A Review of the Law Commission’s
Final Report

‘Event Fees’ is the term devised by the Law Commission to refer to charges in leases that are payable on the sale or sub-letting of retirement properties. These fees have caused considerable anger and resentment, especially on the part of family members who inherit what they believe to be an asset only to find it is subject to significant additional charges when it is sold or even more annoyingly if it is retained and sub-let. Many think these fees are unfair and unreasonable.

In a leasehold context, charges are only unreasonable if they fall within the statutory definition of an administration charge whereas charges in consumer contracts can be unfair if they are not properly disclosed before the contract is entered into. Unreasonable administration charges can easily be challenged at a tribunal but unfair charges must be challenged through the courts.

Retirement flat owners support action against unfair charges

Resident representatives from 10 retirement estates in South Devon attended the Leaseholder Association ‘Unfair Lease Charges’ event held in Exeter on 28th of April.

In his welcome address LA Director Dudley Joiner told attendees they all shared one thing in common, namely properties that were built by McCarthy & Stone and leases that included high ground rents, charges for the use of the guest room, charges for the on-site warden or scheme manager’s flat and exit fees on the sale of the property. He told the audience that the LA had received a letter about the Exeter event from solicitor’s acting for John McCarthy and in light of this he wished to make it clear that LA published statements made about the various charges in McCarthy & Stone leases were the opinions of the LA based upon the facts and upon statements made by John McCarthy in his book ‘Building a Billion’. He read various extracts from the book and said he would leave it to his audience to form their own opinions. He concluded by summarizing the past investigations into lease charges by the Office of Fair Trading (OFT), The Competition and Markets Authority (CMA) and the Law Commission and explained the options available to challenge charges that are unfair or unreasonable. He said the LA did not propose to go into legal details from the platform but their solicitor and leasehold specialist Margarita Mossop, Mayfield Law, would be available after the meeting to answer questions.

LA executive Mark Spall addressed the meeting on the background and objectives of the LA. Mark explained that before joining the LA in 2014 he had worked for 15 years at Age UK (previously Age Concern) providing advice, information and mediation services to leaseholders in retirement properties. He said he left Age UK when his department was inexplicably closed down and leasehold support was discontinued and the LA aimed to fill this vacuum by providing leasehold services unavailable elsewhere. He summarized the limited functions of organizations such as the government-owned Leasehold Advisory Service and the Association of Retirement Housing Managers, which unlike the LA also act for landlords and managers and neither of which offer on-going support or conciliation services. He said the help available from the Property Ombudsman was very restrictive and focused mostly on administrative issues and not money matters. Mark made reference to the recent report from the Competition and Markets Authority, which highlighted that few buyers of leasehold property understood their leases or their rights and obligations as owners. He said the LA was targeting early education of flat buyers and encouraged better communication between leaseholders and property managers to prevent resolvable issues escalating into prolonged legal disputes.

Nick Bignell of the Right to Manage Federation addressed the audience on the benefits of RTM, which was introduced in 1997 in a paper entitled ‘An End to Feudalism’. Nick summarized the comprehensive help and guidance offered by the RTMF to assist leaseholders in the democratic management selection process. He said the RTMF had helped over 7,000 flat owners acquire RTM and appoint a management company of their own choosing. About half of these were in retirement estates and acquired RTM through the RTMF at little or no cost. He quoted from the CMA Market Study published in December 2014 which supported the principle of RTM and concluded that leaseholders are more satisfied where RTM is exercised due to the greater control they have over their property management.

In summary, Dudley Joiner thanked all attendees for their support and enthusiasm for the work LA was doing to help retired leaseholders and encouraged everyone to join in the collective action against unfair and unreasonable leasehold charges.

Unfair Lease Charges Event – Devon

Leaseholders of retirement properties in Devon are invited to an information event taking place at 14:30 on Thursday 28th April in Exeter.

Over the last few years leasehold owners of retirement flats have come to realise they are burdened by numerous charges they were not made aware of at the time of purchase. These charges are rent for the house manager’s flat; payment for use of the guest suite; and payment of exit fees, all of which are included in their leases.

The Leaseholder Association is taking a Collective Legal Action to stop these unfair charges and to reclaim past monies paid at no additional cost or liability to its members.

Please note the meeting is being held at: The Westpoint Centre, Clyst St Mary, Exeter, EX5 1DJ.

To book a place at the event email action@lease-assn.org or telephone 01892 704170.

The money-making revelations of John McCarthy, the founder of McCarthy & Stone

An Article on John McCarthy by the Leaseholder AssociationIn 1977 John McCarthy, a jobbing builder from New Milton, Hampshire, came upon his eureka moment. In his autobiography, ‘Building a Billion’ he recalls how he identified a niche market and the opportunity to “make more money than he had ever dreamed of”. His idea was to build blocks of retirement flats for the elderly. He calculated that in building smaller flats with far fewer parking spaces he could develop more properties per plot of land and see his way to a fortune, which he did. In 2006 McCarthy & Stone was sold for £1.1 billion.

Continue reading The money-making revelations of John McCarthy, the founder of McCarthy & Stone

Leasehold News and Events