Fairhold Services (parent to Estates & Management) have just published their 2017 results.
Whilst the headline figure looks bad for them, it is the notes to the accounts that make for really grim reading.
From a 2016 profit of £3,900,865 Fairhold made a loss of £24,596,280 in 2017.
The notes to the accounts make mention of the Ministry of Housing, Communities and Local Government action and the Law Commission report on the future of leasehold.
Whether leaseholders get all they want remains unclear. Probably they will not.
That said, leglisation that will come in will address excessive ground rents and penal costs of enfranchisement and lease extensions, making it much cheaper to extend a lease or enfranchise a leasehold property.
If a leaseholder can extend the lease at a lesser rate or buy the freehold at a lesser rate (which does away with ground rent provisions) this would have a dramatic effect on the freeholders income.
It is not just their income that would decline, but their income would decline to such an extent that they would not be able to repay the loans taken out to buy the freehold interests in the first place.
This is acknowledged in the Fairhold accounts.
Currently loans taken out by Fairhold attract modest interest rates for short term loans of 1% above LIBOR.
Crucially, longer term debt due to mature in 2030 is at a penal 4.05 % (compare that to an average mortgage rate of 1.9%)
And long term debt due for maturity in 2075 the interest rate is a staggering 8.5 %!
That Fairhold can continue to trade is down to guarantees given by the highly secretive parent Euro Investments based in the BVI that they will not call in any loans.
That guarantee has been given by a company at substantial risk of default if any reforms to leasehold is enacted.
