Source: https://makepublicblog.wordpress.com/campaigns/
Timestamp: 2017-11-24 07:10:52
Document Index: 660765838

Matched Legal Cases: ['art 5', 'art 4', 'art 3', 'art 3', 'art 2', 'art 2', 'art 1', 'art 1']

Campaigns – Make Public
Posted on November 9, 2017 November 9, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Leasehold: What are the chances of Justin Madders 10 Minute Leasehold Bill being enacted in Parliament?
Posted on October 27, 2017 November 4, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 5 and concluding comments
Posted on October 27, 2017 November 4, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 4
Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 3
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.
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
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
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
Posted on October 27, 2017 November 4, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 3
Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 2
In 2013 an uncopyrighted report published by CBRE and employed by their sales intermediaries, was used to sell the attractiveness of the ground rent market to investors and pension funds.
Prior to this and later Redington, through their Asset Class publications did the same. Both publications are written to a very high standard indeed. The CBRE report was referenced by Sir Peter Bottomley in Parliament on 20th December 2016.
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.
Benefits of Ground Rents to Pension Company Defined Benefit Schemes:
Problems caused for house leaseholders
1. Longevity of Income
Modern residential long leases provide income streams of in excess of 125 years. Such terms are far in excess of those available in the wider property sector and financial markets. Unwanted multigenerational commitment
There is little opportunity to renegotiate a lease even if the terms are unfair, and they become more unfair as the years go by, making the property not actually valueless, but valueless and still costing.
“When Clare Budgen bought her first house in Ellesmere Port in 2009 for £155,000 the last thing on her mind was the lease. Taylor Wimpey, the developer, arranged the lease on a 999-year basis, so what could the then 22-year-old possibly have had to worry about?”
Source: The Guardian — The new-builds catching house buyers in a leasehold property trap:
Ground rents are heavily collateralised. The underlying property value is often 30 to 50 times the value of the ground rent investment.
Income Security = Forced sale or forfeit of property
The principal protection to investors that gives this crack cocaine investing asset class to defined benefit pension departments, is the Law of Property Act 1925, Leasehold, which means the leased property must ultimately go back to the freeholder, and to ensure compliance, Section 146 of the law says you may be required to forfeit the property if the ground rent is not paid. The ‘high quality’ investing surety comes from a Colonial-era law solely designed to act against the leaseholder. Even the mortgage company loses its stake if a leasehold house is forfeited.
Companies create value to their shareholders by creating and patenting something that is worthwhile. But today, freeholders use an update of an old colonial law system to create value to themselves and their investors through financially oppressing a population through a value destroying law offering nothing of use to the leaseholder. Descendants of these people have brought leasehold housing back to England and Wales and are busy expanding it.
“The “right of re-entry” or “forfeiture right” is a landlord’s unilateral right to bring a lease to an end in the event of a breach by the tenant. If a lease is successfully forfeit then all interests created out of it will also come to an end, including those of any subtenants or mortgagees.”
Source: BrookStreet des Roches – FORFEITURE: THE RIGHT OF RE-ENTRY
https://www.bsdr.com/publication/forfeiture-the-right-of-re-entry/
3. Liability Matching Provisions
The review provisions of ground rents are considered attractive, often being based on indexation to RPI or a fixed uplift as opposed to reviews to market rents. Such mechanisms enable investors to match liabilities.
Fee Increase Provisions
An explanation first. For a defined benefits pension scheme in deficit, trustees are very worried indeed about having to pay their pensioners more with indexing, and seeing their deficit increase because of very low investment returns.
Ground rent companies offer these pension departments liability matching provisions, also known by the later LDI or Liability-Driven Investment(s), as these increase over time roughly in parallel with the company pension payment rises. It is this almost unique ability coupled with the forfeit threat that makes them the crack cocaine of pension investments for the large FTSE pension fund-challenged companies.
But, under the Property Act 1925, ground rent companies can uniquely do this, by pushing people towards lease escalation schemes, and then to offer ‘enhanced returns’, extracting leaseholder money through ridiculous licences, unfair fee demands, and pay-per-permission schemes that extend to colours of doors, or even having pets.
“Nigel Ashfield, who manages Time investment’s £160m Freehold Income Authorised fund, adds that ground rents provide a highly secure income stream. Defaults are extremely rare, because if tenants do not pay up, they face the risk of losing their lease.”
Source: Financial Times – Is ground rent investment built on solid foundations? Institutional investors’ interest in ground leases are increasing
https://www.ft.com/content/affb1b8c-bbe4-11e2-a4b4-00144feab7de
Posted on October 26, 2017 November 4, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 2
Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 1
Far too little attention has been given to the remarkably synchronised mirroring of the benefits to investors in leasehold with the pain caused by the ground rent industry to the leaseholders.
Everything about house leasehold is based on an I Win, You Lose transaction, protected up by the colonial-era rooted Property Act 1925. It is totally alien to businesses, where law-backed agreements are designed to help industry make profits providing goods and services people want. It is not even a tax. With a tax you have some idea of where it goes to benefit society. But leasehold seems more like enabling a law-backed based cash extraction ecosystem available for anyone of a certain mind-type to simply buy or build or manage a leasehold property, to use the Property Act to demand money with menaces. As with PPI, and with payday lending, it is normal to see an escalation of behavioral excesses unfolding here over a 7 to 10 year ramping, as the players and their pensions consultants competed with each other to find more innovative ways to extract money out of leaseholders.
However, today a large proportion of FTSE 100 and FTSE companies have Defined Benefit Pension Schemes, many closed to new entrants, and in serious deficit. They have discovered that the returns that can be made a new asset class based on ground rents, supported by leasehold, is giving them much better returns than traditional pension investments, and they have swooped on this. If it was ever thought that pension trustees were principled people, today they appear to be busy catching up with the PPI and payday lender’s habits.
So in a series of articles we are going to break down each element of the I Win, You Lose transaction. However we are going to use this deconstruction based on a highly effective approach (for the investors) put together in 2013 by CBRE called: THE EVOLVING RESIDENTIAL GROUND RENT MARKET and used by their consultants to help pension departments set up these highly attractive ground rent investments. We will give these another name: Ground Rents: The Crack Cocaine of Pension Scheme Investing.
This article overviews the ground rent ecosphere created by the Property Act 1925, and the legal right of forfeit under Section 146. The following articles (being written) covers each ground rent scheme benefit, which we then compare with the harm done to house leaseholders. The mirrored symmetry is remarkable. And completely legal.
This side by side analysis illustrates how the ground rent income scheme is set up for pension departments and investors, and illustrates the benefits of each perspective to the investors. It is then contrasted with the way the financial demands flow through to the leaseholders, and shows how layered charges placed on top of the ground rent fee increases the return to the investor, with very little deduction of costs, and paid for exclusively by the leaseholder who is in a trapped contract which is to all intents and purposes without appeal.
The scheme only exists thanks to the peculiarly detrimental laws that act against the leaseholder. Now abolished elsewhere, they are maintained only in England and Wales, and a few Colonial-era ‘Glasgow’ leases maintained in New Zealand, which also has an overheated housing market.
The analysis particularly concentrates on the effect of forfeit, which is the single mechanism used to financially guarantee to the investor, even over a mortgage company, a cash benefit if a leaseholder should go into such serious default that the home is forfeited and returned to the ground rent company at zero cost for resale at full market price. It is this specific feature that gives the ground rent industry its very high investment safety ranking compared to other income investments such as bonds that return far less, and pays out very little if a company or government goes bankrupt.
The leasehold laws give rise to a unique ability to create and offer to a hidden army of secret investors via offshore funds, a sophisticated low risk low volatility high cash return asset class. It is the crack cocaine of investments to trustees of large defined benefit pension schemes in deficit where the deficits are so bad that company managers and shareholders are concerned. They are desperate to manage these deficits in the next 15 – 20 years.
The UK major housebuilders created the new leasehold house market from 2007, and given their enthusiasm to create these leases, then sell them to ground rent companies in the shortest possible time thereby illogically losing decades of future high value income, it is not reasonable to accept they do not somehow retain an interest in the leases after they have been transferred to the ground rent companies. Taylor Wimpey have denied this.
The asset class is built in four parts:
The 1925 Property Act, Section 146 Notice for Forfeiture
Investors who take advantage of these unique set of colonial-era laws
Builders and their lawyers that wrote the escalating leases and created the house leasehold market in stark contrast to practices around the world including Scotland and Northern Ireland. Ground rent companies who are essentially sophisticated large-scale rent collectors, backed up by very efficient debt collection agencies, both very skilled at demanding monies backed up by the law. A large wealthy law sector skilled in the creation of deceptive leases, and exploiting the current laws against the leaseholder at Tribunals and mediation, where settlements in leaseholder favour are infrequent but the law requires they must always pay the legal costs of the ground rent company.
The leaseholders, who are the unwilling providers of all of the cash to this highly efficient money collection machine, who’s product is so much in demand by pension departments, and for which we believe the large builders pension departments must somehow also be invested.
It is important to state for balance, that the nightmare of a forfeit to a leaseholder, is considered an attractive part of a ground rent investment. The right to forfeit was an especial target when governments repealed similar property acts around the world including Scotland and Ireland.
It is our belief the builders, who employed extraordinary effort to create this market, may also secretly invest in the schemes through the cloaked investment practices offered by the ground rent companies offshore facilities. We stand to be challenged on this assertion.
Furthermore, the continuing existence of this freeholder-leaning act, backed by forfeit, and frequent attempts by large freeholders to maintain opaque practices, avoid scrutiny, and lobby Government to remove all threats, gives rise to an operating ecosphere within all sorts of undesirable practices can and do arise, causing serious harm to leaseholders whilst maximise cash receipts for themselves.
So this analysis is written to show how the Property Act 1925 gives the exceptional advantage to the secret investors, and creates the exceptional harm to the leaseholders caught up in the escalating leasehold scandal. It is analysed point by point from the investor perspective, then each point is reviewed to show how each investor benefit disproportionately harms the leaseholder.
Posted on October 26, 2017 October 26, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Leasehold: The Investors’ benefit and the Leaseholder’s pain – Part 1
Press briefing: Leasehold Scandal line of enquiry. Do builders continue to benefit in some way after a lease is sold to a ground rent company?
Do builders continue to benefit in some way after a lease is sold to a ground rent company?
To the journalists who have faithfully been covering the horror of the House leasehold scandal. Firstly, thank you for all you do to cast a spotlight on this indefensible industry created by our large builders, and administered ruthlessly by ground rent companies, be it a new house leasehold, or flat/apartment leases. It is your media exposure that has given voice to the many campaigners seriously worried about their homes.
Our purpose in writing to you to ask if you can publicly ask several questions the building industry needs to answer, is that based on our experience in pursuing hidden fund ownership elsewhere, it is striking to note there are a large number of occurrences of possible links between the ground rent companies and the mainstream builders, and their pension funds. These appear long after a leasehold has been supposedly transferred by a building company to a ground rent company.
There is also a notable financial peculiarity in that the large builders seem to have gone out on a limb to both create these leases despite the known PR risk (we have evidence), then with 24 months or earlier, to sell them off to ground rent companies in preference to offering them to house leaseholders, when clearly the large majority of the revenue from each lease come in in the years following the sale to the ground rent company.
The common connection is nearly all of the companies originally offering the most aggressive terms are mainstream builders with defined benefit pension funds in sufficient deficit to concern both management and shareholders. We can also cite two mainstream builders with DB schemes in deficit, that who ran ground rent businesses before transfer, and one building society that also has a defined benefits pension scheme in deficit that has recently invested in a London apartment ground rent portfolio.
The evidence we have (we use the NYT IMVAIN verification standard) substantially passes the bar for asking focused questions to the builders, but does not as yet constitute a watertight case. This includes at this point nearly 500 screenshots, and 140 notes. Taylor Wimpey have denied any interest after a leasehold is sold on, but we have evidence to suggest they need to be firmly challenged on this. All builders have declined to appear in front of the All-Party Parliamentary Group on Leasehold Reform, and this is reminiscient of Capita’s refusal to discuss the Arch cru fund failure until we started publicly asking similar questions.
We believe it is important to note the builders created this new and toxic house leasehold market by themselves, and the ground rent companies and most favoured solicitors only willing collaborators. In any redress scheme to leaseholders via a change in the law, or through Parliamentary or Campaigner pressure, it is only the builders who have the financial reserves and economic strength to undo what they created and financially carry the cost of converting these leases to freehold.
We list the seven most significant questions on our blog post here:
https://makepublicblog.wordpress.com/2017/09/22/unfair-escalating-house-lease-seven-questions-about-housebuilders-financial-connection-to-ground-rent-companies/
We would like to ask if you might be interested in taking some of these questions forward to the builders along with your own questions, and see how this might take the campaigners in general forward to seeing an end of this industry.
The campaign is shown on our website here: http://www.makepublic.uk/campaign-detail/18 and more related topics research is on our blog at: https://makepublicblog.wordpress.com/campaigns/
Who is HALO, and who is Chris Clark?
My name is Chris Clark, and I am business owner of Make Public, a campaign facilitation company (makepublic.uk), and have recently set up a campaign ‘HALO: Houseowners Against Leasehold Oppression’ to see what might be done to assist the lot of house leaseholders as distinct from leaseholders in general caught up in the escalating lease scandal.
I am also an investor in everything except property, and that includes not owning a house. Our campaigns as Make Public have focused on financial scandals (Arch cru, Arck LLP) and exposing offshore fund memberships and people in the networks. We have had success in uncovering secret Jersey, Guernsey, and Cypriot networks on another campaign. Our work has been covered in Transparency International this year.
We are happy to pass over our research, and have good investigation facilities that may assist other points you may have.
Posted on October 4, 2017 October 4, 2017 Categories Fleecehold, House leasehold, Leasehold escalationLeave a comment on Press briefing: Leasehold Scandal line of enquiry. Do builders continue to benefit in some way after a lease is sold to a ground rent company?