Home » News » Guest blog: Leasehold scandal is based on flawed data previous nextRegulation & LawGuest blog: Leasehold scandal is based on flawed dataThe Government’s leasehold reforms are a reaction to inaccurate media headlines claims Mick Platt, Director at Simarc Property Management.14th October 20192 Comments2,872 Views This guest blog by Mick Platt, Director at Simarc Property Management Limited, is his response to a piece by leading property legal expert Nigel Read’s piece for The Negotiator: What does the future hold for leasehold properties.The leasehold debate is dominating the housing agenda right now. Headlines on the quantity of onerous leases are leaving consumers feeling anxious, concerned and ‘trapped’ in a system that is failing to provide proper education to buyers on leasehold implications prior to making an offer.An onerous lease is one where the ground rent doubles in a fixed manner more frequently than every 20 years. Reports suggest around 100,000 homebuyers are trapped in their own home, suffering from spiralling ground rents. However, a comprehensive analysis of the market conducted by specialist property firm, Winckworth Sherwood LLP, sheds a whole new light, on a whole new story.The reality is far from what has been reported and there are in the region of only 12,000 onerous leases in the market, out of a total of 4.5 million leasehold properties in England and Wales.Action is required to remedy this situation, but we cannot lose sight of the fact that this is a tiny proportion of the market, equating to just less than 0.3% of all leaseholds.And this figure will only fall as Taylor Wimpey and other housebuilding companies draw on new measures to provide compensation for those residents who hold these leases. Additionally, it is estimated that over 66% of these residents already have access to a scheme or the ability to vary their lease and by working closely with policymakers, we are confident this can be pushed close to 100%.The 14-point pledgeThis level of inaccuracy raises serious questions about evidence-based policymaking. The Government’s proposal to eliminate ground rents entirely and move towards a commonhold structure is based on flawed logic. Why throw out a system that is working well in 99.7% of cases? Surely regulation would be a better way forward.Industry has already demonstrated a strong appetite for reform. In March of this year, 40 house builders and developers signed up to a voluntary 14-point pledge that has been designed to end the practice of onerous leaseholds.As a contributor to the government-backed leasehold Pledge, we are aiming to create a fairer system for all current leaseholders and improve leasehold terms for new homeowners.The pledge ensures that new homeowners, when purchasing their homes from developers, will not be offered a leasehold agreement with onerous clauses.It will guarantee that legal advisers and developers are transparent with prospective buyers and that leaseholders have greater access to information throughout the buying and selling process.This is the first step to establishing a legally enforceable Code of Practice made mandatory by the Government and regulated by an independent body.ProfessionalisationThe lack of regulation in the market has put the leasehold tenure under intense scrutiny. Scrapping the current system and forcing residents to take on joint-ownership and management of their own developments, as well as potential responsibilities for building safety, under current Government proposals, runs the risk of increased conflict.The role for that ‘accountable person’ then becomes far more complex. This is when a professional freeholder as a steward of project and property management is imperative particular as freeholders are able to make those difficult decisions on behalf of leaseholders, which allows them to enjoy their home in peace.Policymakers and the industry need to move away from myths and focus on professionalisation of the sector through regulation. October 14, 2019Nigel Lewis2 commentsBryan Wildman, NLC NLC 15th October 2019 at 1:01 pmIndustry submissions to government indicate an appetite for leasehold reform, then follow up by pleading for minimal reform. Their plausible reasons have been heeded by successive governments as leaseholders concerns have been ignored.Recently, leasehold reformists such as LKP and NLC have united to put across good reasons for leasehold reform. Using the power of social media and by acting as Secretariat for the APPG for Commonhold and Leasehold Reform LKP have finally got the attention of the government to recognise there are multiple consumer concerns with the use of leases.There is no actual definition what constitutes an onerous lease and it is only in the last 10 to 15 years that doubling leases and those linked to RPI have been created, in such a way to help maximise freeholders profits and provide attractive investments for offshore investors.Historically ground rents were of no monetary value (peppercorn). Accepting Winckworth Sherwood LLP numbers to be correct, these should be judged against the number of leases created in the last 10 to 15 years when the abuse effectively started and not the 4.5 million reported. We should also remember that ground rent is income for providing no service whatsoever. Reducing ground rent to zero will effectively cease it being treated as an asset class.Government’s planned reform is about giving consumers a choice of tenures, and a choice of whether they want to manage their estates or buildings.Potential homeowners should have the choice of buying a lease which is wasting asset that ultimately reverts to the freeholder or an alternative tenure such as commonhold, owned by the purchaser. It is this choice that will ultimately focus the Management Companies and thus increase overall professionalism.Log in to ReplySimon Davies, A A 15th October 2019 at 12:07 pmNo mention in this piece of how fast the ground rent increases, excessive permission, enquiry and admin fees, high costs to enfranchise or do a lease extension. Freeholder appointed managing agents with high service charges who may be impossible to remove in some circumstances, for example if a Housing Association, more than 25% commercial in the building, or an estate of houses. Long leasehold is an unjust, feudal relic, now unique to England and Wales. Everwhere else uses Commonhold, and manages without a remote freeholder, some who are offshore entities, and usually do not give a tinker’s cuss about the leaseholders other than extracting as much money from them as possible. A freeholder who may have paid just 1% of the building’s value for the freehold interest, and yet has near 100% control of leaseholders lives. Freeholders like this will cause more conflict in the building, not less, because leaseholders have to deal with an uncaring, profit motivated entity, which should have no part in their lives or homes.Leaseholders can make their own decisions about their destiny. If leaseholders cannot or will not agree, then the court can appoint a managing agent from an approved list. The freeholder is often an unnecessary expense and obstruction for leaseholders.Mortgage lenders should avoid toxic leasehold, look forward, and embrace Commonhold. Leasehold takes longer during property conveyancing and is more expensive, because there are 3 parties in a transaction including the unnecessary remote freeholder.The “pledge” is useless because many agents and freeholders have not signed up to it, or even if they have, fail to follow it. It is also useless because moving a high starting ground rent to RPI can still make the lease onerous. Ground rent above £250 per year can make the property an assured tenancy, and who knows what inflation will do in future. Many thousands of properties have a ground rent greater than 0.1% of property value which is regarded by some lenders as onerous.The bigger elephant in the room is out of control service charges, and the great difficulty many leaseholders have in challenging them and holding managing agents to account.Buildings insurance – another scam where commissions are paid both ways to agent / freeholder and insurer at leaseholders expense, or the freeholder fails to insure the building at all, leaving leaseholders exposed.Buildings and contents insurance for a 3 bed freehold semi, £130 per year. Buildings insurance for a 2 bed flat, £460 per year. Leaseholders add all the value to the building and their flats, yet suffer from corruption like this.Clear information at point of sale is needed so home buyers can make an informed decision, not buried in a complex lease document which only lawyers can understand.No freeholder means –No unnecessary permission feesNo ground rentNo lease extension or enfranchisement costs.No speculators controlling peoples’ homes and lives.The lease is a wasting asset for leaseholders which will no longer apply.No potential forfeiture of the lease.No mis-selling of houses as leasehold where the freehold was sold on to a 3rd party, and failure to warn home buyers this could happen at point of sale.Less work for expensive lawyers which has to be good in reducing costs for millions of leaseholders.A giant ponzi scheme, where a few benefit at the expense of 6 million leaseholders. It is incredible such a system as long leasehold still exists in the 21st century.Log in to ReplyWhat’s your opinion? 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The deadline to purchase seasonal beach tags at the discounted price of $20 is extended to June 30. In-person sales of 2020 seasonal Ocean City beach tags are now open and available at the following locations:City Hall: At the reception desk. Hours are 8:45 a.m. to 6 p.m. Monday through Friday; and 9 a.m. to 6 p.m. Saturday, Sunday and holidays (including Memorial Day).Music Pier/Box Office Window: Purchase from the window. Hours are 9 a.m. to 5 p.m. Monday through Thursday; and 9 a.m. to 10 p.m. Friday through Sunday.Route 52 Causeway Welcome Center: Purchase from the window. Hours are 9 a.m. to 1 p.m. Monday through Friday; and 9 a.m. to 4 p.m. Saturday and Sunday.Henry Knight Building: Purchase from the lobby. Hours are 9 a.m. to 4:30 p.m. Monday through Friday.34th Street Information Center: Hours are 9 a.m. to 3 p.m. Saturday and Sunday.Beach tags are also on sale online and by mail at www.ocnj.us/beachtags. The deadline for purchase of discounted ($20) seasonal tags has been extended to June 30. Beach tags are not required until June 6.Military beach tags are available at City Hall, the Route 52 Causeway Welcome Center and the Music Pier with proper ID. See www.ocnj.us/beachtags for more information.Please remember to follow social distancing guidelines when purchasing beach tags; stay 6 feet apart in line, wear a face covering, and wash or sanitize your hands after the transaction.
Russia’s non-state pension funds (NPFs) delivered a weighted average nominal return of 10.6% to date on savings in the compulsory system, and 10.9% on reserves in the first nine months of 2016, according to the Bank of Russia (CBR), the sector’s regulator.Inflation for the period totalled 5.4%.The results are a marked improvement on the previous year, when the funds returned 9.3% against an inflation rate of 7.1%.The return of the extended portfolio of state-owned Vnesheconombank (VEB), which manages 96.1% of the assets of workers insured outside the privately run system, fell from 12.1% to 11.18%, a result beaten by 24 of the NPFs. The investment returns contributed to the increase in pensions savings managed by the NPFs, which grew by 24.3% year on year in rouble terms to RUB2,100bn (€29bn), as did an 11.8% growth in NPF membership, to 29.87m.The membership growth came from workers switching from having their assets managed by VEB to the NPFs.In terms of asset allocation, corporate bonds accounted for an increasing share of the NPF portfolio, rising from 40.9% in 2015 to 48.6% in 2016.The share of equities also grew, from 11.6% to 13.8%, boosted partly by a legislative change in June that allowed NPFs to invest directly into privatisation IPOs.Meanwhile, the share of Russian Federation central government bonds fell from 6.1% to 5%, and that in regional, municipal, city and other federation bonds from 4.3% to 2.4%.Over recent years, the CBR has been lowering the maximum limit in deposits – to 40% in 2016 – to free up investment in the real economy, with proposals to lower this to 5-10% eventually.As a result, the NPF portfolio share fell from 23.6% to 15.8%.The share in mortgage securities, another focus of CBR regulation because of past abuses, declined from 5.7% to 4%.Another trend over the reporting period was the sharp decline in the number of NPFs, from 110 to 81, of which only the 43 funds registered with the Deposit Insurance Agency’s guarantee scheme can continue to operate in the compulsory system.The shrinkage is due to the CBR’s annulment of NPF licences for various violations, and more recently by the growing trend of financial group owners merging their NPFs.As a result of Russia’s budget and state pension deficits, the moratorium on contributions to the NPFs, which started in 2014, looks set to continue for the coming three years, alongside question marks over the future of the compulsory system.Previously, 6% of the 22% of the employer-funded social tax on wages went to the privately run system or VEB, the remainder to the first pillar.The biggest debate is over a proposal by the CBR and finance ministry to replace it with a quasi-voluntary system that would see employees paying a share of up to 6% eventually into what the co-authors describe as a “modernised” pensions system, with employees able to opt out by filing for five-year pensions contributions breaks.
In response to the petition, the SC said these were “merely based on what he perceived from the online news articles discussing the President’s illnesses,” which the SC has consistently characterized such articles as “hearsay evidence.” MANILA – The Supreme Court has dismissed a petition compelling President Rodrigo Duterte to release his medical records to the public. The lawyer alleged that Duterte had been absent from engagements for health reasons, had “prolonged absences” from the public view, and appeared incoherent in COVID-19 public addresses. “Further, the President’s regular televised addresses to the nation as regards the government’s response to the COVID-19 pandemic show that the President has been actively performing his official duties,” the court added. In a resolution that was made public on Wednesday, the High Court justices threw out the petition of lawyer Dino De Leon as it was based on “conjectures and unsubstantiated.” “Apparently, petitioner’s allegation that the President is seriously ill is unsubstantiated and is based merely on petitioner’s surmises and conjectures regarding his perception of the declining health of the President,” it further said./PN “Based on the allegations in the petition itself, petitioner failed to establish the existence of a clear legal right that was violated, or that he is entitled to the writ of mandamus prayed for,” the SC said. He also cited the President’s several illnesses, such as Buerger’s disease, Barrett’s esophagus, gastroesophageal reflux disease, spinal issues, daily migraines, and myasthenia gravis. “After a punctilious evaluation of the petition, the Court finds that the averments and arguments in the petition failed to establish a prima facie case for mandamus, i.e., that the reliefs sought constitute ministerial duties on the part of respondents, and that there is a clear legal right on petitioner’s part to demand the performance of these ministerial duties,” the SC said. De Leon filed a petition for mandamus earlier this year asking that the Office of the President be ordered to disclose President Duterte’s health records since he assumed office.