Response in Parliament to Select Committee Leasehold Reform

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  • eagle2
    replied
    Originally posted by leaseholder64 View Post
    I've seen a solicitors' quote of £350 for doing an LPE1.
    That does not make it reasonable. I used to be involved in replying to the LPE1 enquiries and we used to charge £60. I suggest £80 would be reasonable today.

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  • leaseholder64
    replied
    Leaseholders tend to have problems following the law.

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  • Lawcruncher
    replied
    Originally posted by leaseholder64 View Post
    I note that two threads in the last week have involved cases where the freeholder is the one complaining, as a result of RTMs failing to adequately manage, and, in at least one case, creating serious safety problems. The problem of management by people who not fit to manage, but are leaseholders is also a big one, seems to get little attention, although it was mentioned in the recent RTM reform report.
    We have to distinguish between management and making decisions.

    All decisions should be made by the leaseholders collectively following the law.

    Management needs to be professional.

    Leave a comment:


  • Lawcruncher
    replied
    I think the human rights aspect is probably already covered. Many years ago the Duke of Westminster went to the ECHR and they found that the Leasehold Reform Act 1967 did not infringe his human rights. Whilst a different issue, the court also found that the right to acquire title to land by adverse possession did not infringe human rights either. The right not to be deprived of property is not therefore absolute.

    The argument that ground rent is part of the consideration is a bit hard to swallow. That is not how purchasers perceive it, What they look at is the premium. In practice two identical flats, one with a peppercorn corn rent and another with an increasing rent are going to have the same sale price. In any event, why the need to allocate part of the purchase price to rent for flats when it is not done for houses? The plain fact is that these days many developers are not satisfied with making their money from developing, but set up leases to provide for a nice little earner that they can sell on.

    I can agree that conveyancers have not covered themselves in glory. What is considered acceptable has been allowed to drift. Clients are not given full advice. With rising ground rent for example the full effect needs to be pointed out.

    Governments of left and right have addressed many of the problems, though enforcement may be an issue. The time has come to grasp the nettle and make sweepig changes because many long leaseholders are quite simply being ripped off. The problem is exactly how to go about it.

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  • leaseholder64
    replied
    I note that two threads in the last week have involved cases where the freeholder is the one complaining, as a result of RTMs failing to adequately manage, and, in at least one case, creating serious safety problems. The problem of management by people who not fit to manage, but are leaseholders is also a big one, seems to get little attention, although it was mentioned in the recent RTM reform report.

    Leave a comment:


  • leaseholder64
    replied
    I've seen a solicitors' quote of £350 for doing an LPE1.

    Leave a comment:


  • eagle2
    replied
    £200 is too much for what are usually bland replies.held on a word processor.

    What about when the landlord charges grossly inflated prices for works carried out by connected companies?

    what about the recent case of a landlord charging £5,000 to collect ground rent arrears?

    Leave a comment:


  • sgclacy
    replied
    Originally posted by eagle2 View Post
    There is legislation already, service charges and administration charges are supposed to be reasonable but landlords and their agents are ignoring it. The problem with hidden charges is that the leaseholder is often unaware of them, he needs to dig deep to discover them.
    The government are proposing a limit for leasehold enquiries of £200 and many such consents could be prescribed going forward

    Those who want change and demand that existing ground rents be capped and reduced with no compensation and lease extension at a max price of 1% of the value of the property are seeking to be provocative - purchases and sale of leasehold property in the last 25 yrs have been conducted when the price to extend or enfranchise could be calculated with some certainty - so prices paid by lessees for their interest reflected that formula - therefore why make changes - the only changes which are necessary is to make it easier and quicker and if prescribed rates were given for capitalisation and the deferment and relativity it would save on Legal and valuation fees and speed up the process- a stated intention of the government

    i do think if the landlord acquired his interest post 1993 that he should bear his own legal and valuation fees as he bought knowing of the existence of the 1993 Act

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  • eagle2
    replied
    There is legislation already, service charges and administration charges are supposed to be reasonable but landlords and their agents are ignoring it. The problem with hidden charges is that the leaseholder is often unaware of them, he needs to dig deep to discover them.

    Leave a comment:


  • sgclacy
    replied
    Originally posted by eagle2 View Post
    Dealing with ground rent is a simple matter, it can be set at a peppercorn rent or the leaseholder can be given options basef on genuine discounted cash flow. Dealing with existing contracts is more difficult.

    The real issues to be tackled are the hidden charges.
    I agree - but I think the problem of hidden charges are easier to deal with through legislative change as they don't impinge on human rights

    However the ideas about variations to the ground rent and the valuing the reversion impact on values and this is what will cause resistance to change. The Great Estates in Prime London will obvioulsy throw enormous sums at challenging any changes

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  • eagle2
    replied
    Dealing with ground rent is a simple matter, it can be set at a peppercorn rent or the leaseholder can be given options basef on genuine discounted cash flow. Dealing with existing contracts is more difficult.

    The real issues to be tackled are the hidden charges.

    Leave a comment:


  • sgclacy
    replied
    The ground rent is not the problem it’s the failure to appreciate the financial significance of the obligation to pay it

    In the vast majority of cases it’s the failure of the solicitor / valuer to think about the outgoing and deciding whether the value of that burden is reflected in the price paid for the flat

    if the ground rent was very large say £5k and the property was discounted by £100k then the lessee can hardly complain at The rent

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  • eagle2
    replied
    The argument is that there is no obvious benefit for paying the ground rent and the leaseholder has little if any say in the matter. If you rent a property, you receive the benefit of the use of the property.

    Solicitors should explain the terms of leases to leaseholders. The whole system needs to be reformed.

    Leave a comment:


  • sgclacy
    replied
    Whether it was precisely calculated in the freeholders mind i doubt save for very large house builders - but that does take away the main point which is that the rent is set out and forms part of a contract and only in the most extreme cases should human rights legislation be overridden - the danger is that tinkering with existing leases where the rent does not double every 10 yrs would undermine the general principal of contract law where terms can be expected to be capable of being relied upon

    as as I said earlier I see no reason why an initial rent should be varied or indeed a rent which merely keeps pace with inflation

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  • eagle2
    replied
    In practice, it does not work that way. A leaseholder takes on a lease in order to have the use of the flat. Tbe freeholder sets out the terms of the lease and usually intends to sell the freehold as soon as he has sold the flats. The leaseholder is told that the lease is standard and cannot be changed. I doubt very much that the freeholder calculates the discounted cash flow when he fixes the selling price. There is no obvious benefit of paying a ground rent and there is a case for always setting it at a peppercorn rent.

    Leave a comment:

Latest Activity

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  • Doubling rent
    SandraHope
    My solicitor has strongly advised me against purchasing a flat as it has just come to light that the recently renewed lease has had its ground rent increased 100% and it is also on a doubling basis. My solicitor has advised us that mortgage companies are becoming more reluctant to offer mortgages on...
    16-10-2019, 19:31 PM
  • Reply to Doubling rent
    michelle230
    Good to know if you have children/grandchildren, you'll be more than happy for them to purchase these traps. At least * someone * will be lucky enough to escape and pass on the burden....
    17-10-2019, 17:21 PM
  • Reply to Doubling rent
    michelle230
    Gordon999 Spot on!...
    17-10-2019, 17:16 PM
  • Visitor Parking Dispute and Unreasonable Behaviour
    uoeno
    Hello. I am the owner of a residential apartment, which I use as my main residence, which is managed by a property management company, to whom I pay a monthly service fee, and a residents management company, of which the PMC is one of the directors. The freehold of the land is owned and managed by a...
    15-10-2019, 15:50 PM
  • Reply to Visitor Parking Dispute and Unreasonable Behaviour
    Jon66
    Perhaps you would be better off finding a more suitable property as clearly this one is no longer suitable. By the sounds of it, all parties would see this as a good solution.

    Just because your circumstances change, trying to bend the lease to suit this is probably not the best way of...
    17-10-2019, 15:40 PM
  • Reply to Doubling rent
    Gordon999
    Many older properties were sold on 99 years lease term and small annual ground rent which doubled after every 33 years.

    The problem with 99 years leasehold property , the mortgage lenders are reluctant to offer mortgage loan below 70 years terms . The cost to seek lease extension when...
    17-10-2019, 15:36 PM
  • Reply to Doubling rent
    michelle230
    Untrue. Who said * all * rising ground rents are a problem. Onerous ground rent terms are. As lenders acknowledge. Hence them not lending. Hence sales falling through. Hence many trapped in unsaleable homes....
    17-10-2019, 15:21 PM
  • Reply to Doubling rent
    sgclacy
    It was lender knee jerk reaction to the problems of 10 year doublers.

    The lenders may themselves find that they could be "hoist with his own petard" if lessees abandon their properties for being un-mortageable...
    17-10-2019, 14:36 PM
  • Reply to Doubling rent
    leaseholder64
    One problem with setting arbitrary hard limits is that you end up with something like the interesting number paradox, and any ground rent at all becomes unsafe!
    17-10-2019, 14:27 PM
  • Reply to Doubling rent
    sgclacy
    Totally agree and the following article shows the problems those that talk hysterically about rising ground rents can cause

    https://www.mortgagesolutions.co.uk/...rules-procter/

    If a ground rent was say £1000...
    17-10-2019, 14:10 PM
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