| Chairman | Lord Richard PC QC |
| Directors | Ron Armstrong |
| Jennifer Ellis | |
| Muriel Guest-Smith (until December 2003) | |
| David Marcus | |
| Trevor Moross | |
| Chief Executive | Peter Haler |
In February 2004, LEASE passed its tenth year of operation, which is remarkable for an organisation originally envisaged as a three-year stopgap to provide specialist advice on new legal provisions while the legal profession caught up. That we are still here is a matter of some satisfaction, and that LEASE has developed into the highly professional and clearly appreciated service it now is should be a subject for congratulation. We have achieved much in our ten years, placing LEASE in an eminent position of respect in the leasehold professional field and gaining recognition from the public and the media.
I was pleased to host a recent reception in the House of Lords to mark our tenth anniversary; the Minister, Keith Hill, was kind enough to attend and speak and it was gratifying also to see Sir George Young, who, as Minister in 1994, had the foresight and drive to set up the L.E.A.S., our predecessor organisation.
The development of LEASE from an agency dealing with 5,000 enquiries a year to one now handling well over 2,000 a month has, I feel, made a real and useful contribution to successive Governments' continuing efforts to level the playing field for the leasehold owner. My Board fully recognises how much remains for LEASE to do in assisting both the public and the professionals in learning to live with the new rights introduced by the Commonhold & Leasehold Reform Act 2002.
This year's significant event in the legislative field was the welcome introduction of the statutory right to manage (RTM) in September, together with the widened jurisdiction for the Leasehold Valuation Tribunals; the following month saw the commencement of the improved procedures for consultation of tenants on service charges (S20). RTM and S20 both seemed to cause great consternation among professionals and LEASE welcomed the opportunity to work with the Association of Residential Managing Agents and the Association of Retirement Housing Managers in training their members on the right to manage and co-operating in the production of the first published guide to the revised S20.
It became clear that public sector landlords had special concerns about S20 and we greatly appreciated the help we received from the Association of London Government and the Chartered Institute of Housing in producing and delivering a revised version of the S20 guide to public sector leasehold managers.
LEASE fully appreciates the concerns of managers at the greater complications they face in the management of leasehold property under 2002 Act rules, but we remain convinced of both the necessity and the essential fairness of the new rights for leaseholders.
We remain concerned at the continuing delays in the implementation of the remaining provisions of the Act although, through our close working relations with Government officials, we fully understand the reasons. Last year I expressed my dissatisfaction that Parliament had to debate a Bill without sight of the necessary regulations. We have an Act which is strong on rights but poor in drafting; nevertheless, my Board fully appreciates the staunch efforts of the civil servants in both the Department of Constitutional Affairs and the Office of the Deputy Prime Minister in their struggle to draft regulations to make workable some of the more clumsily drafted provisions.
The delay in the introduction of commonhold and the amendments aimed at the abuse of forfeiture is a matter of regret and some of the most valuable amending provisions to leasehold introduced by this Government are unlikely to be commenced within three years of Royal Assent.
However, it is clear to us that new legislation means more work for LEASE and I was very much aware of the increases in demand arising directly from the various commencement orders. We were grateful for an increase in grant for the year and welcomed the new contribution from the Department for Constitutional Affairs, but the fact remains that the organisation is underfunded for the demand placed on it. I have raised our funding difficulties direct with the Minister, who I know appreciates the problem. LEASE is a lean organisation, highly cost-efficient, extracting the maximum from the money given to us by the Government. We actively want to do more and will be preparing a business plan during the coming year; I remain confident that the Minister will see the value of LEASE and will continue to provide the support we need.
Finally, as always, I express my thanks to my fellow Directors and the staff of LEASE. I would like particularly to thank Muriel Guest-Smith of the Federation of Private Residents' Associations, who stepped down from the Board in December. Muriel has been a Director of LEASE since 1996 and before that a Director of L.E.A.S., and we will greatly miss her experience and contribution. In Muriel's place we welcome Robert Levene, a leasehold flat-owner and the new Chief Executive of the FPRA; we look forward to working together.
3.1 LEASE is an independent service providing free legal advice on all aspects of residential leasehold in England and Wales; it is a private company, wholly funded by grant-aid from the Office of the Deputy Prime Minister, the Department of Constitutional Affairs and the National Assembly for Wales.
3.2 All LEASE advisors are legal professionals, either solicitors or non-practising barristers, able to offer high-quality advice from a position of specialisation in the subject. LEASE has gained public recognition as a fund of knowledge on residential leasehold and as a resource readily available not only to leaseholders and landlords but also to professionals working in the field, such as solicitors, valuers and managers.
3.3 LEASE publishes a wide range of advisory material, both in print and on its comprehensive website; the website also provides unique access to all decisions and determinations of the Leasehold Valuation Tribunals relating to purchases and lease extensions under the Leasehold Reform Act 1993, disputes over service charges and management under the Landlord and Tenant Acts 1985 and 1987 and applications concerning the right to manage under the Commonhold and Leasehold Reform Act 2002.
3.4 LEASE has a formal role in the provision of advice to Government on leasehold matters and the development of commonhold through our agreed work programmes.
4.1 LEASE was ten years old in 2004. The service was established in 1994, as the Leasehold Enfranchisement Advisory Service (L.E.A.S.), to provide initial advice and aid access to the new rights of freehold purchase and lease extension for flat-owners, introduced by the Leasehold Reform, Housing and Urban Development Act 1993.
The procedures of the Act are complex and these valuable new rights were not readily accessible to the layperson; the Minister, Sir George Young, took the initiative in providing the means to set up a specialist service to provide free legal advice on the Act. The stated intention was for a temporary service, based on a three-year grant, to fill the advice vacuum while the legal profession as a whole developed expertise in the new legislation.
L.E.A.S. opened its doors on Monday 7th February, with a staff of two with two telephone lines. Within a few months the staff rose to three and remained at that level until 1996. During the first year of operation L.E.A.S. responded to just under 5,000 enquiries (4,977) and published eight detailed advice notes.
4.2 Funding was initially on a shared basis, part Government grant and an equal private sector contribution. This came primarily from the lending industry. The Northern Rock Building Society (as it then was) provided the office rent-free and the Building Societies Association wholly funded one salary. We also received a financial contribution from the Association of Retirement Housing Managers, with whom we have remained on close terms, and from the Royal Institution of Chartered Surveyors. We remain most grateful to our funders in these early years.
4.3 Demand for advice grew, and there was no evidence of the need for our service being replaced by the legal sector. Public dissatisfaction with leasehold abuse was growing and the Government responded to these concerns in the changes to leasehold legislation introduced in the Housing Act 1996. The Government recognised the value of L.E.A.S. as an advice service both to the public and Government in a provision in the Act allowing for full funding of a generic leasehold advice service, no longer restricted to the 1993 Act.
As our first Chairman, the Earl Lytton, looking back on these changes in his 1998 report, said: 'We have been given the chance to set up the sort of service we ourselves felt was really needed'.
Staff and output expanded, thanks to an increasing level of grant, as shown in Figure 1 below. LEASE has dealt with over 150,000 enquiries in our ten years of operation.
5.1 LEASE maintains a high level of financial efficiency, producing increasing levels of output with corresponding reductions in unit cost per enquiry. We remain highly conscious of our dependence upon the public purse and our need for constant improvement in value for money.
5.2 In the past year, LEASE responded to 27,438 enquiries, an increase of 19.3% on the previous year. (These figures relate to enquiries dealt with, not enquiries received, which are not measured but from earlier research are considered to be around 30% higher.)
5.3 Overall output has increased more rapidly than grant levels for the past three years with a corresponding reduction in per-enquiry unit cost (see Figure 8 below).
| Year | Grant | Output | Unit Cost
| 2001-2 | £485k | 18,500 | £26.22
| 2002-3 | £545k(+12.4%) | 23,000(+23%) | £23.69(-10.6%)
| 2003-4 | £586k(+7.5%) | 27,000(+17.4%) | £21.48(-10.2%)
| |
5.4 The LEASE website was designed and produced in-house with limited input from consultants, at a minimal cost of around £6,000. It provides access to all our advice notes, reports and research papers, updates on introduction of legislation plus the three schedules of LVT determinations with full case papers for around 2,000 decisions.
Usage of the website is high and steadily increasing. In September 2001 an average of 235 visitors accessed the site daily; by February 2004 this had risen to 867. The website is available as two CDROMs at a non-profit cost of £10; during 2003-4 we issued 144 copies.
6.1 LEASE greatly welcomed the commencement, in September and October 2003, of the provisions governing the right to manage, the new LVT jurisdiction and the revised consultation procedures for service charges under S20 of the Landlord and Tenant Act 1985.
6.2 The substantial LEASE guide to the new right to manage was available on the website on the day of publication of the Commencement Order, 4th August 2003, and the printed version was available on actual commencement in December. Until publication of the ODPM guide in January 2004, the LEASE booklet remained the only readily available printed guide to the new provisions. For several months this was the most accessed document on the website and over 3,500 printed copies have been issued.
As noted in last year's Annual Report, LEASE had agreed to work with the Association of Residential Managing Agents (ARMA), in providing direct training to managing agents and four full-day training workshops were held in early September, in Huddersfield, Crawley and London. The dual objectives were for the managers to understand the process in operation and also to then be able to provide practical advice, on a consultancy basis, to tenants considering take-up of the right to manage.
The initiative was repeated with the Association of Retirement Housing Managers (ARHM), with workshops in Exeter, Aldershot and Leeds, and with a private company, Peverel, for their management staff in Milton Keynes.
6.3 The improvements to the S20 consultation requirements for service charges caused consternation in both the private and public sectors. While the new procedures are more complex than the old ones, there is little doubt that they will fulfil the Government's aims for greater transparency and a genuine consultation process for service charge payers.
LEASE worked with ARMA and ARHM in producing the first guide to the provisions, a joint publication; as is the usual practice; this was available on the date of commencement.
Subsequently, the joint booklet was not found adequate to deal with some of the major concerns of the public sector landlords, both in terms of the tenant's new right to nominate a contractor and the frequent necessity for compliance with EU procedures. We therefore co-operated with the Association of London Government (ALG) in producing a new joint publication tailored directly to the needs of the public sector landlord. With the kind assistance of the Chartered Institute of Housing, a copy of the guide was mailed direct to the leasehold manager of every local authority and housing association in England and Wales.
6.4 LEASE took its educational remit seriously and, for the first time, arranged a full day conference on the 2002 Act for property professionals. This was held at Savoy Place on 14th May 2003. As it was a sell-out, with all 340 places taken up, a repeat 'overflow' event was held for a further 50 delegates in July.
The conference programme concentrated on the practical application of the legislation for legal and valuation advisers and property managers. The Minister, Lord Rooker, gave the opening address and we were fortunate in being able to obtain leading figures in the field to speak, including Professor David Clarke and the co-authors of Hague on Enfranchisement, Damian Greenish and Anthony Radevsky. Delegate feedback was very encouraging, sufficient to merit the establishment of a LEASE Conference as future annual event.
6.5 LEASE continues to work closely with the ODPM toward the implementation of the remaining provisions of the Act. We remain concerned at certain provisions relating to right to enfranchise companies, the vehicle enabling the new right to participate in a collective purchase of the freehold, and we are aware of views among professional advisers that the provision will have a severely detrimental effect on the number of enfranchisements.
We have made representations to the ODPM and hope that officials can find some means to solve the perceived problems. We regret the continuing delay in the implementation of the protections against misuse of forfeiture and in the new right for a leaseholder of a house to arrange his own insurance. We note the increase in enquiries to LEASE on both issues, which suggests that some unscrupulous landlords may be stepping up abuses in the awareness of the impending block on these practices.
7. Improving leasehold management
7.1 LEASE is committed to the improvement of standards in leasehold management and continues to work with other agencies toward this. In addition to our ongoing liaison with ARMA and ARHM, we were pleased to be asked to input to two new guides to good practice in the public sector.
One was produced by ALG, the other jointly by the Chartered Institue of Housing (CIH), the National Housing Federation and the Housing Corporation. We remained concerned at levels of management expertise in certain areas of the public sector and strongly support the two guides which should make a major contribution to improvement in standards.
7.2 To further improve management, LEASE contributes to professional conferences and provides direct training on leasehold law, including the new provisions. In addition to the conference and the specialist work on RTM and S20, LEASE has spoken at a number of events, including the CIH annual leasehold management conference and other CIH seminars, at ARMA and ARHM events, the AIMS policy forum, the ALG leasehold forum and RICS matrics. We were also pleased to work with Moretons, a London property manager, who initiated a number of evening seminars for Chairs of resident management companies. This was a new and useful audience for LEASE.
As part of LEASE's training role, we participated in 'Leaseholder Days' and other events arranged by Hastings, Redbridge, Enfield and Haringey Councils and Manchester and Haringey leaseholders' associations. We provided formal training to the following organisations: Oxford Citizens Housing Association, Hounslow Homes, West Oxfordshire Housing Association, Retirement Lease Housing Association, Midsummer Housing Association, Hallam Housing Association, Somer Housing Association, Westminster ALMO, Camden Housing Advice Service, Chelsea CAB, Macclesfield Borough Council.
7.3 In this context it is relevant to make reference to the progress made by the Residential Property Tribunal Service in dealing with their new jurisdiction provided by the 2002 Act and the ensuing increase in their workload. LEASE recognises both the improvement in output by the Leasehold Valuation Tribunals and the significant reduction in timescales. We will continue to provide access to the Tribunal's decisions and determinations on our website and to pursue our useful working relationship with RPTS.
8.1 We were pleased to be chosen by the Department of Constitutional Affairs (DCA) as the advice agency for commonhold. The Department is providing grant under S62 of the 2002 Act for the recruitment and costs of an additional LEASE adviser and for new advice publications. The new adviser was appointed on 8th December 2003 and will lead on commonhold, but all LEASE staff will advise on the new legislation.
8.2 LEASE participated in a number of Commonhold Workshops arranged by DCA, an interesting and highly effective initiative by the Department to obtain maximum discussion and feedback on draft regulations from a very wide range of practioners in the property sector.
8.3 We look forward to the anticipated commencement of commonhold later in 2004. We recognise the wider remit required by commonhold, to advise the public and the professions but also to reach the developers and the home-building industry. Commonhold is more directly aimed at new-build rather than conversion from leasehold, and it will be primarily for the developers to take up the opportunities provided by the new system and for the lenders to fund both the development and the mortgage of the resultant units. It will be a significant task for LEASE in the coming year to tailor advice provision to all potential participants in commonhold, from the builder to the unit-holder.
9.1 Internally, our principal task for the coming year must be to revisit the issues of the funding and business foundations of LEASE. We continue to rely wholly on Government funding and we are committed to the continuation of a free service. However, there is a pressing need to place LEASE on a more businesslike footing and the production of business proposals remains a priority for 2004-5. We had intended to submit formal proposals to Government based on a business plan during the year, but this was postponed due to the huge amount of work arising directly from the 2002 Act.
9.2 The MORI customer satisfaction survey, reported last year, confirmed that our overall approach to advice and the quality of service is about right and found highly satisfactory by the great majority of our clients. We remain concerned at the continuing long waiting times for clients to speak to advisers although this should be improved by the new, semi-automated, telephone system installed in April 2004.
9.3 LEASE does nothing to generate or encourage demand; as we are already hard-pressed to deal with current enquiries any higher levels would swamp our limited resources. The website clearly is highly effective in furthering customer awareness but LEASE does not advertise, other than a small feature in the yearly Non-Retirement Guide, a publication aimed at the retired leaseholder. Despite the fact that we employ no publicity consultants (nor would our budget allow us to), we still achieve surprisingly high levels of publicity. We featured in over 50 local and national newspaper articles during the year and contributed to a Radio 4 broadcast in August. LEASE is gratified by this high level of recognition of our service.
9.4 While income stays at existing levels. LEASE will always be over-subscribed; we have too few advisers to deal with the volume of enquiries received. The changes to leaseholders' rights introduced by the 2002 Act have increased demand, not only from leaseholders themselves but from professionals needing advice on how to operate in the new regime. It is only the dedication of the advisory staff which enables the service to produce increases in output each year but there must be a limit as to how far this can continue without further resources.
9.5 LEASE is committed to the provision of a high-quality legal advice service, maintaining and striving to exceed the standards we have established over the past ten years. We remain grateful to Government for the continued funding of the service.
10. Income and expenditure account
| 31.03.04 | 31.03.03 | |||
| £ | £ | |||
| Income: | ||||
| Office of the Deputy Prime Minister | 586,000 | 545,000 | ||
| Department of Constitutional Affairs | 18,000 | - | ||
| National Assembly for Wales | 5,800 | 4,700 | ||
| Donations | - | 400 | ||
| 609,800 | 550,100 | |||
| Expenditure: | ||||
| Staff costs | 415,230 | 328,335 | ||
| Rents, rates, heat and light | 92,712 | 93,229 | ||
| Post, telephone and stationery | 18,763 | 23,094 | ||
| Travel and subsistence | 1,945 | 7,984 | ||
| Printing | 32,499 | 17,970 | ||
| Other expenditure | 48,027 | 51,731 | ||
| Auditors remuneration | 1,800 | 1,750 | ||
| Fixtures and fittings | 8,545 | 8,544 | ||
| Computer equipment | 3,150 | 3,150 | ||
| 622,671 | 535,789 | |||
| Excess of income over expenditure | (12,871) | 14,311 |
| 31.03.04 | 31.03.03 | ||
| £ | £ | ||
| Fixed assets: | |||
| Tangible assets | - | 11,696 | |
| Investments | 1 | - | |
| Current assets | |||
| Debtors | 21,443 | 29,688 | |
| Cash at bank | 4,103 | 39,911 | |
| 25,546 | 69,599 | ||
| Creditors | |||
| Amounts falling due within one year | (15,181) | (58,058) | |
| Net current assets | 10,365 | 11,541 | |
| Total assets less current liabilities | 10,366 | 23,237 | |
| Reserves | |||
| Profit and loss account | 10,366 | 23,237 | |
| 10,366 | 23,237 |
This information is extracted from the full accounts audited by Hodgson Hickie, copies of which can be obtained from LEASE, 70-74 City Road, London EC1Y 2BJ.