MP Iain Duncan Smith criticises George Osborne’s Housing Policies

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Former Conservative Party leader Iain Duncan Smith has criticised policies of former Chancellor of the Exchequer George Osborne with regard to housing during conversation at this year’s Landlord Investment Show in Olympia.

Iain Duncan Smith MP, former leader of the Conservative Party

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Expert Panel Unanimous on Future Optimism in UK Housing Market

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A panel of experts were unanimous in their belief that there are grounds for optimism in the UK housing market over the next five years, at an opening debate for the Landlord Investment Show 2019 in London Olympia.

The Landlord Investment Show 2019 kicked off at Olympia London on March 21st

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Leasehold reform on the cards…

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Long-leasehold:

The government has been saying for some time now that Britain’s
ancient leasehold laws are overdue for reform.

The initiative stems from recent abuses of the leasehold system,
where building companies have been seen to exploit unsuspecting buyers of new-build
properties, often first-time buyers who are unaware of the implications of
buying a leasehold interest, as opposed to a freehold interest.

The balance of power in the leasehold system, one which is
virtually unique to Britain around the world, is deemed to fall too heavily in
favour of the freeholder, that’s according to a new report in which MPs are
calling for change.

The report produced by MPs sitting on the housing, communities
and local government committee says that the leasehold housing system is
“flawed� and open to abuse, with homeowners left at risk of “exploitation�
because of onerous ground rents, high service charges and unreasonable costs to
extend leases.

The government now has two months in which to respond to the
committee’s findings.

Property Ownership
Types

Basically, in English law, there are two main types of
ownership: freehold, which means you own it the property and the land it stands
on outright, and leasehold, which gives the leaseholder a right to occupy for a
given and agreed period of time, to buy and sell the property, but they don’t
own the land it’s built on.

Lease holders are in effect the tenants of the freeholder
and they will pay an annual ground rent and service charges for maintenance,
plus special charges for such things as alterations and lettings. These charges
are often where the unfairness and disputes arise.

Currently, there are said to be around six million
properties in England and Wales under leasehold, mostly flats and apartments in
blocks, and most commonly in the capital – London. However, recently it has
become an increasingly common arrangement for new build houses to be sold by
development companies giving only a leasehold title to the new “owners�.

The Parliamentary committee found during their inquiry that
many of these leaseholders were unaware of their legal position – the differences
between freehold and leasehold – when they purchased “in particular the
additional costs and obligations that come with a leasehold property�.

There are some critical issues when dealing with leasehold,
which are important for any buyer to understand: the length of the lease, the
amount of the ground rent and service charges and how these can multiply over
time, the cost of renewal of the lease, the terms of the lease and its restrictions
and the costs involved to renew or extend the lease period.

The legalities are highly technical and anyone considering
taking on a lease should seek specialist (leasehold) professional advice.

Costs and Charges

Maintenance can be problematic and expensive when dealing
with high rise blocks, so to even out the costs for leaseholder long-term, property
freeholders and their managing agents often use sinking funds – this is a reserve
a pot of money accumulated over time to pay for unexpected repairs and major
works, for example a new roof or lift repair. This issue has been particularly highlighted
with the cladding issue after Grenfell.

Leaseholders are often subject to many restrictions set in
the leasehold agreement which means that permission is required from the
freeholder to do many things, often with a hefty charge involved.

Sometimes a formula is included in the lease for increases
in annual ground rent charges which can lead to them spiralling to astronomical
levels. This is an issue the MPs intend to address and have suggested legislation
to limit charges to 0.1% of the present value of a property, up to a maximum of
£250 per year.

Leasehold Reform Inquiry

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Manchester ‘Rogue Landlord Hub’

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Greater Manchester Combined Authority (GMCA) has received £128k from Ministry of Housing, Communities and Local Government to develop a ‘Rogue Landlord Hub’ designed to target landlords and letting agents who flout the law through bad management or by housing tenants within neglected and unsafe homes.

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Help please – criminal and bankrupt tenant won’t leave

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I still have the tenant from hell. With the councils help I was misled to give a tenancy to this criminal tenant (who has done the same to many landlords before) with the understanding she will pay the rent with housing benefit.

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SDLT on transfer of mortgaged property?

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I understand that when beneficial interest in property is transferred between spouses the amount of mortgage liability assumed by the transferee is regarded as consideration and SDLT is payable on any amount over the threshold of £125000, but can anyone tell me what happens when:
• Spouses hold the property as tenants in common
• the mortgage is in their joint names with joint and several liability i.e.

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HF Academy to run agent workshop on dealing with the tenant fees ban

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At the end of 2018, Hamilton Fraser launched HF Academy, a series of half and full day workshops offering property professionals advice and education covering the full tenancy lifecycle. The next workshop, due to take place on 14th May at Holiday Inn Borehamwood

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RLA claims Right to Rent is ‘a farce’

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Right to Rent:

A recent legal case has brought the controversial
Right-to-Rent scheme into further disrepute, given that and existing High Court
judgement* earlier this month deemed the scheme unlawful on discrimination grounds.

On the 1st of March the High Court decided that the scheme breached the European Convention on Human Rights on the basis that it discriminated against non-UK nationals with the right to rent and British ethnic minorities when landlords and agents made their letting decisions.

The scheme – designed to prevent those without a right to
reside in the UK to be prevented from renting a property after due diligence
checks by landlords or letting agents – has now been embroiled in another different
legal ruling on discrimination grounds.

In situations where the Home Office informs the landlord
that an existing tenant does not have the right to reside, or where the tenant’s
right to reside has expired, it will issue a formal notice to the landlord
which then forms the basis of the landlord’s claim for possession through the
courts.

That’s the theory. But in a new judgement issued by the High
Court it has ruled that this breaches the Equality Act on the basis that it
amounts to “direct discrimination on the basis of nationality.�

According to the Residential Landlord’s Association (RLA), “whilst
the wording of the Act means that the Home Secretary cannot be prosecuted for
this, landlords who are forced to comply with the notice can be charged under
the law as well as being at risk of a civil claim being made against them.�

This new ruling therefore gives those existing tenants, who
may not have the right to reside in the country, a valid defence against any
claim to evict them. It will allow them to take out an injunction to prevent an
eviction and possibly any further claim for damages.

David Smith, Policy Director for the Residential Landlords
Association, said:

“This new ruling makes the Right to Rent a farce. To put
landlords in a position where acting on a direct instruction provided by the
Home Office leaves them open to breaching equality law cannot be tolerated.

“With the High Court having ruled that discrimination is
baked into the Right to Rent scheme it is time for the policy to be scrapped
altogether.�

The most recent case in question is that of R (Goloshvili) v Secretary of State: http://www.bailii.org/ew/cases/EWHC/Admin/2019/614.html

*“The measures have a disproportionately discriminatory
effect and I would assume and hope that those legislators who voted in favour
of the Scheme would be aghast to learn of its discriminatory effect…� Mr
Justice Spencer  

R (Joint Council for the Welfare of Immigrants) Claimant – and – Secretary of State for the Home Department Defendant – and – (1) Residential Landlords Association (2) Equality and Human Rights Commission (3) Liberty: https://www.bailii.org/ew/cases/EWHC/Admin/2019/452.pdf

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HF Academy to run agent workshop – dealing with tenant fees ban

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Fees Ban:

At the end of 2018, Hamilton
Fraser launched HF Academy, a series of half and full day workshops offering property
professionals advice and education covering the full tenancy lifecycle. The
next workshop, due to take place on 14^th May at Holiday Inn
Borehamwood, is ‘Future Proofing Your
Lettings Business and How to Deal with The Tenant Fees Ban’.

Hosted by Susie Crolla
of the Guild of Letting & Management, the workshop will deal with the impending
Tenant Fees Ban due become Law on the 1st June 2019. It will reflect on current
business practices, highlight Unique Selling Points, discuss the details of the
Tenant Fees Ban and provide agents with strategies to help navigate this
change.

Paul Shamplina, founder
of Landlord Action and star of Channel 5’s ‘Bad Tenant’s Rogue Landlords’, will
speak to agents about attracting new landlords and retaining the ones they
already have, alongside Sean Hooker, Head of The Property Redress Scheme (PRS),
who will give an update from Westminster.

Commenting on the
course, Paul Shamplina, says “The idea is
to allow business owners to focus their energy on the important elements of
this transition, which is going to shape the future of lettings.  We want to help take away the sense of panic
and provide letting agents with strategies to streamline their processes, gain
a better understanding of landlords’ mindsets in the current climate and plan
for what’s to come.�

Sean Hooker, head of
PRS, adds “With so much change facing the
industry, your business has to be ahead of the curve.  This course will
signpost the letting agent on how they can replace lost income due to the fee
ban and work more efficiently with their time.�

An attendee of HF
Academy’s previous workshop, Brendan Ryan, Director of Operations at Daniels
Estate Agents, said: “The workshop we
last attended at HF Academy was without doubt one of the best that we have been
to, purely for the fact it was delivered in a very practical way by Susie and
in a letting agent’s language.  The
knowledge Paul Shamplina has of our industry was impressive and he gave us some
great tips on how to find new landlords’.�

To sign up to the HF Academy event for £149 (+VAT), including lunch and networking opportunities with likeminded agents, please click here.

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Bankrupt couple take in £7.8 million in property scam

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Investment Scams:

These scams abound and property, it would seem, has more
than its fair share of these frauds. Glossy brochures, slick looking websites
and smooth talking sales people lure unsuspecting investors with tempting high
interest and capital returns.

The usual warnings should always apply: if it looks too good
to be true, it usually is. When most savings accounts are paying no more that 1
to 2% interest, claims of up to 8 or 10% are wildly optimistic, and for a
passive investor, largely unattainable.

Investors should ALWAYS do thorough due diligence checks before investing in any project, or pay a professional to do this for them. Check out companies and their accounts with Companies House, do credit checks with a good reference agency, check out individual directors – bankruptcies, court judgements and criminal convictions will often show up on-line with a quick Google search.

Request detailed accounts to assess potential profits, visit the development and talk to local agents to assess values and seek testimonials from previous investors who have had experience with the company concerned. Always search the Bankruptcy and Individual Insolvency Register and Companies House.

So, in the above case, enter Stroud based declared bankrupts
Matthew and Charlotte Roberts who set up an extremely and exceptionally
complicated investment scam which lured numerous investors to part with their
hard earned savings totalling £7.8 million

The High Court has now wound up thirteen companies set up by
the couple who managed to sustain this highly sophisticated scam over a considerable
period of time. The thirteen companies were wound up by the High Court in the
public interest following investigations by Company Investigations of the
Insolvency Service.

The companies all traded from one address in Stroud and were
all set up by husband and wife team Matthew and Charlotte Roberts, who are both
bankrupt. They had targeted high net worth individuals and ‘sophisticated
investors’ for two projects and succeeded in raising at least £7.8 million.
Insolvency Service investigators are now seeking to track down funds and assets
but have warned a significant amount of the money may not be recoverable.

David Hill, chief investigator with the Insolvency Service,
said,

I am very pleased to see that the Court has called a halt to
the unscrupulous activities of these companies. The Insolvency Service will
continue to investigate and bring to a halt the activities of companies harming
or about to harm the public by operating in this way.

The companies have shown no regard for the law.

The 13 companies purported to be involved in two projects.
11 were concerned with a project to acquire and convert a former convent in
Woodchester, near Stroud in Gloucester, into a hotel and music venue. The
remaining two companies were involved in a second project to acquire and develop
a property in Norway to create an ‘eco resort’.

The Matthews raised at least £7.8 million from private
investors who were told their investments would be fully asset backed with the
companies in which they purchased shares acquiring ownership of various land
and buildings at the two sites. In fact none of the land, or buildings was
found to be owned by the companies in which investors had invested.

Investors were invited to buy preference shares in a number
of companies with a particular purpose in defined project on the promise of
annual returns from 10% and guaranteed buybacks up to 150% depending on the
length of the investment term which could be between one, three or five years.
They were then told that their investment was high risk and having certified
themselves as either ‘high net worth individuals’ or ‘sophisticated investors’,
they would have no access to the Financial Services Compensation Scheme.

Both Matthew Roberts and Charlotte Roberts are bankrupt. The
former has been bankrupt since 3 September 2014 and his discharge has been
suspended. The latter was made bankrupt on 25 August 2016 and her discharge is
also currently suspended

In respect of the UK project (“The Convent Hotel & Spa�)
the Court heard that the site of the former convent had been acquired by the
Roberts and/or HH Property 4 Limited, a company under their control, in May and
June 2013, through the use of bridging loans secured against the properties.

In the first phase of fund raising investors were encouraged
to buy shares in Special Purpose Vehicle (“SPV�) companies, again controlled by
the Roberts and which each owned a single share in BBH Property 1 Limited. In
subsequent fund raising phases investors purchased shares directly in BBH
Property 2 Limited, Crowdseed3 Limited and Crowdseed4 Limited. In total some
£5.8 million was raised from investors in the UK project.

Investors were told their funds would be used to enable the
purchase by those four companies of various buildings at the Convent site thus
providing security for investors by shared ownership of the companies that
owned the buildings free from debt. The investment companies would then lease
the buildings to hotel operating companies and receive a dividend based on the
rent received by the companies plus a guaranteed buy back of their shares at
125% of investment after 3 years or 150% after five years.

Investors were given comfort that their monies would be paid
into solicitor client accounts and held in escrow and only released when
adequate security was in place. This did not happen and funds were released by
solicitors on the directions of the Roberts and large sums were applied for
other purposes, or purposes that the investigators could not identify.

The Court saw evidence that, save for one set of buildings
known as The Barns, none of the properties were ever transferred to the
investment companies as purported would happen in the brochures and other
documents provided to investors. The Barns, which the investigators found to be
derelict outbuildings, were subsequently transferred by BBH Property 1 Limited
to Thornley Property Stroud Limited without the investors’ knowledge leaving
the investors without any security at all.

Thornley Property Stroud, which was used by Mrs Roberts as a
personal management company and latterly as the hotel operating company, is
recorded as having paid £300,000 for the purchase of the Barns from BBH
Property 1. However; the investigators found no evidence that any such
consideration was ever paid by Thornley Property Stroud for The Barns.

BBH Property 1 Limited was incorporated on 11 December 2014,
registration number 08675992. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

BBH Property 1 Limited was incorporated on 11 December 2014,
registration number 09012571. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

Crowdseed3 Limited was incorporated on 15 September 2014,
registration number 09217756. The registered office of the company is at 54
Mallorie Park Drive, Ripon, N Yorkshire, HG4 2QF.

Crowdseed4 Limited was incorporated on 30 January 2015,
registration number 09415203. The registered office of the company is at 54
Mallorie Park Drive, Ripon, N Yorkshire, HG4 2QF.

HH Property 4 Limited was incorporated on 02 April 2012,
registration number 08016267. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

Convent (Stroud) Limited was incorporated on 15 September
2015, registration number 09778052. The registered office of the company is at
The Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

Roomco Limited was incorporated on 03 September 2014,
registration number 09200891. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

Convent Live Limited was incorporated on 15 September 2014,
registration number 09218722. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

Thornley Property (Stroud) Limited was incorporated on 25
April 2014, registration number 09011046. The registered office of the company
is at The Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire,
GL5 5HS.

Netgiglive Limited was incorporated on 20 November 2012,
registration number 08300688. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

Music Show Limited was incorporated on 21 November 2016,
registration number 10489610. The registered office of the company is at The
Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

In respect of the Norway Project (“The Convent in the Hills
Investment�):

Convent in the Hills Limited and Covent in the Hills 2
Limited were companies used to raise investment to purchase and develop land in
Norway to create an eco resort.

There were two elements to the development the first was a
proposal to build a central hotel and 224 houses on a plot of land. Funds were
raised by The Convent in the Hills Limited and were used to purchase five plots
of land in Mr and Mrs Roberts’s names, only one of which had planning
permission and was subsequently transferred into the ownership of a subsidiary
company of The Convent in the Hills being Convent in the Hills AS

Convent in the Hills AS is a Norwegian company and is
currently subject to an insolvency process in that country.

The plot was purchased from Mr and Mrs Roberts for NOK 5
million (Norwegian Krona), being the same price that they had paid for all five
plots in the previous year. The Court accepted the evidence that a significant
proportion of the monies raised was paid to Mrs Roberts, or to companies, or
individuals with whom she was connected, including paying expenditure
apparently unconnected with the Norwegian Project.

The Convent In The Hills Limited was incorporated on 3 June
2014, registration number 09068955. The registered office of the company is at
The Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire, GL5 5HS.

The Convent In The Hills2 Limited was incorporated on 23
July 2014, registration number 09144068. The registered office of the company
is at The Convent, Convent Lane, South Woodchester, Stroud, Gloucestershire,
GL5 5HS.

The winding-up petitions were presented under s124A of the
Insolvency Act 1986. The Official Receiver was appointed as provisional liquidator
of the companies on 10 August 2017 by Mr Justice Roth, a Judge of the Chancery
Division of the High Court.

Company
Investigations, part of the Insolvency Service, uses powers under the Companies
Act 1985 to conduct confidential fact-finding investigations into the
activities of live limited companies in the UK on behalf of the Secretary of
State for Business, Energy and Industrial Strategy.

The Insolvency
Service, an executive agency sponsored by the Department for Business, Energy
and Industrial Strategy (BEIS), administers the insolvency regime, and aims to
deliver and promote a range of investigation and enforcement activities both
civil and criminal in nature, to support fair and open markets. We do this by
effectively enforcing the statutory company and insolvency regimes, maintaining
public confidence in those regimes and reducing the harm caused to victims of
fraudulent activity and to the business community, including dealing with the
disqualification of directors in corporate failures.

Bankruptcy and Individual Insolvency Register

Companies House – Company Information

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