The background to this blog:
A frequent complaint made by house leaseholders about the ground rent companies is that they have to be paid in advance to answer simple questions about how much they will be charged to change some feature of their home, the colour of a door, an extension to the house, the renewal of carpets, or in one case, permission to have a pet. When the fee prices come back after enquiry, without explanation as to how some of them are arrived at, they are sometimes sequenced in groups of two or three fees to be paid, all adding up to a considerable sum of money. For example, a leaseholder wanting to ask a question about changing something might then be asked to pay a consent fee for permission, then a fee to proceed with the works, or a much larger licence fee if it is a house extension, or changing windows. A surveyor visit and report might be requested, or possibly a legal fee.
In one example involving Adriatic Land (case on file at LKP), a leaseholder was first asked for £108 to ask a question about buying a freehold, then £333 for consent, then surveyors fees, not stated but one price below is at least £225, then finally a licence to buy the freehold. Then the freehold fee arrived, which was £12,750, which may or may not have included some of the aforementioned fees. Whatever leaseholders might say about such charges, and views are overwhelmingly negative, there is a financial purpose behind this. It is so ground rent companies and scheme promoters can claim to defined benefit pension departments they can further increase the return on escalating ground rents by profiting from these additional charges.
Readers should note that house forfeit for non-payment of fees demanded was noted as a way of an additional attraction to increasing returns by Redington and CBRE promotional materials and articles. So to assist leaseholders avoid paying 3-digit fees to get answers to even the most innocuous enquiry, and also to get an appreciation of the higher level fees that will be charged for items leaseholders may consider is no part of anyone else’s business, here is the average of prices charged by ground rent companies that were complained about in the UK media. Note that some of these charges may be applied sequentially.
|YOUR SECRET GROUND RENT COMPANY PRICELIST|
|Date – 1st October 2017||Cases reviewed:||10|
|Average Fee or Term||No. of Data Points|
|Lease Period Years||317||3|
|Ground Rent Fee||£224||5|
|Your Lease Escalator/ period (Years)||10||7|
|Builder Freehold Quote to you||£4,788||6|
|Ground Rent Co buys from builder at:||£9,000||1|
|Ground Rent Co offers Freehold to you for:||£24,458||6|
|Time (Months) before higher price quoted||18||2|
|Fee to enquire||£83||3|
|Permission to change fee, change not specified||£133||5|
|Amendment consent fee||£333||2|
|Licence to proceed with works||£1,940||2|
|Solicitor’s fees to Ground Rent Co Solicitor||£480||1|
|Your Likely Best Settlement on fees we require from you||50%||1|
|Your Likely Best Settlement if we agree to amend your doubler terms||To: RPI/10 Years||1|
|Forfeit of property for unpaid fees, see lease||100%||2|
|Property Value now (if zero means mortgage co won’t lend against your lease agreement.)||0%||1|
|Adriatic Land, E&J Estates, Gateway Property Management, UK Ground Rents, Holdco|
|Compiled from 10 cases reported by concerned leaseholders and covered by The Guardian, Daily Mirror, and Leasehold Knowledge Partnership. Ground rent companies and legal representatives, please note, the complaints pages are screenshotted and links archived. Research carried out September 2017 and is ongoing.|
Fighting these charges. What works, and what doesn’t?:
Whenever there is financial injustice taking place (and we have seen this often), public exposure of the offender is the most effective action, followed by a change in the law if this is feasible. It is hoped that by exposing these secret charges (secret because you have to pay the ground rent company to find out what they will charge you), and the pattern for successful claims, house leaseholders will have some redress until such time as the major house builders revert all house leaseholds to freeholds (they can do this even after sale), or the law is changed to ban the ground rent industry.
- What works:
- Amend lease doublers to RPI, 10 year review unchanged An estate of leaseholders complaining in parallel to the ground rent company and the builder in parallel, even after the builder has supposedly sold the freehold on, and ensuring the local newspaper at least is copied into the campaign, normally results in the reversion being successful. Taylor Wimpey (noting they have claimed to have sold the lease on and are therefore not financially involved), are currently paying £750 per lease to cover cost of reversion. This however does not stop the ground rent rising, nor the ground rent company charging fees for making changes to your home. Furthermore we have strong investor evidence that lease doubler contracts are worth less to investors than RPI leases because investors consider leaseholders will complain more about them.
- Appeal against a very high freehold purchase demand This has so far been characterised as an individual v ground rent company fight. The formula that may net a 50% discount and some associated fees being cancelled is if the individual partners up with their MP and a national newspaper to publicly highlight the unfairness. This also works well with complaints about licence fees etc. Discounts from 50% to 100% are reported when the news reporters start enquiring about fees justifications.
- Legal and/or Campaigner PR Group Action Safety in numbers works very well. Look for every opportunity to link your complaint with many others.
- What may not work so well
- Do it yourself, and/or use legal support It is notable that there are not many reports of success using this route coming through, thought there will be successes. Ground rent companies are very practised at matching solicitor with solicitor, with fees to match, and they do this to intimidate complainers. They are quick to invite resolution via court. There are many campaigner complaints that land law discriminates against the renter/tenant, that Tier 1 courts that hear complaints work in favour of the freeholder, and there is anecdotal evidence that judges are unhappy about the bias when they adjudicate on cases. When discussing with your legal adviser focus firmly on the likely outcome of your case.
- There are a number of committed law firms, so use due diligence to find a good one. 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.
A BLOG WRITTEN BY CHRIS CLARK OF HALO – HOUSEOWNERS AGAINST LEASEHOLD OPPRESSION Time to fight back! Chris Clark HALO – Houseowners Against Leasehold Oppression and Make Public