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Evening Standard
Evening Standard
Business
Charlotte Lytton

Leasehold reform: 'forfeiture remains the most mafia-like element of leasehold law'

Spurious service charges, ‘urgent works’ that never go ahead, months of unanswered calls and emails: dodgy freeholder tactics are nothing new to most leaseholders. Yet a viral case this week has again highlighted that, for the worst in that group, there is no such thing as stooping too low.

One Londoner posted on X (formerly Twitter) that her freeholders had sent notice of beginning proceedings to take her flat away.

Her crime? Not paying her service charge, due to the fact she has lodged a tribunal against them for, you guessed it, bogus service charges.

In the absence of her paying a £5,500 bill (an impressive near 10-times higher than the £600 estimate she was given on buying two years ago), she is ‘in breach of the lease’ - and her home is theirs for the taking.

That they owe *her* money from a tribunal she won against them last year — for, yes, more bogus service charges — matters little when there are loopholes to be exploited in the bid for more cash.

In a crowded field, forfeiture remains the most mafia-like element of leasehold law. But four years on from the Government’s promises to overhaul this “feudal” system, it, along with everything else unfairly punishing the UK's estimated 10 million leaseholders, stands.

Worse still is that the watered-down parliamentary bill currently making its way through the Commons makes no mention of excising forfeiture, either.

They say it is so rare (affecting an estimated 80-90 homes each year) that taking it out isn’t worth the hassle — but that fails to account for the many more attempts freeholders make on leaseholders’ homes that don’t end in forfeiture, but serve as a money and time-sapping scare tactic instead.

Barry Gardiner, the Labour MP for Brent North, has spoken out against the practice (PA Media)

“There is no universe in which that is fair and equitable,” Barry Gardiner, MP for Brent North, tells me. “It is part of the rotten system of residential leasehold that keeps people prisoners in their own homes.”

Part of the reason forfeiture (or the threat of it) has got so out of hand is that it involves the First Tier Tribunal system — allegedly designed to level the playing field for leaseholders, but instead proving a sluggish and frankly insufficient means of dealing with the problem.

Case levels are so high that the backlog is six months long, by which point new, ludicrous service charges have been issued, and leaseholders brave enough to take the bullies on must file a new claim.

The time and energy it takes to try politely dealing with rogue managing agents, and provide the vast documentation the FTT requires cannot be overstated (there’s also a £300 fee each time).

If and when the tribunal does eventually go ahead, winning means next to nothing. Freeholders and managing agents routinely fail to repay the money they owe and challenging that requires another tribunal.

All the while, with service charges subject to these proceedings unpaid, freeholders can say the lease has been breached, and try to seize the properties in question.

If and when the tribunal does eventually go ahead (reasons one notorious freeholder has recently given to try and get out of them include ‘having a holiday booked,’ ‘the war in the Middle East,’ and ‘having another tribunal on the same day’), winning means next to nothing.

Freeholders and managing agents routinely fail to repay the money they owe and challenging that requires another tribunal.

This is all very useful for the aggressors, of course, meaning more time in which to file possession orders, and scare leaseholders into paying inflated service charges in full, never to be returned. Unfit for service feels too polite a term.

And so forfeiture goes on, a property-grabbing gambit exposing humanity at its worst.

When one leaseholder paid his service charge two weeks late last month — “an error on my part due to my wife recently passing away and that it simply slipped my mind” — he soon received a possession order.

He emailed his managing agent explaining his circumstances, and that he would pay the next day, which moved the company enough to charge a bargain half of the late fee (sent with their condolences for his wife’s passing).

Another, with dementia, lost his home after forgetting to pay his charges and all appeals a friend made to simply collect his possessions were ignored.

Others report receiving erroneous forfeiture notices, yet how many pay up anyway, driven by confusion or fear, is unclear.

Killing forfeiture would end much of freeholders’ coercive power. That the Government can’t or won’t see that only proves, again, how hollow their leasehold ‘reform’ really is.

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