What might be announced at the APPG Leasehold debate on 21st December 2017?
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.
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:
The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold Oppression. It 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:
- our Facebook Groups Page at HALO Facebook
- our web page at Make Public HALO Campaign (some work still being done)
- our Change.org petition at Unfair escalating house lease? Unite to challenge housebuilders to convert to freehold
- Write to us at HALO@MakePublic.uk
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!
HALO – Houseowners Against Leasehold Oppression and Make Public
COPYRIGHT © 2017 – HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION
Chris Clark F.IDM, MBA
HALO: Houseowners Against Leasehold Oppression
The Finsbury Business Centre
40 Bowling Green Lane
Tel: +44-(0)-7952 291 327