Draft:Fleecehold

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Fleecehold[edit]

A Fleecehold is a jocular term used to describe the marketing of tenure on land. Unsuspecting, naïve, gullible, or aspirational homeowners might buy this tenure thinking that they have an asset, but who in fact have purchased a debt or obligation. The situation typically applies to:

  • leasehold houses, usually on estates,
  • leasehold flats in blocks, and sometimes on estates,
  • freehold houses on estates.

Origin and meaning[edit]

The term fleecehold is used[1] to describe a number of tenure situations in the United Kingdom’s new-homes sector. The term arose in 2016 when campaigners[2] merged the words freehold, leasehold, and fleece, to suggest that sales of certain types of new homes involved fleecing, the "fleecing" being referenced meaning, “to defraud or charge exorbitantly; swindle".[3] Home-owners began to tell Members of Parliament that they had not been fully informed prior to purchase[4] and that they had been mis-sold their homes.[5] By 2017 "fleecehold" was being widely used by those affected and in industries related to the new housing sector.[6] By September 2018 the Law Commission, which recommends new laws to Parliament, had used the term in its document "Will our provisional proposals solve the ‘fleecehold’ problem?"[7]


Applications[edit]

The term fleecehold has been applied to the following forms of tenure:[8]

  • leasehold houses, usually on estates,
  • leasehold flats in blocks, and sometimes on estates,
  • freehold houses on estates.

Buyers of such homes (and their supporters) say that although they passed through processes much the same as those associated with purchasing a home outright, they do not in fact own their homes outright.[9]


"Fleecehold" as applied to new leasehold houses, usually on estates:[edit]

The term “fleecehold” is used when buyers of new leasehold houses find they are actually tenants living in properties subject to charges which “fleece” them for significant sums of money annually, incrementally, or on specific one-off occasions.[10] In March 2019 the Select Committee of The Ministry of Housing, Communities and Local Government stated that “it would be more appropriate to refer to leasehold tenure as ‘lease-rental’”.[11]

Leaseholders claim they were misled by developers’ marketing materials and sales staff who made no, or little, mention of the word “lease” or “leasehold” during the purchase process, this claim having been supported by the National Association of Estate Agents survey of 2018 which found that, amongst other things, “the language used in contracts is a ‘significant concern’, referring often to ‘virtual freehold’ which gives the buyer ‘the perception of total ownership, control and stability’”.[12]

The same report, “Leasehold: A Life Sentence”, advised that its survey of more than 1,100[13] people who had bought a leasehold house within the previous 10 years showed that 94%[14] regretted buying a leasehold property; that 62%[15] felt they were mis-sold their home; that 57%[16] did not understand what it was to be a leaseholder until after they had "purchased" their property; and that there were dangers in "buyers" using lawyers recommended by developers, "buyers" thereby becoming involved in a “significant legal and financial risk without the right information or understanding”.[17]

Although developers say their customers are at all times fully informed of “the ownership structure”[18] of all new homes, in late 2018 numerous leaseholders advised the parliamentary Select Committee charged with looking into "Leasehold Reform" that when they asked developers for details they were directed to use the developers' "recommended solicitors" but that those solicitors then failed to reveal every facet of their purchases.[19]

Purchasers of leasehold houses say are fleeced by being legally obliged to pay further costs, such as the following.

  • Ground rent. While annual ground rents generally start in the low hundreds, as time passes they may double or escalate to very high levels.[20] Clauses in the deeds of some leasehold properties allow the ground rent to double every 10 years, and entitle the freeholder to charge high fees if a home-owner wishes to make internal alterations.[21] In one case, a buyer was led to believe at the time of purchase that she could subsequently escape the ground rent by buying the freehold of the house for a maximum of £3,000, but the developer meanwhile sold the freehold to a third party, who then required approximately £40,000 for purchase of the freehold, almost a third of the house's value.[22] In another case, the owners of a leasehold house who had been told they could buy its freehold for several thousand pounds within 2 years of purchase, discovered a year later that because their developer had sold the freehold to a third party, they would have to pay up to £35,000 to purchase their freehold.[23]
  • Estate rentcharge. Paid towards the maintenance of the external common parts when a property is situated on an estate,[24] developers and managing agents usually usually refer to the estate rentcharge as the “service charge”, the “maintenance charge”, the “management charge”, or the “estate charge”.[25] The estate rentcharge is usually collected by the managing agent appointed by the developer, or by the company which owns the external common parts. See the section below on freehold houses for examples of estate rentcharges applying equally to most leasehold houses and flats located on estates.
  • Permission fees. If the tenant of a leasehold dwelling wishes to alter internal elements of the property in which they live, they must usually apply for permission to do so and pay a charge which developers and managing agents refer to as a permission fee.[26] Examples given below concerning leasehold flats apply equally to leasehold houses. If alterations to the exteriors of leasehold houses may be permitted upon request, permission fees also apply.


"Fleecehold" as applied to leasehold flats.[edit]

When fleecehold is applied to leasehold flats, the flats are generally either in a new stand-alone block or in a group of new blocks, and either type may be part of new “mixed estates” (made up of either leasehold houses and leasehold flats, or of “freehold” houses and leasehold flats). Leasehold flat-owners say they are fleeced in many of the same ways as leasehold house-owners say they are fleeced.[27]

In 2016 the owner of a leasehold flat on a new development found that its ground-rent had been fixed so as to eventually cost £8,000 a year. Additionally, the flat could not be re-sold because some banks and building societies refused to grant mortgages to prospective buyers.[28]

Leasehold flat-owners must pay all or most of the additional charges which leasehold house-owners must pay, but must also pay an annual block charge for the maintenance of the internal common parts and exterior surfaces of the building in which their flats are situated. In 2017 the owners of three leasehold flats situated above a shop were issued with annual service charge bills requiring them to pay £7,682 each for the maintenance of a shared corridor and stairwell: this charge being made of the managing agent's fees and administrative costs, buildings insurance, testing and inspection of "landlord electrical circuits", the drawing up of a "planned preventative maintenance schedule", an annual health and safety audit and fire risk assessment, and £1,236 per year for weekly cleaning of the corridor and stairwell.[29]

Leaseholders are able to challenge their freeholder, but a freeholder may employ expensive legal teams to resist their demands, possibly resulting in the leaseholders having to pay a daunting legal bill. In one instance, a group of leasehold flat-owners challenging their wealthy freeholder faced having to pay a legal bill of around £500,000.[30]


"Fleecehold" as applied to new freehold houses on estates:[edit]

Buyers of freehold houses on estates have said they were misled to believe they would own their properties outright, as if their properties were traditional freehold houses, but with regard to the external common parts of the estates on which their houses are situated they subsequently discovered they are tenants and are required to pay annual estate rentcharges, non-payment of which may result in action at county court level, a lease being placed on the house, bailiffs at the door, eviction, or the forfeiture of their homes.[31]

Information regarding service charges in developers’ marketing materials, and even in documentation provided by solicitors, has been found within several years of purchase to have significantly underestimated the amount charged annually, and not to have listed the many items which may eventually make up an annual rentcharge.[32] In 2011 freehold house-owners on an estate found that for the maintenance of a strip of roadside land 2 feet wide by 60 feet long each house had to contribute towards an estate charge of just under £6,000 a year, constituted by £1,900 for "maintenance of landscaped areas", £120 for "health and safety costs", £290 for "public liability insurance", £253 for "audit fees", and £3,255 for the agent's "management fee".[33]

Under current UK legislation the owners of freehold houses on estates have no option but to pay the rentcharge bills presented to them each year by managing agents. They have no legal right to question the accounts or even to be supplied with breakdowns and/or receipts for items making up their annual estate rentcharge.[34] If the owners of freehold houses wish to dispute charges they find that: whereas leaseholders who may take such a dispute to a tribunal for arbitration, there is no similar resolution service available to freeholders.[35] Freehold house-owners' only alternative is to take the matter to court, which few house-owners are able or willing to do. The UK's Right To Manage legislation[36] which allows home-owners to self-manage only applies to the owners of leasehold flats.[37].

"Freehold" house-owners on new estates perceive they are fleeced by legal arrangements made between developers and local councils before construction begins. By way of a Section 106 agreement a developer pays an agreed sum to a local council prior to construction according to certain conditions, such as that the developer takes responsibility for the maintenance of and the ownership of the external common parts of the new estate or that the developer will delegate it to a management company.[38] Because councils compete with each other to deliver large numbers of new homes, they seldom refuse developers’ recommendations that new housing be created on privately managed estates.[39] Developers benefit from Section 106 agreements by not having to ensure that estates are built to adoption standards and by being able to sell management contracts to residential managing agents, while councils, who seem willing to accept assurances by developers that new estates will be managed well, benefit by being freed of the traditional municipal responsibilities for maintaining such things as roads, pavements, lighting, and parkland.[40] Councils sometimes bind developers to agreements requiring that the owners of properties on estates are to be given ownership of their external common parts, but Section 106 agreements may also enable developers to cost-cut on building quality, to cram as many houses as they can onto estates, to skimp on the inclusion of estate amenities, to not include as many affordable homes as initially planned, and to choose not to subsequently offer the external common parts of estate to the council for adoption.[41]

Although developers have sometimes stated in purchase deeds that home-owners are eventually to self-manage, "freehold" house-owners have reported managing agents seeming to frustrate or delay the transfer of responsibility, in one instance insisting that certain Section 106 conditions were still to be met, although both the developer and the council had advised that they considered there were no Section 106 conditions outstanding.[42] However, in most instances "freehold" home-owners are unable to take possession of their external common parts as they are currently not provided with any legal mechanism by which they may terminate the managing agent’s contract and appoint an agent of their own choosing. In October 2017 Secretary of State for Housing, Sajid Javid, bemoaned the fact that “they [freehold house-owners on estates] have absolutely no say over who provides services and at what cost, and no way of taking over management themselves”.[43]

Once home-owners take ownership of the management company which owns their external common parts, they benefit from their homes being described as "Freehold houses with a share in the freehold of the common parts through the management company".[44]


The Private Estates Model[edit]

Central to fleecehold is "The Private Estates Model" which since 2000 has become almost standard in the creation of new housing, such that when opening a Westminster debate on estate fees in January 2019, a Member of Parliament advised that, “A situation has arisen whereby the private estates model is rapidly becoming the norm for new developments, with those who have saved hard for their homes bearing an unfair burden and builders treating them as a cash cow”.[45]

Whereas historically developers paid lump sums to local authorities for the lifelong maintenance of the external common parts in new areas of housing,[46] the Private Estates Model entails local councils approving construction of estates for which such councils will have little or no on-going responsibility, followed by the developers frequently selling off management contracts for such estates to speculators and property management companies.[47] After the management contract for an estate is sold on there is no limit on what a new managing agent can charge for maintaining the external common parts of an estate.[48] Furthermore, if a managing agent comes to own (as well as manage) the external common parts of an estate, they cannot be dismissed as the estate's managers.[49] Worse still, the owner of the external common parts of an estate, known as "the rent-owner",[50] may exercise powerful legal rights over home-owners covenanted to pay the annual rentcharge: such that if a rentcharge has not been paid within 40 days of a deadline, and even if the payment has not been demanded, the rent-owner may place a lease on the property or take possession of it.[51]

While vulnerable to the powers of rent-owners, the owners of houses or flats on private estates are required to pay the same rates of council tax as are paid by people whose homes are not situated on private estates,[52] although by way of their rentcharges they must pay separately for repairs of such things as potholes and street lights [53] - even if their "private estate" is ungated and can easily be driven through by members of the public. On a new estate which has been set up as "a new town", home-owners have been charged, in addition to council tax and an estate rentcharge, a council tax surcharge (a "new town tax") of just under £400 for the maintenance of one specific element of their external common parts.[54]

The Home Owners Rights Network (Hornet), estimates that 87,000 households on UK estates are in dispute with managing agents,[55] and holds that councils should be required to compulsorily and retrospectively adopt private estates.[56] Hornet has made MPs aware that covenants in purchase deeds are often so unclear that home-owners do not become aware of rentcharges until they receive a bill, that agents are not obliged to justify such charges to home-owners, that such charges are uncapped, and that the residential property management industry is unregulated.[57] Hornet has produced the adjacent diagram showing how The Private Estates Model affects nearly all forms of new housing in the UK, and that the Residential Property Management Industry is central to the scheme.[58]

The Private Estates Model, with the Residential Property Management Industry at its heart.

In October 2017 the Secretary of State for Housing, Communities & Local Government, Mr. Sajid Javid, told a conference of The Association of Residential Managing Agents (ARMA),[59] which says that it is the leading association for Residential Managing Agents in England and Wales, that "there’s no avoiding the fact that too many people in your industry are simply not good enough . . . Literally anyone can put on a suit, order some business cards, and call themselves a managing agent. You don’t have to any qualifications or experience, or a criminal records check".[60] The Institute of Residential Property Management (IRPM),[61] which says that it is “the leading professional body for residential property management professionals” in the UK has acknowledged, since Mr. Javid's speech, that the "Government is moving on its promise to regulate the agency and property management sectors and introduce a nationally recognised qualification."[62]

Councils throughout the United Kingdom have received substantial cuts to their annual funding from central government since the year 2001 to 2002, the cuts having been severe since the government began implementing its policy of intentional austerity in 2008, so that since 2010 to 2011, 79% of councils have reduced their housing spend, and a third have cut their housing spend by more than 50%.[63] In addition, councils say they can only take responsibility for maintaining the external common parts of new estates if developers request them to do so, but that developers do not do so.[64] However, as has been pointed out by a local government expert, councils seem content not to add to their responsibilities,[65] and councils have allowed central housing policies to be flouted to the benefit of wealthy investor-freeholders.[66]

Developers have stated that as local authorities confirm they are unable to adopt the external common parts of new estates, these need to be maintained by a management company, and that this is made clear at the point of reservation and throughout the home buying process, both to customers and to their independent legal advisors.[67][68]


Towards the Reform of Fleecehold[edit]


2017 Government plan: “Fixing our broken housing market”[edit]

In February 2017 the Ministry of Housing, Communities & Local Government published a white paper called "Fixing our broken housing market", in which plans to reform the UK housing market were set out, acknowledging that “in areas where the housing shortage is most acute, high demand and low supply is creating opportunities for exploitation and abuse”.[69]


2017 Government consultation: “Tackling unfair practices in the leasehold market”[edit]

From July to September 2017, the government invited interested parties to participate in a consultation called "Tackling unfair practices in the leasehold market". The vast majority of the 6,000+ replies received were in favour of widespread reform of the selling of leasehold and freehold homes, in particular "introducing legislation to prohibit the development of new build [leasehold] houses; restricting ground rents in newly established leases of houses and flats to a peppercorn (zero financial value); and support for existing leaseholders, such as making buying a freehold or extending a lease easier, faster, fairer and cheaper".[70]


2017 Government announcement: “Crackdown on unfair leasehold practices”[edit]

In December 2017 the government announced measures to remove unfair and abusive practices from the leasehold system, including a ban on leaseholds for almost all new-build houses. In the press release "Crackdown on unfair leasehold practices", the government said that its measures would include:[71]

  • "legislating to prevent the sale of new build leasehold houses except where necessary such as shared ownership"
  • "making certain that ground rents on new long leases – for both houses and flats – are set at zero"
  • "working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending "a lease much easier, faster and cheaper"
  • "providing leaseholders with clear support on the various routes to redress available to them"
  • "a wider internal review of the support and advice to leaseholders to make sure it is fit for purpose in this new legislative and regulatory environment"
  • "making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges"


2018-2019 Law Commission project: “Leasehold Enfranchisement”[edit]

Since July 2018 the Law Commission has been engaged in a “Leasehold Enfranchisement” project,[72] the final stage of which will be the publication in 2019 of a Final Report listing recommendations for legislative change.


2018 Government consultation: “Implementing reforms to the leasehold system”[edit]

In October 2018, the Ministry of Housing, Communities & Local Government’s Communities Secretary announced the launch of a further consultation[73] and said:

  • that the “Majority of new-build houses [are] to be sold as freehold and new leases [are] to be capped at just £10 – ending unscrupulous [the] practice of unnecessary leaseholds”.
  • that there would be “New measures to make it easier for leaseholders to get tenant associations formally recognised and protect consumer interests”.
  • and that there would be further action to make the property market fairer “including [a] crackdown on rogue landlords and ending unfair charges for tenants”.

The announcement followed campaigning by The Leasehold Knowledge Partnership, The National Leasehold Campaign (13,768 members as of 10 April 2019), The Home Owners Rights Network (5,200 members as of 10 April 2019), The Home Owners Alliance, and others.

The consultation itself set out how the government intended to implement reforms concerning freehold houses so that "the maintenance of communal areas are fairer and more transparent".[74]


2019 Government Select Committee report: “Leasehold Reform”[edit]

In March 2019 the Housing, Communities and Local Government Select Committee published a report in which it acknowledged multiple problems in the United Kingdom’s leasehold and freehold housing sectors and recommended wide-ranging changes. As well as the report[75], the Committee also published a summary[76], which includes several videos. Key recommendations of the report are as follows.

Recommendations for leasehold properties:[edit]

  • that “it would be more appropriate to refer to leasehold tenure as ‘lease-rental’”.[77]
  • that “the Competition and Markets Authority should investigate mis-selling in the leasehold sector and make recommendations for appropriate compensation”.[78]
  • that “the Government ensure that commonhold becomes the primary model of ownership of flats in England and Wales, as it is in many other countries”.[79]
  • that “existing ground rents should be limited to 0.1% of the present value of a property, up to a maximum of £250 per year”.[80]
  • that “the Government should introduce legislation to restrict onerous permission fees in existing leases”.[81]
  • that “the Government should prohibit the offering of financial incentives to persuade a customer to use a particular solicitor”.[82]
  • that “the Government should make it "simpler, easier, quicker and cheaper for leaseholders to enfranchise”.[83]
  • that “the sale of houses under leasehold should cease, as the Government has proposed, and urgent action be taken to enable those leaseholders in houses to be given the right to enfranchisement under appropriate low cost arrangements”.[84]
  • that “Leaseholders should not be required to run the risk of paying their freeholder’s legal costs, even if they win"[85] as "the threat of forfeiture puts freeholders in a near unassailable position of strength in disputes with their leaseholders”.[86]

The committee also noted that “Developers denied that their sales teams deliberately misled leaseholders with partial sales information and false promises of purchasing their freeholds at an agreed price. But the number of near-identical stories from leaseholders reflects a serious cross-market failure of oversight of sales practices. Some affected leaseholders may have a strong claim that their properties were mis-sold. The Competition and Markets Authority should investigate mis-selling in the leasehold sector within the next six months and, where appropriate, make recommendations for appropriate compensation, with the option of enfranchisement”.[87] In addition, the committee noted that “too often leaseholders, particularly in new-build properties, have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit”.[88]

Recommendations for freehold properties:[edit]

With regard to freehold houses on estates, the committee recommended:

  • that “The Government is right to legislate to ensure that freeholders who pay charges for the maintenance of communal areas and facilities should have the same rights as leaseholders to contest the fairness of those fees. As we have recommended for service charges, such fees should be provided to residents on a standardised form, which clearly identifies the individual parts that make up the overall charge”,[89] and
  • that “the Government should require that permission fees are only ever included in the deeds of freehold properties where they are reasonable and absolutely necessary, although we cannot think of any circumstances in which they would be so”.[90]

Recommendations for both leasehold and freehold properties:[edit]

  • that “the Government should require the use of a standardised form for the invoicing of service charges, which clearly identifies the individual parts that make up the overall charge”.[91]


2019 Government announcement of an industry pledge:[edit]

On 28 March 2019 the Ministry of Housing, Communities and Local Government announced that approximately 40 leading property developers and investor-freeholders had signed an "industry pledge" “to crack down on toxic leasehold deals”,[92] promising to free existing leaseholders trapped in onerous deals, to close legal loopholes which force leaseholders to pay unjustified legal fees, and to make retirement property fees more transparent. However, campaigners were swift to dismiss the pledge as insufficient, insisting that the government must legislate to make illegal a wide range of the practices of developers and managing agents.[93]

As of early April 2019 the government’s plans remain aspirational.[94]


2019 the Competition and Markets Authority announces investigation into mis-selling of houses:[edit]

On 14 May 2019 the Chair of the CMA advised Parliament's Housing, Communities and Local Government Committee that it will investigate the mis-selling of new-build properties in the UK.[95]

External sources[edit]

The following sources are presented in chronological order, and so can be read as a history of events relevant to rise of the use of the term fleecehold.


End Notes[edit]

  1. ^ As in The Guardian article "Homeowners trapped by ‘fleecehold’ – the new cash cow for developers", 2 December 2017, at: https://www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted?fbclid=IwAR0iJQ3TVT-PdndEs7umKzvbIN0BC6El4_S-DQi0yPzKZOS96zRTrlmJNVE
  2. ^ See 139 instances of the term (as of 9 April 2019) in the web-pages of The Home Owners Rights Network as listed by Google at: https://www.google.com/search?q=site%3Ahttps%3A%2F%2Fwww.homeownersrights.net+fleecehold&ie=utf-8&oe=utf-8&client=firefox-b
  3. ^ As defined by Collins Dictionary at: https://www.collinsdictionary.com/dictionary/english/fleece
  4. ^ In October 2016, The Guardian reported that Member of Parliament Justin Madders said buyers “didn’t know the original developer sold the leaseholds to private investors who have ruthlessly exploited the law to line their own pockets”. https://www.theguardian.com/money/2016/oct/29/new-builds-house-buyers-leasehold-property-trap
  5. ^ See paragraph 2 in "‘Fleecehold’ estate management contracts are the latest fiddle from taxpayer-subsidised house builders”, The Leasehold Knowledge Partnership, 23 January 2019: https://www.leaseholdknowledge.com/fleecehold-estate-management-contracts-are-the-latest-fiddle-from-taxpayer-subsidised-house-builders?fbclid=IwAR2ayRWe3CToPGIntUbgIM9n-b_f5X5JGjfejw7S22x7jxRhbfRpuX2yPnk
  6. ^ In March 2018, Knightsbridge Wealth Limited advised its clients in a written update that “‘Fleecehold’ firmly established itself in the national consciousness over the past year”. https://www.knightsbridgewealth.co.uk/wp-content/uploads/KN_Update14_MARCH-2018.pdf
  7. ^ The Law Commission wrote that “‘Fleecehold’ is a term that is used by different people to mean different things. We use it here to refer to freehold properties that are acquired subject to onerous terms”. https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/09/Enfranchisement-Fleecehold-Note.pdf
  8. ^ In the "Leasehold Reform" report published on 19 March 2019 (paragraph 29 in the section "Conclusions and Recommendations"), members of the parliamentary Select Committee wrote that, "The growing practice of imposing permission fees in the deeds of new-build freehold properties and enfranchised former-leasehold properties is an unjustified intrusion upon homeowners which many campaigners have rightly referred to as ‘fleecehold’", thereby applying the term to both leasehold and freehold properties. [1]
  9. ^ See paragraph 20 in The Guardian article of 2 December 2017 in which it is noted that whether leaseholders or freeholders, “homeowners [on estates] should be cautious as the rent charge owner may have a number of options including the ability to take possession of the property". https://www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted
  10. ^ See "To have or to leasehold? Inside the scandal rocking the new homes industry - Punitive clauses and escalating fees leave owners ‘tenants in their own homes’, Which Magazine, 14 June 2018: https://www.which.co.uk/news/2018/06/to-have-or-to-leasehold-inside-the-scandal-rocking-the-new-homes-industry
  11. ^ In March 2019 the United Kingdom’s Housing, Communities and Local Government Select Committee stated that its considered opinion was that “it would be more appropriate to refer to Leasehold tenure as ‘lease-rental’”. See paragraph 12 at: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146805.htm
  12. ^ See the section “Virtually a Freehold” on page 9 of the report “Leasehold: A Life Sentence”: http://www.naea.co.uk/media/1047279/propertymark-leasehold-report.pdf
  13. ^ See paragraph 4 on page of 5 of the report “Leasehold: A Life Sentence”: http://www.naea.co.uk/media/1047279/propertymark-leasehold-report.pdf
  14. ^ See page of 6 of the report “Leasehold: A Life Sentence”: http://www.naea.co.uk/media/1047279/propertymark-leasehold-report.pdf
  15. ^ See page 7 of the report “Leasehold: A Life Sentence”: http://www.naea.co.uk/media/1047279/propertymark-leasehold-report.pdf
  16. ^ See page 7 of the report “Leasehold: A Life Sentence”: http://www.naea.co.uk/media/1047279/propertymark-leasehold-report.pdf
  17. ^ See paragraph 1 in the section “Something to Hide?” on page 11 of “Leasehold: A Life Sentence”: http://www.naea.co.uk/media/1047279/propertymark-leasehold-report.pdf
  18. ^ See the statement “Throughout any sale process, customers are fully informed of the ownership structure of the home. If a customer is interested in such a property, the sales team advises them whether the property is being sold on a leasehold basis” in paragraph 20 of The Guardian article, "The new-builds catching house buyers in a leasehold property trap" of 29 October 2016: https://www.theguardian.com/money/2016/oct/29/new-builds-house-buyers-leasehold-property-trap
  19. ^ See the section “Relationship between developers and solicitors” in section 2 “Accusations of mis-selling” of the Select Committee's report of 19 March 2019 regarding "Leasehold Reform" at: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146806.htm
  20. ^ See paragraph 15 in "Grounds for concern over firms that snap up freeholds", The Telegraph, 16 December 2017, which stated, "One example is the system of doubling ground rents, a scandal which has recently come to light. Described by Sajid Javid, the Communities Secretary, as a "feudal" practice, it means the sum payable to the freeholder doubles every 10 or 25 years, rendering them [properties with such ground rents] unsellable . . . " : https://www.telegraph.co.uk/business/2017/12/16/grounds-concern-firms-snap-freeholds//
  21. ^ See paragraph 6 in “Housebuilders must halt leasehold sale of new houses, says minister”, The Guardian, 20 December 2016: https://www.theguardian.com/money/2016/dec/20/housebuilders-must-halt-leasehold-sales-of-houses-compensation
  22. ^ See paragraph 22 in “The new-builds catching house buyers in a leasehold property trap”, The Guardian, 29 October 2016. https://www.theguardian.com/money/2016/oct/29/new-builds-house-buyers-leasehold-property-trap
  23. ^ See paragraph 13 in “The ground rent scandal that is engulfing new home buyers”, The Guardian, 5 November 2016. https://www.theguardian.com/money/2016/nov/05/ground-rent-scandal-engulfing-new-home-buyers-leasehold
  24. ^ Chargeable under the Rentcharges Act of 1977 which permitted the continuation of estate rentcharges, enabling a rent-owner to collect periodic payments from the purchasers of plots of land on an estate so as to enable the rent-owner to perform maintenance tasks in the external common parts of the estate as covenanted between the rent-owner and the tenant at the time of purchase. See the act at: https://www.legislation.gov.uk/ukpga/1977/30/section/2
  25. ^ See page 8 "SERVICE CHARGES, ESTATE CHARGES AND MAINTENANCE CHARGES" in "Freehold Houses in Estates", published by the Association of Residential Managing Agents, at: https://arma.org.uk/downloader/ts9/Freehold_Houses_in_Estates_V02.pdf
  26. ^ See paragraph 17 in "The great leasehold hoax: When you buy a property, but don't ever own it", in The Independent, 18 January 2019: https://www.independent.co.uk/news/long_reads/leasehold-tenure-hoax-housing-landlords-estate-agents-property-developers-help-to-buy-a8681821.html
  27. ^ See paragraphs 2 and 9 in the article subtitled "Building society has made a surprise intervention into the leasehold flats and houses scandal", The Guardian, 6 May 2017: https://www.theguardian.com/money/2017/may/06/nationwide-housebuilders-leasehold-new-builds
  28. ^ See paragraph 2 in “The ground rent scandal that is engulfing new home buyers”, The Guardian, 5 November 2016. https://www.theguardian.com/money/2016/nov/05/ground-rent-scandal-engulfing-new-home-buyers-leasehold
  29. ^ See paragraphs 14 to 17 in “A £7,600-plus service charge on my flat above a shop is bankrupting me”, The Guardian, 1 September 2017: https://www.theguardian.com/money/2017/sep/01/service-charge-flat-bankrupting-me-heinz-property?fbclid=IwAR0z8HzdcvoyEaJY0Gurgw1dOuisGKxLMH-MOW0cM-iXWByWSjItBqnwEXw
  30. ^ See paragraph 16 in “Housebuilders must halt leasehold sale of new houses, says minister”, The Guardian, 20 December 2016: https://www.theguardian.com/money/2016/dec/20/housebuilders-must-halt-leasehold-sales-of-houses-compensation
  31. ^ See paragraph 3 in “Crying foul: footballer told he could lose his house over unpaid bill”, The Guardian, 25 June 2018: https://www.theguardian.com/money/2018/jun/25/footballer-zeli-ismail-rentcharge
  32. ^ See "Homeowners trapped by ‘fleecehold’ . . . They own the freehold but are forced to pay often escalating estate management fees with no accountability", The Guardian, 2 December 2017: https://www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted?fbclid=IwAR0iJQ3TVT-PdndEs7umKzvbIN0BC6El4_S-DQi0yPzKZOS96zRTrlmJNVE
  33. ^ See paragraph 22 in “Sack your property manager for a new lease of life”, The Guardian, 19 February 2011. https://www.theguardian.com/money/2011/feb/19/sack-your-property-manager
  34. ^ See paragraph 6 in the section “Extra charges on privates estates”, on the website of "Money Wise" magazine at: https://www.moneywise.co.uk/home-mortgage/buying/buying-freehold-home-check-the-small-print
  35. ^ See the section "Tribunals - not an option" on page 12 in "Freehold Houses On Private Estates - A guide for freehold homeowners paying service charges" published by the Association of Residential Managing Agents, August 2017: https://arma.org.uk/downloader/ts9/Freehold_Houses_in_Estates_V02.pdf
  36. ^ The Commonhold and Leasehold Reform Act 2002 provides leaseholders with the right to acquire the landlord’s management functions by transferring them to a management company set up by the leaseholders. https://www.lease-advice.org/advice-guide/right-manage/
  37. ^ See paragraph 3 in The Home Owners Alliance website article, “Problems facing freeholders on new developments”, 9 November 2016. https://hoa.org.uk/2016/11/problems-facing-freeholders-new-developments
  38. ^ See sections 1(b) and (d) for the scope of Section 106 agreements between councils and developers: http://www.legislation.gov.uk/ukpga/1990/8/section/106
  39. ^ See “Adoption Now!” at The Home Owners Rights Network: https://www.homeownersrights.net/buzz/adoption-now
  40. ^ See paragraph 18 in “Homeowners trapped by ‘fleecehold’ – the new cash cow for developers”, The Guardian, 2 December 2017: https://www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted?fbclid=IwAR0iJQ3TVT-PdndEs7umKzvbIN0BC6El4_S-DQi0yPzKZOS96zRTrlmJNVE
  41. ^ See the article on “Section 106 Estates Tax” at website of The Home Owners Rights Network: https://www.homeownersrights.net/buzz/section-106-estates-tax
  42. ^ See reference to a case in which a council’s Section 106 agreement delayed the hand-over of a residents management company to the owners of the homes of an estate: https://www.leaseholdknowledge.com/councils-section-106-delaying-residents-management-company-countrywide-tells-leaseholder-complaints-ruling
  43. ^ In the speech “Regulation of the managing agent market, 18 October 2017. https://www.gov.uk/government/speeches/regulation-of-the-managing-agent-market
  44. ^ See page 7, "General Specification", for an example of freehold houses on a new estate being sold with a share in the freehold of their external common parts. https://www.glentree.co.uk/binary_data/65205_the_village_green_brochure__low_.pdf
  45. ^ See the 11th (and final) paragraph of Helen Goodman MP’s introductory speech to the Westminster debate on "Freehold Estate Fees" of 22 January 2019 at: https://www.theyworkforyou.com/whall/?id=2019-01-22a.122.1
  46. ^ See paragraph 2 in “Homeowners caught in service charge nightmare”, The Times, 23 December 2017: https://www.thetimes.co.uk/edition/money/homeowners-caught-in-service-charge-nightmare-hmjmd9lgl?fbclid=IwAR3ETHGOU3I41ySNmRGWC3KRc2knxBzZP3FltHfGTKcgnGhtBZvT1rYhOv4
  47. ^ See paragraph 2 in “Homeowners trapped by ‘fleecehold’ – the new cash cow for developers”, The Guardian, 2 December 2017: https://www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted?fbclid=IwAR0iJQ3TVT-PdndEs7umKzvbIN0BC6El4_S-DQi0yPzKZOS96zRTrlmJNVE
  48. ^ See paragraph 7 in “Government urged to end ‘fleecehold’ abuse”, Property Industry Eye magazine, 5 December 2017: https://www.propertyindustryeye.com/government-urged-to-end-fleecehold-abuse/?fbclid=IwAR0-xQ3Ogoavpht3MgnveqapDCoNm8Vj7S3sFo41vmmYsVehvpoPYzNnIow
  49. ^ See paragraph 12 in "'Fleecehold' complaints flood in as residents battle to turn tide, on increasing rentcharges payable to managing agents by home-owners on estates", The Guardian, 6 January 2018: https://www.theguardian.com/money/2018/jan/06/fleecehold-management-companies-complaints-bills
  50. ^ See paragraph 8 of "The property 'scam' you NEED to know about . . . ", Bristol Post newspaper, 24 March 2018: https://www.bristolpost.co.uk/news/property/property-scam-you-need-know-1376274
  51. ^ See paragraph 8 in “Crying foul: footballer told he could lose his house over unpaid bill”, The Guardian, 25 June 2018: https://www.theguardian.com/money/2018/jun/25/footballer-zeli-ismail-rentcharge
  52. ^ See paragraph 8 in “Homeowners trapped by ‘fleecehold’ – the new cash cow for developers”, The Guardian, 2 December 2017: https://www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted?fbclid=IwAR0iJQ3TVT-PdndEs7umKzvbIN0BC6El4_S-DQi0yPzKZOS96zRTrlmJNVE
  53. ^ See paragraph 2 in “The potholes and pitfalls of life on an unadopted road”, in The Times, 11 August 2018: https://www.thetimes.co.uk/article/the-potholes-and-pitfalls-of-life-on-an-unadopted-road-dbs3s3tnr
  54. ^ See paragraph 1 in The Times article of 24 February2019 on the council of a new town charging home-owners a surcharge on their council tax. https://www.thetimes.co.uk/article/council-stings-residents-of-cranbrook-for-new-town-tax-of-370-a-year-lcgpsllg8?fbclid=IwAR3uOvmozlUtDZzcYC0vga4aoJwf2O7una6Pm6Uvbs6AkmK5rqfL1DS6PUc
  55. ^ See paragraph 13 in "The Redditch Standard" newspaper article of 5 April 2019 concerning a claim that prior to purchase estate management fees were not declared. https://redditchstandard.co.uk/news/redditch-househunter-raises-alarm-over-land-management-fees/?fbclid=IwAR2FrgGZ0POHws89qYNmj9lSx7exMQKODj93NU2qrZojv_qwhqupZ-qkGtE
  56. ^ See article titled “Scrap Estate Charges of 17 November 2018 at the Home Owners Rights Network: https://www.homeownersrights.net/buzz/scrap-estate-charges
  57. ^ See paragraph 8 in "Labour MP Helen Goodman fights 'fleecehold' rip-offs with Private Members' Bill", The Leasehold Knowledge Partnership, 14 November 2018: https://www.leaseholdknowledge.com/labour-mp-helen-goodman-fights-fleecehold-rip-offs-with-private-members-bill
  58. ^ See Hornet's original diagram in "New Build Estate Management", 9 June 2018, at: https://www.homeownersrights.net/buzz/new-build-estate-management/
  59. ^ See ARMA's website at: https://arma.org.uk
  60. ^ See the complete text of the speech "Regulation of the managing agent market" given by the Secretary of State to an ARMA conference on 18 October 2017: https://www.gov.uk/government/speeches/regulation-of-the-managing-agent-market
  61. ^ See IRPM's "About Us" web-page at: https://www.irpm.org.uk/public/page/about-irpm
  62. ^ In the article “Housing experts join forces to boost property agent standards” of 12 October 2018: https://www.irpm.org.uk/public/page/news/106
  63. ^ See section 5, "A third of councils have had to halve their housing spend", in "How cuts changed council spending, in seven charts", BBC News, 5 December 2018, at: https://www.bbc.co.uk/news/uk-england-46443700
  64. ^ See paragraph 19 in "'Fleecehold': New homes hit by 'hidden costs'", BBC website news, 20 March 2019: https://www.bbc.co.uk/news/uk-england-46279048?fbclid=IwAR0ilY0MQeZXGXdDF4Vt-b9FDoj_TKOPbTOY40wxh-zQpndCSVE6Aw-0E2c
  65. ^ See paragraph 36 in "'Fleecehold': New homes hit by 'hidden costs'", BBC website news, 20 March 2019: https://www.bbc.co.uk/news/uk-england-46279048?fbclid=IwAR0ilY0MQeZXGXdDF4Vt-b9FDoj_TKOPbTOY40wxh-zQpndCSVE6Aw-0E2c
  66. ^ See paragraph 3 in "The truth about property developers: how they are exploiting planning authorities and ruining our cities", The Guardian, 17 September 2014: https://www.theguardian.com/cities/2014/sep/17/truth-property-developers-builders-exploit-planning-cities
  67. ^ See paragraph 14 in The Redditch Standard newspaper article of 5 April 2019 concerning a customer's statement that prior to purchase estate management fees were not declared. https://redditchstandard.co.uk/news/redditch-househunter-raises-alarm-over-land-management-fees/?fbclid=IwAR2FrgGZ0POHws89qYNmj9lSx7exMQKODj93NU2qrZojv_qwhqupZ-qkGtE
  68. ^ See paragraph 20 in The Worcester News article of 4 April 2019 providing a developer's response after a county councillor raised concerns about "fleecehold" charges on a new-build housing estate. https://www.worcesternews.co.uk/news/17549940.fleecehold-charges-at-bevere-bellway-site-near-worcester
  69. ^ See the final paragraph on page 10 of the Ministry of Housing, Communities & Local Government's white paper: "Fixing our broken housing market", 7 February 2017: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/590464/Fixing_our_broken_housing_market_-_print_ready_version.pdf
  70. ^ “Tackling unfair practices in the leasehold market”, a Ministry of Housing, Communities & Local Government's consultation, opened on 25 July 2017: https://www.gov.uk/government/consultations/tackling-unfair-practices-in-the-leasehold-market
  71. ^ “Crackdown on unfair leasehold practices”, a Ministry of Housing, Communities & Local Government press release, 21 December, UK: https://www.gov.uk/government/news/crackdown-on-unfair-leasehold-practices--2
  72. ^ “Leasehold Enfranchisement”, a Law Commission project, begun in July 2018: https://www.lawcom.gov.uk/project/leasehold-enfranchisement
  73. ^ Announcement on 14 October 2018, by the Secretary of State for Housing, Communities & Local Government, of the consultation: “Implementing Reforms to the Leasehold System”: https://www.gov.uk/government/news/communities-secretary-signals-end-to-unfair-leasehold-practices
  74. ^ See paragraph 3 in the section "Consultation Description" in the consultation "Implementing reforms to the leasehold system", opened by the Ministry of Housing, Communities & Local Government, on 15 October 2018: https://www.gov.uk/government/consultations/implementing-reforms-to-the-leasehold-system
  75. ^ “Leasehold Reform”, the report of the Select Committee of the Ministry of Housing, Communities & Local Government, published on 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146802.htm?fbclid=IwAR0qjtwjV7WcnkXPpBGbEMky-wWAnB1Xv4saiuhOhcZaYLNWMgiFIv1sjJ4
  76. ^ “Leasehold Reform”, a summary of the report of the Select Committee of the Ministry of Housing, Communities & Local Government, published on 20 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-summary.html
  77. ^ See paragraph 12 in section 1 "Future of leasehold tenure" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146805.htm#_idTextAnchor005
  78. ^ See paragraph 61 in section 2 "Accusations of mis-selling" https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146806.htm#_idTextAnchor020
  79. ^ See paragraph 5 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  80. ^ See paragraph 23 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  81. ^ See paragraph 28 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  82. ^ See paragraph 11 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  83. ^ See paragraph 48 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  84. ^ See paragraph 4 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  85. ^ See paragraph 42 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  86. ^ See paragraph 43 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  87. ^ See paragraph 10 in "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  88. ^ See paragraph 3 in the section "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  89. ^ See paragraph 37 in "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  90. ^ See paragraph 29 in "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  91. ^ See paragraph 34 in "Conclusions and recommendations" in the report of the Select Committee of the Ministry of Housing, Communities and Local Government, 19 March 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/report-files/146810.htm
  92. ^ See the Ministry of Ministry of Housing, Communities & Local Government's announcement of an “industry pledge”, 28 March 2019 at: https://www.gov.uk/government/news/james-brokenshire-announces-industry-pledge-to-crack-down-on-toxic-leasehold-deal
  93. ^ See the Leasehold Knowledge Partnership article “Ground Rent Addicts Anonymous sign Brokenshire’s pledge (three years after the scandal they created and denied existed)”, published on 28 March 2019, at: https://www.leaseholdknowledge.com/ground-rent-addicts-anonymous-sign-brokenshires-pledge-three-years-after-the-scandal-they-created-and-denied-existed
  94. ^ As noted in the parliamentary briefing of 15 February 2019 titled “Freehold houses: estate charges” at: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8497
  95. ^ See the Commons Select Committee announcement “Committee welcomes CMA investigation into leasehold mis-selling”, published on the UK Parliamentary website on 16 May 2019, at: https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/news/cma-investigation-leashold-misselling-chairs-comments-17-19/

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