Council to require developers there to rebuild another LGBT Pub ‘The Joiners Arms’, and guarantee it to the gay community for 25 years. They also inspired campaigners supporting the Parliament Hill Cafe v City of London Corporation to step up and convincingly win their campaign.

So, constant activity is the way to go.

For Leasehold, we believe one of the best ways during this quiet period is for campaigners to write to their MPs in the form of Impact Statements.  The APPG for Leasehold Reform has recorded a number of these, the consultations will also include them, but along with much else, these are now presently out of view.

The Impact Statement will demonstrate to the MP clearly how the house leasehold scandal has affect houseowners personally. Send a copy of each letter to the local press as well.  MPs are very concerned to appear in local media for all the right reasons.  It is a very effective drip feed way of keeping the issue in front of MPs.  This method was used extensively with the Arch cru fund scandal to generate strong publicity.

There’s a copyright-free model IMPACT STATEMENT done in MS Word here.  Feel free to use:

http://bit.ly/IMPACT_STATEMENT

The best timing for these to start is from 9th January 2018.

A steady flow of Impact Statements from 10,000 (at least) House leaseholders to the 650 MPs between early January and February 2018 will challenge the builders lobbyists very effectively indeed.

Model Impact Statement again at http://bit.ly/IMPACT_STATEMENT

< PREVIOUS POST

______________________________

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to. 

Keep fighting back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype

 

Leasehold and Corporate Lobbying – The Secret Whisperers, and a way to fight them – Part 1

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Fair Use Note: We do not say that any firm mentioned here has been specifically contracted to work for the major builders to lobby against repeal or dilution of leasehold before the Justin Madders Bill 2nd reading.  We are highlighting that they accepted lobbying work on unknown subjects from all the major builders between April and August 2017 and appear to have long standing relationships, and that given the publicity over toxic leases, it would be improbable if leasehold was not very high on their agendas. They advertise as to engage in political lobbying, and that insiders say the industry lobbyists typically meet up to discuss positions based on statements made by other lobbyists.

The Community Petition or Consultation and the Corporate Lobbyist

Q1.  What happens to a consultation over a contentious topic when it is considered as part of the discussions?

The evidence is turned into a report, is likely have its day as part of a bill discussion and future deliberations in the Commons and Lords, and after this is placed on record, but not front of mind.

Q2.  What does an All Party Parliamentary Group member do to promote solutions arising from the consultation findings do?

Lobby fellow MPs to support the solution outlined in a future bill and keep the topic in front of their minds. The bigger the APPG the more the persuasion.

Q3.  What does a lobbyist, faced with a large activist group, and commissioned by a disadvantaged stakeholder to defend their interest do?

Work with their client to create a communications persuasion strategy aimed at diluting the offending parts of the bill, to either have the bill rejected, or changed in some way that reduces the threat to the client.

There is an excellent writeup in The Guardian of how they do this at:

https://www.theguardian.com/politics/2014/mar/12/lobbying-10-ways-corprations-influence-government

The main UK builders use lobbying extensively hiring PR companies with experteise in events, or research, or public affairs and more.  According to the website PRCA Public Affairs and Lobbying Register, between June to August 2017, four large Political PR Companies, Curtin & Co, Newgate Communications, Newington Communications, and Remarkable Group, carried out most of the lobbying work by activity for Taylor Wimpey, Barratt Homes, Bovis Homes, Persimmon, Berkeley Homes, Bellway, Redrow, and Fairview.   

There was extensive overlap by Companies and PR Agency, and insiders say it is standard lobbying practice to come together on contentious issues, and there is little more contentious than leasehold, and leasehold houses at present.  As this occurred at the same time as much of the media coverage was being generated in 2017, it seems highly likely to us that builders concerns over house leasehold was high on the agenda for all parties.

It was notable that ground rent companies were totally absent from lobbying activities, in this period, yet they are the ones supposedly most affected.  Why is this?

We can see most of these tricks now being tried as the major housebuilders (but, note, hardly a murmur from the ground rent companies – why so?) set about diluting the most profit-risking parts of leasehold reform.

This is how the housebuilders’ lobbyists are operating.  Most weeks between now and February, builders’ lobbyists will be running events, holding meetings with Ministers and undecided influential MPs, writing reports, and garnering support from FTSE 100/250 company pension departments. They will describe how hard pension funds are finding it to pay pensions, how they invested in leasehold through best intentions, and the Government should not risk pensioners incomes with too many changes to leasehold.

They will readily admit to ‘some occasional difficulties’, talk about a code of conduct or similar, but they absolutely promise they will help the government make it right, will seek guidance, and have already taken far reaching steps. But please just don’t change things too much. The builders and ground rent companies who caused this are erased from the conversation. Should they be successful in diluting the proposed amendments, 12 months from now it will be business as usual.

But there is a further dimension. Under current laws, lobbyists only have to declare their activities when contacting Ministers, but not MPs. And if lobbyists arrange meetings between industry and Government, these are not declarable at all. Here’s the Independent’s findings on this:

http://www.independent.co.uk/news/uk/politics/revealed-the-loophole-that-lets-lobbying-companies-keep-their-clients-a-secret-a6977931.html

So at the moment, Taylor Wimpey is telling the country via The Guardian that they are well on their way to sorting out the lease escalator problem with ‘freeholders’, so that is alright (no data on affected numbers of houseowners being remedied was supplied), and Pinsent Mason are saying that pension departments were unintentionally caught up with ground rent investments and that people should be careful about changing the ground rent terms. This focuses on and evokes sympathy for the investors and paints both builders and ground rent companies out of the landscape which was no doubt the intention.

The next tactic might be a fake grass roots campaign aimed at getting pension department recipients of at risk ground rent investments to write to MPs saying ‘Don’t wreck our pensions by outlawing Leasehold”. This was how it was done with tobacco packaging. Or as with Fracking, at some point, anti-leasehold campaigns may even be pictured by builders and ground rent businesses as ‘leasehold extremists’, inflicting great harm on the pensions recipients, and not to be listened to.

But lobbyists such as the above mentioned are paid to meet Ministers and Parliamentarians, and attend, write reports to briefing meetings, and report opinion back to their clients every day of the week. In this case, their objective would likely be to reduce as far as possible the financial damage that could arise for their clients if leasehold is scrapped or diluted. Furthermore, all MPs have votes, and lobbyists will certainly wish to support MPs votes in all the areas less unaffected by the leasehold scandal, or conflicted in some way about leasehold, i.e., they have property interests too.  Many do.

Something else that I have now realised is very relevant is that we have around 8,000 consultation responses at DCLG, and effectively locked up from public view. The APPG have been copied on a small number of responses by the submitters, and they are mostly biting in tone. But apparently, the other side’s lobbyists consider this very useful to them – they call it engaging with the communities, then ‘channeling’ the results so they are out of public view’. From Sajed Javed’s perspective as the consultations are presently not on line, this is more likely an accidental outcome than by any intent.

So with a Consultation Report and a day of discussion on the unfairness of leasehold on one hand, and very likely daily lobbying to MPs and Ministers between now and February, which side will be most front of mind most of the time?

At present as far as can be seen, according to Google Alerts, there is hardly any press coverage of any activity in the news taking place by campaigners to keep the matter before Parliamentarians and Ministers.  It has gone really quiet.  APPG members are working on it behind the scenes. It is also certain there is activity from the other side attempting to deflect the damage, and the evidence shows they are actively spending money with expert political lobbyists. It defies belief that Leasehold is not high on their priorities.  The APPG therefore needs help.

Silence means danger for the house leasehold campaigners here.

The next post proposes what action campaigners may consider taking.

NEXT POST >

______________________________

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  

Keep fighting back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype

 

Leasehold: What are the chances of Justin Madders 10 Minute Leasehold Bill being enacted in Parliament?

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On 7th November, MP Justin Madders, on behalf of the 125-member All Party Parliamentary Group on leasehold, piloted a 10 minute Bill through Parliament seeking to protect current trapped house leaseholders. How likely is it the Bill will eventually become law given the odds being stacked heavily against Private Member Bills?

There are three ways of looking at it. Firstly, as with a gamble, to be in with a chance, you have to be in it to win it. Second, with a long running success rate of only around 1 in 20, if you look at the statistics, you’d wonder why people bother with Private Member Bills. But the third is, if you don’t like the odds, you can go out and change the odds, or change the landscape. We’re going to explore it from these angles.

First, a brief reminder of what Justin Madders has set out to do.

The Government is minded to scrap leasehold being applied on houses, but it is very unclear what they will do about current leasehold houses. If they try and row back on these, the ground rent companies and their investors will lose hundreds of millions of pounds of income. They and their lobbyists will not take this lying down. Justin Madders’ bill sets out to, amongst other objectives, guarantee that the rights of house leaseholders already trapped are retrospectively upheld in the new arrangements.

On 7th November 2017, the 10 Minute Bill passed unopposed, helped in huge part by the 125 members of the cross-party All Party Parliamentary Group on leasehold. The second debate is due on 2nd February 2017. These are the following possible outcomes.

  • It will go through.
  • It will be voted down.
  • The Government will gauge the support, and consider merging all or part of the bill to other leasehold reform legislation.

Firstly the political landscape. It does seem the case that up until 2010, without anything else being considered, the average 10 minute Private Member’s bill does have a slightly better chance of success when the government has a weaker majority.  The Theresa May Government is noticeably weak.

Next, as the Government can, one way or another, derail the bill’s progress at any point (which is why having a weaker government helps, a bit), then the movers of the 10 Minute Bill need to spend the intervening period between the first and second reading, identifying opposers and swing voters, and meeting regularly with them and urging them to support the Bill. The lobbyists for the builders and ground rent companies (which does include The Crown Estate) will be doing the same thing, but in the opposite direction and behind the scenes. At present, after the first shock of publicity earlier this year, the ground rent companies are playing a waiting game, and their investors are continuing to pay over the odds In one case 30 times the 1st year ground rent of £625 pa is being advertised to buy the leases.

What are the threats?

  1. A PM leadership battle breaks out and is won by a supporter of the current leasehold law.
  2. Campaigners and/or Parliamentarians are insufficiently active over the next 90 days.
  3. There is a battle in the Lords between the old leasehold barons and other Lords members at Committee stage and afterwards.
  4. To show some sort of strength and stability against Labour as a principle in some other sticky time, the Conservatives come out in force to vote it down.

The Campaigners’ Advantage

However what really helps here is that leaseholders have a large and active APPG of 125 members. If all 125 can be persuaded to actively press the cause for the next 3 months, then given the weakness of the Government, and that DCLG has already declared movement on leasehold, builders’ lobbyists might not be able to persuade the Government to whip a vote against a 2nd Reading. Furthermore, if a lot of people-powered parliamentary support can be maintained over the next 3 months, there is a reasonable chance that either the 10 Minute Bill will go to Committee stage, or that it will be included in some way in the current post Leasehold consultation presently being undertaken.

Campaigners – get writing those letters!

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  

Keep fighting back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype

 

Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 5 and concluding comments

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This last article shows the investors’ concern over possible reputational damage to the pension fund and investors, which is what happens when leaseholder complaints arrive in rising numbers in Parliament.

It was unusual for a consultancy to point this out, so they must have been thinking at what point can leaseholders be squeezed for cash before they complain, and seen there were indeed likely limits. The builders and ground rent companies ignored this.

There is also an examination of how leasehold enfranchisement is seen as an inconvenience, that the leaseholder has to pay a high price to make good.

And for the last time, the quick reminder – CBRE set out 13 principal benefits of the ground rent asset class to investors.  Each point can be demonstrated to show the absolute perfection of the ‘I Win, You Lose’ investor v leaseholder mirror.  The analysis shows there is not one single aspect of ground rent investment that benefits the leaseholder.

CBRE Frontspiece

Report downloadable at: http://bit.ly/CBRE2013

To save reader fatigue, these are set out in two or three ‘benefits’ per blog article.

11. Reputational Risk

 

The sheer number of lessees an investor has to interact with means that investors will be exposed to reputational risk, often regardless of how successful they are operating as a freeholder.

 

Bad Publicity

When house leaseholders complain about leasehold escalation in droves on Facebook, in the press, and on TV, and the builders and ground rent companies get named for their excesses, this is bad publicity.

When ground rent companies’ unfair charges get debated in Parliament forcing the Government to consider changing the law, this is tragedy (for the investors)

When the GRIO:  Ground Rent Income Fund plc share price drops by 15% since April 2017, that is evidence that public campaigning is depressing the market.

But at present the builders, who rebuilt the leaseholding ecosystem from 2007 onwards, are not seeing their profits hit, and there is an overwhelming impression that they are using the ground rent companies and legal sectors as ring-fenced defences, and the fall guys in this current scandal.

(Taylor Wimpey have now thrown off their stock price difficulty arising from the ‘£130m assistance scheme’.)

It is the case, because we have achieved this already elsewhere, that if pension funds interests in aggressive leasehold contract risk being publicly exposed, they are very likely to divest quickly.

 To get an idea of how dominant complaints about housebuilders are, simply search Google using this textstring:

“name of builder” + leasehold + scandal

i.e., “taylor wimpey” + leasehold + scandal

12. Right of First Refusal

Lessees must be offered the right of first refusal of the freehold/headlease before it is sold in the open market.

 

House Leaseholders denied right

Due to a peculiarity in the law, house leaseholders do not have automatic right of refusal, even when they have been actively approaching the housebuilder. 

Lease describe this as follows:  “…the right of first refusal under the Landlord and Tenant Act 1987 only applies to buildings containing flats.”

https://www.lease-advice.org/faq/does-the-right-of-first-refusal-rfr-apply-to-houses/

It is certain that after 2 years the new homeowner’s lease will have been transferred to a ground rent company.

[Justin] Madders said another constituent was told by Taylor Wimpey that they would be given first refusal on the purchase of the freehold, but it was then sold on without their knowledge or approval….  “It can only be described as a racket by the country’s biggest developers,” he added.”

Source:  The Guardian – 20th Dec 2016  – Patrick Collinson  – Housebuilders must halt leasehold sale of new houses, says minister.  Government raises possibility of compensation for those already affected

https://www.theguardian.com/money/2016/dec/20/housebuilders-must-halt-leasehold-sales-of-houses-compensation

13. Lease Extensions and Enfranchisement

A leaseholder may seek to extend, or as a group of leaseholders collectively enfranchise, their leases. The freeholder can therefore potentially lose the ground rent income, albeit in return for a capital sum.

 

Denying a ground rent company their freehold income is expensive.

For a ground rent company over 20-30 years, there are considerable earnings to be easily had from a leaseholder.  Therefore if a ground rent company is pushed to sell it, they make it as expensive as possible.  Sometimes, with attendant publicity, solicitor’s assistance, and writing to your MP may result in a lower figure.  The biggest reductions seen to date is 50% off the original fee plus landlord legal fees.

Even so, as it can be seen here, the leaseholder’s pain at being forced to pay up is seen as merely a minor disadvantage to the ground rent industry.

Lindsay… bought a house from developers Taylor Wimpey.  The company did ask Lindsay if she wanted to buy her freehold – for £2,600. She declined because she was on maternity leave and felt financially it was not possible.  Two years later she asked about buying it but found it was now £32,000.  “I rang them and said, ‘I’d like to buy it now.’ And they said, ‘It’s not for sale – there’s a private investor who owns it.

Note:  This case was unusual, as as Taylor Wimpey complainants univerally spoke of the builder evading the ‘buy lease’ question.

Source:  BBC – 2nd Feb 2017 – Victoria Derbyshire programme

http://www.bbc.co.uk/news/business-38827661

 

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In conclusion, it is exactly the problem demands leaseholders complain about the most, that make these leases so attractive to the Ground Rent companies, and their partner pension funds, and high net worth individuals.

The entire industry (if it can be called this) is built on a single freeholder leaning Property Act 1925, with the right to legal forfeit under Section 146. 

If this were to be repealed, as it has everywhere else around the world apart from England, Wales, and parts of New Zealand, an entire value destroying money-extracting ecosystem and all of the highly undesirable practices it has given rise to, will be expunged from modern society, to the great benefit of millions of English and Welsh citizens, and not just the leaseholders of the new build houses caught since 2007.

_________________

Link to previous article

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  Look out for further information on or before 9th November 2017.

Time to fight back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype

 

Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 4

rsz_halo_wordpress_banner 

The fourth article describes how investor returns are increased through using ‘premiums’ which translate to heavy demands for cash for buying a freehold off the ground rent company.  

It also provides an explanation as to why builders feel compelled to pass their portfolios, your leases, to a ground rent company as quickly as possible.

Quick reminder – CBRE set out 13 principal benefits of the ground rent asset class to investors.  Each point can be demonstrated to show the absolute perfection of the ‘I Win, You Lose’ investor v leaseholder mirror.  The analysis shows there is not one single aspect of ground rent investment that benefits the leaseholder.

CBRE Frontspiece

Report downloadable at: http://bit.ly/CBRE2013

To save reader fatigue, these are set out in two or three ‘benefits’ per blog article.

7. Premiums

 

CBRE said:

Residential ground rents can often generate significant capital sums from lease extensions and enfranchisement premiums, albeit in some cases with a reduction in ground rent receipts due to statutory provisions.

 

Burdens

 

It is difficult to capture the feelings of a household whom having discovered a builder has secretly sold their leasehold on to a ground rent company, then spending a sum of money to enquire about buying the freehold a builder has already suggested a figure for, to then find the freehold figure has quintupled in price.  Plus you have to pay the ground rent company’s ‘reasonable costs’ and valuation fees as well.

Ground rent companies are also far better placed than builders to create and manage cash payments from the leaseholder, and also able to devise complicated ‘extras’ that you will have read about so much in the press.

It is rather easier to capture the feelings of the large company pension department with a deficit problem, who blissfully invests in the ground rent scheme after reading about the comfort of ‘premiums’ such as ‘enfranchisement’ as a consequence of reading the glossy brochure.

And remember, it appears to us highly likely that the builders’ own in-deficit defined benefits pension schemes are also invested in leasehold via a back door after the sale event.

“In 2014 Taylor Wimpey sold the freehold of his [Ian Thomson’s] home to a firm called Adriatic, which is now asking £44,000 for the freehold. “This is a sum we can’t afford,” said Mr Thomson. “Taylor Wimpey told us it was the salesperson’s fault and that she had left, so it wasn’t their problem.”

The company refused to explain why customers were routinely told that they could buy their freehold at a later date when it was actually the company’s strategy to sell the freeholds to investment companies.”

Source:  Daily Telegraph – ‘Taylor Wimpey sold our freehold – it will cost £40k to buy it back’

http://www.telegraph.co.uk/money/consumer-affairs/taylor-wimpey-sold-freehold-will-cost-40k-buy-back/

Disadvantages

 

What are the pitfalls to investors for investing in your leasehold contract?  On balance, very little.

 

8. Disaggregation

 

CBRE said:

The investor’s ownership is spread over thousands of units with the resultant management, legal and cost implications.

 

Managing Leasehold is Complicated

 

In the early days this required large IT expense to build the workflow-based IT systems to manage the variables involved in the contracts.

However today, the IT investment is much lower, making the admin support easier for smaller ground rent companies to get in on the act.

It is therefore safe to assume, with pension departments more and more behaving like drug addicts, the market is going to get more and more avaricious without being checked.

 

9. Management

 

CBRE said:

Management of large ground rent portfolios is complex. Significant IT expenditure is necessary to optimally manage portfolios and maximise returns. There is arguably a shortage of independent agents who are able to undertake portfolio administration such as ground rent collection.

 

Collection

This was true, but no more.  The IT investing needed is falling in cost rapidly and more and smaller ground rent companies will be able to afford the IT to help collect rents and pay investors.

This is how Brookes MacDonald Group plc’s IT System for GRIO – Ground Rents Income Fund plc runs:

·         “Maintain the property information held within the GRIF plc Property Information System (PrISm), including facts such as timing of rent reviews, arrears, managing agent and other relevant information.”

·         “Assist with the quarterly dividend calculation using actual and forecast information”

·         “Preparation of financial information for quarterly fund updates”

So if you ever wondered about how efficient the ground rent company was at organising your fee payments and collections, this was how.  And all made possible by an outdated colonial-era law.

“As mentioned in the previous investor report, we continue to carefully monitor the ground rent market for doubling rents and new-build leasehold houses. Increased scrutiny of the market has, however, not weakened bidding for high-quality assets.”

Source:  Ground Rents Income Fund plc update 30 June 2017

http://www.groundrentsincomefund.com/wp-content/uploads/2017/10/GRIF-Update-June-17_2.pdf

Ground Rents Income Fund plc (GRIF) is a Real Estate Investment Trust (REIT), listed on The International Stock Exchange (TISE), formerly the Channel Islands Securities Exchange Authority Limited (CISEA) and traded on the SETSqx platform of the London Stock Exchange.  

The above was written AFTER lease doubling became a high profile scandal.

10. Portfolio Size

 

CBRE said:

Large portfolios are necessary to create the economies of scale which can generate optimal returns. Creating a portfolio of scale is both costly and can take a significant amount of time.

 

The driver for Secret Transfers

This explains the substantial effort and most careful use of legal workrounds builders employ to pass the leasehold properties into the hands of the ground rent companies as soon as possible.

It also strengthens the suspicion they are not financially uninvolved after the freeholds change hands.  Why sell off a source of income so quickly having taken the risk of public backlash to create it in the first place?

“Adriatic bought the freeholds on 24 of the 45 houses on our estate for £177,000, or £7,375 per property. We (Joanne and Mark Darbyshire) were not offered the chance to buy the freehold when the leases were sold; if we had been informed what would happen next we would have bought it.

“Adriatic now wants more than £40,000 in return for the freehold. This is completely unaffordable for us and many others. It also wants disproportionate amounts of money to do anything – from requesting a quote to buy the freehold (more than £100) to making any alterations. A neighbour has been told that there will be a £2,500 fee for permission to build a small extension.”

Source:  Daily Telegraph – ‘Taylor Wimpey sold our freehold – it will cost £40k to buy it back’

http://www.telegraph.co.uk/money/consumer-affairs/taylor-wimpey-sold-freehold-will-cost-40k-buy-back/

Link to next article

Link to previous article

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  Look out for further information on or before 9th November 2017.

Time to fight back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype

 

Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 3

rsz_halo_wordpress_banner 

This third article describes the ability to create low volatility income with the possibility of increasing returns over time, and how this translates to the hard expenses leaseholders are forced to pay out on such things as adding an extension, changing a door, or even having a cat or dog.  

It capitalises on the huge sacrifices leaseholders make to pay their mortgages on time, and the leaseholder behaviour that creates to make sure the ground rent is paid as well, without disruption to the investors.

Quick reminder – CBRE set out 13 principal benefits of the ground rent asset class to investors.  Each point can be demonstrated to show the absolute perfection of the ‘I Win, You Lose’ investor v leaseholder mirror.  The analysis shows there is not one single aspect of ground rent investment that benefits the leaseholder.

CBRE Frontspiece

Report downloadable at: http://bit.ly/CBRE2013

To save reader fatigue, these are set out in two or three ‘benefits’ per blog article.

4. Ancillary Income

CBRE said:

Unlike traditional residential and commercial assets the return generated from the investment is not solely derived from rental income. ‘Soft income’ can be generated from notice fees, insurance premium commissions, service charge management and enfranchisement premiums.

 

Unwanted Outgoings

The ‘soft income’ referred to by CBRE are the hard expenses leaseholders are forced to pay on top of the increasing ground rent, such as permission to change something, licences for modifications, fees for answering questions, involvement of expensive solicitors to make amendments, and breathtakingly huge demands for freehold purchases shortly after first purchase.

See for charge schedule based on recorded instances:

https://makepublicblog.wordpress.com/2017/10/02/made-public-the-secret-ground-rent-company-price-list-why-pay-them-to-ask-how-much-they-will-charge-you/

As the ground rent companies improve their methods for demanding cash from trapped leaseholds, it is highly likely that the investors will pressurise the ground rent companies to increase both the rate and frequency of their charges.

The more the number, cost, and frequency of these unwanted expenses become, the more incentive there is for the investors to demand more.

“Unscrupulous and avaricious actors within the property industry are using sharp leasehold practices to line their own pockets and fleece householders.”

Source:  Paula Higgins –  Home Owners Alliance 

 

5. Minimal Income Erosion

CBRE said:

Minimal gross to net income deductions in comparison to the commercial and residential property sectors. The main cost involved in holding ground rent investments is the cost of ground rent collection and administering notices.

 

The ground rent business prides itself in ensuring its investors get most of what the leaseholder pays in fees

 

In business, you would pay for something useful, a mobile phone subscription lets you use the phone network, and the provider creates and maintains it.  If a company pays you a dividend, it is because you voluntarily bought shares in it.  More esoterically in business and intellectual property rights, you might pay for the right to use something essential for you and worth having.

But here, not only have the ground rent companies and their investors offered absolutely nothing of value, they boast to investors about how cheap it is to extract, increase, and forward your cash to their investors.  Overseas investors are cloaked as a number of legally opaque tax avoiding funds are based in Jersey and Guernsey. 

This is all only possible because of the Law of Property Act 1925, descended from colonial financial repression law, and uniquely in healthy and growing form in England and Wales in the 21st Century.

“…assets where the income generated is linked to growth in retail prices, [RPI Escalators] such as One Park West in Liverpool or Beetham Tower in Manchester, are particularly attractive as a number of investors see its fund as an “earning enhancing diversifier” away from index-linked gilts.”  (Note, whilst these are top end apartments, the principle applies exactly to leasehold houses too.)

Source:  Financial Times – Ground rent prices rise as investors chase yield – a comment by James Agar of Brook MacDonald Funds

https://www.ft.com/content/383316d2-470c-11e3-bdd2-00144feabdc0

6. Lack of Volatility

CBRE said:

Ground rent investments have historically remained relatively insulated from the market volatility that has affected both the residential and commercial investment markets over the last few years. Ground rents have been viewed as a safe haven by investors.

 

Paying the ground rent fees in good times and bad, backed up by forfeiture if unpaid

Few people have uninterrupted financial security over the long term.  A redundancy happens, a life event takes place, and bills may get skipped for a period.  But every attempt is made to pay a mortgage, else there is the risk of repossession.  There is employment protection insurance and a level of social support if things get really difficult.  Here, the worst case is that if the home were to be repossessed by the mortgage company and resold, you would get the balance. 

So the rational result is in good times and bad, people as a whole do their best to ensure the mortgage is paid regularly.  It is the same with ground rent, people will usually do their best to pay this.

This leads to the result described by CBRE that ground rents are insulated from the market volatility.  Leaseholders make the sacrifices, the investor gets peace of mind.

But there is a sting in the tail provided by the Property Act.  If the leaseholder gets into difficulties severe enough, then the freeholder can forfeit the property, and even the mortgage company loses out when this happens. This is why the claim ‘safe haven’ works so effectively for an investor. 

The forfeit is marketed to investors as an additional attraction of their investment.  Lease escalation to impossible levels increases the chances of a journey towards forfeit unless the ground rent company changes terms – if their investors let them – or the law is changed to ban leasehold.

“There is a burning hunger for change in this area [of leasehold] but the real question is whether or not there is the appetite within the industry and government to deal with the fallout.”

Source:  Lexology – Leasehold Houses in the Firing Line: What Next for Developers?

https://www.lexology.com/library/detail.aspx?g=22b8d8c5-2b37-4c07-babf-3f2eb11b8d47

Link to next article

Link to previous article

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold OppressionIt is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  Look out for further information on or before 9th October 2017.

Time to fight back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION

 

Chris Clark
HALO/Make Public

 

Chris Clark F.IDM, MBA
Chief Executive
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Clerkenwell
London
EC1R 0NE

Tel: +44-(0)-7952 291 327
Email: halo@makepublic.uk
Skype: chrisclarkskype