Government Encourages House Building
By admin | August 11th, 2010 | Category: Past Articles | 7 commentsIt’s been widely reported in the national press that the government are to encourage councils to build more homes, by promising to pay the council the same amount of money, as each of the new homes pay in council tax per year for two years after completion.
Fair enough, this is a way of encouraging the council to build new homes and meet targets, but as we are already too familiar with, councils ‘appear to currently be being encouraged’ by developers to allow the approval of new developments, with assurances that they won’t be responsible for their upkeep, by the appointment of PMCs.
If the government do proceed to pay these ‘Brucey Bonuses’ on every new home, the councils will be quids in if they continue to also be encouraged by developers!
So let’s not feel sorry for those poor councils who say they don’t have the budgets to do this and that, the money is there, they just don’t want to spend it!!!
The government must act and have assurances that these monies will only be paid, providing it is the councils responsibility to maintain these developments and stop allowing developers to appoint property management companies that rip residents off!
On a slightly different note, When it comes to leasehold properties why doesn’t the local council buy those parts of the land, so that they are paid the ground-rent and benefit from it, rather than those fees go into the profit margins of the CBG / PPMG?
Who knows what the future holds, but we will soon find out when residents of these new properties discover these pitfalls!
We have some very interesting stories to post in the next few days, that may spur a reaction from the ever so quiet ‘Andy’!
So basically to take advantage of the public, Councils grant permission to the ‘BIG’ Developers to build new homes on the proviso that they also include enough ‘social’ and ‘affordable’ housing and maybe also some civil amenities (like near me where a new Library is being built with a whole heap of new compact Flats even though there’s an existing Library not too far away!) – this sorts out the Council’s duty to provide enough housing and amenities without having to actually do anything themselves (…except for granting permission which is hardly arduous).
Then these ‘Private’ Developments are leased out to homebuyers, who are then required to pay 1) Ground Rent to the Freeholder (…to satisfy it’s Bond investors!?) 2) Service Charges to the PMC for the upkeep of the property and common areas inc. roads, lighting, street cleaning etc. and then ALSO pay 3) Council Tax to the Local Council at the given Banded Rate. Normally Council Tax would include cover for the costs of keeping the common areas, as mentioned, roads, lighting, street cleaning etc. but seeing as this is being ‘taken care of’ by the PMCs (this is in quotes as PMCs could not really care less about taking care of these things in the ‘Private’ Developments they supposedly ‘manage’!) then does the Council Tax paid then just result in pure profit for the Councils?? Other similar homes in the area which are not in ‘Private’ Developments are probably in similar Bands for their Council Tax but don’t have to pay additional Service Charge and benefit directly from all the services that the Council provide.
Add on to this the Government’s new ‘Brucey Bonuses’ scheme as mentioned by Admin then this then doubles the Council’s profits (….as far as I can see the only thing directly that leaseholders Council Tax goes towards is refuse collection!) The Council will deny any responsibility over the ‘Private’ Development’s common areas and the PMCs will charge the earth for it and then sit back and do nothing after collecting your hard earned money as that becomes pure profit for them! The Developers are quids in too, as we all know the rebuild value of these modern properties is nothing like the market value for them (…if you’ve looked into the insurance scam then you’ll know this all too well!) so even with having to provide additional ‘cheap’ housing and maybe some civil amenities too then this is nothing compared to the profits they’ll make on marketing the leasehold properties and collecting the Ground Rent on them (or selling on the Freehold)! Add to this the \pack ‘em in stack ‘em high\ approach to modern blocks of Flats and probably the cheaper quality of building materials (…as we’ve seen modern build 80′s and 90′s properties look more weathered and dilapidated than neighbouring Victorian, Edwardian houses that have been there for decades!) then there are huge margins in it for the Developers too (…probably even bigger than the margins the PMCs get from the insurance scam!)
In my opinion though, the greatest scam of all is that these \homebuyers\, probably a lot of naive first time buyers who, as we were when we brought our first leasehold property, are buying into a dream of having their own home! Add to this the kudos of living in a ‘Private’ Development too then you think \Wow! Isn’t it nice to have a place you can call your own!\ – little do they know the true nightmare that they are letting themselves in for (…and you can’t really call it your ‘own’ either!) I think a question was asked before that if you knew then what you now know about living under a leasehold and all that entails then would you still buy a leasehold property! My answer is a firm NO! And the above scam of EVERYONE, Councils, Developers, PMCs, Freeholders profiteering from the hard working public is just disgraceful and has to stop! How any government could let this happen, let alone a ‘socialist’ Labour one is disgusting! And now the coalition just seem to be stoking the fire with their ‘Brucey Bonuses’ – is there any hope?
Time for the “Professional Bodies” to get “proactive” as stated in the Government’s response to the No 10 Petition then?
(a link to which was posted on this site recently)
These bodies know full well the problems that exist in the leasehold /freehold field. Whilst leaseholders and affected freeholders may be classed as “feudal serfs”, the professional bodies ans assocations ahve access to governmenr and their civil servants.
I say to them all : PLEASE SPEAK UP ON OUR BEHALF.
Nirmal
We couldn’t agree more with your comments and surely it’s time that this type of information was in the press / in writing to warn first time buyers of these predicaments?
Only too often we are hearing it’s hard for 1st time buyers to get on the property ladder and if they can afford it – the likelihood is that it’ll be a flat… with the spiralling management fees that none of us expected.
So if it wasn’t hard enough being able to get the mortgage on the property in the first place, it’ll only be harder to afford to live in these properties! Especially when applying for mortgages we get asked to prove affordability, which is crazy, because none of us know the true costs that will increase year on year.
We have to ask the question as to whether this is the reason why we are all seeing a decline in flat prices, because people are aware of the spiralling costs and want out, thinking that reducing the cost of the property will make the fees irrelevant?
Who knows…. we just wish we could some how warn 1st timers of these dangers, which would hopefully see an end to flats being built, inturn seeing an end to PMCs being appointed……
Maybe a website ‘firsttimebuyers.co.uk’ should be setup to warn them???
For reference on this thread: Government response to petition ‘flatownerhelp’ Submitted by Darren Rossiter, Signatures: 1,392
http://www.hmg.gov.uk/epetition-responses/petition-view.aspx?epref=flatownerhelp
“Government recognises the need to strike the right balance of rights and responsibilities between landlords and tenants. The current legislative framework can deliver that balance, if matched by an increasingly pro-active and positive approach by the professionals in the sector. The government is working to ensure adequate leaseholders protection.
The petition called for the enforcement of a proper code of conduct to protect leaseholders. The Secretary of State has approved two codes of management practice that cover leaseholders and service charges. These are published by the Royal Institution of Chartered Surveyors (RICS), and the Association of Retirement Housing Managers (ARHM).
Landlords and managers in the leasehold sector dealing with service charges should have regard to these codes, which set out both best practice and the law. As codes of Practice approved by the Secretary of State they can be used in evidence at court or tribunal proceedings, and we are keen to see leaseholders make use of those codes where they believe they have not been complied with.
Free, initial legal advice and information on leasehold law is available from the Leasehold Advisory Service (LEASE). LEASE is a specialist body funded by this Government Department to provide initial advice and information on a wide range of residential leasehold issues. It also runs a mediation scheme for resolving leasehold disputes. They can be contacted at 2nd Floor, 31 Worship Street, London, EC2A 2DX, by telephone on 020 7374 5380 or by e-mail at info@lease-advice.org and their Website is http://www.lease-advice.org”
Noting also that the address given by the Government foe LEASE is out of date, new address is:
LEASE
Maple House
149 Tottenham Court Road
London W1T 7BN
020 7383 9800 – Lines are open Monday to Friday from 9:30-5:00
Look forward to the interesting stories
There is one problem with all of this.
The Petition called for the following:
“create a body which will oversee and regulate the leasehold management industry, enforce a proper code of conduct offering protection to owners of leasehold properties from unreasonable service charges and poor quality of service.”
The RICS code of practise should indeed be followed by property managers and any deviations from that code can be used in LVT cases to support the case of a tenant. In fact may aspects of the code are duplications or parallels of leasehold law.
However, this is where it falls down.
The enforcement is down to the tenant in making a case at an LVT which has been the position for some time now. Any legal action at an LVT is down to the tenant to fund, in monies and time.
The Petition called for a “body” to regulate and enforce such codes of conduct. That would be the far preferred situation and property managers would be far less inclined to flaunt legislation and codes, knowing that it was not down to the tenants and laymans of the world to pursue them.
Arthur, GREAT point! The Government expects us all to become experts in property law rather than take any responsibility to oversee and regulate. There aren’t many things you can do nowadays without being overseen but running a PMC and taking advantage of your ‘customers’ seems to be one of them!