Survey on onerous ground rent data. Please fill this in if you have a leasehold house with exploitative ground rent terms
Leasehold game-playing has spectacularly backfired for Beech Developments at its Gwel y Mynydd site in Llandudno Junction.
The small-scale housebuilder decided to build the houses leasehold, which cost around £250,000, with escalating ground rents: they start at £100 and double after five years and then rise with RPI annually.
Purchasers were told by the sales team that the cost of the freeholds would be £1,000.
But when 66 purchasers registered their interest to buy the freeholds in early December they were told the price of the freeholders would be £3,500 and that they had until December 31 to confirm.
The deadline for completing the deal, set by Beech Developments, was February 10, otherwise the freeholds would be sold to the Blackthorne Corporation Limited (who active directors are William John Coplin and Mark Hawthornthwaite).
This high-handedness caused outrage and set off articles in the local North Wales Daily Post.
Matthew Gilmartin, MD of Beech Developments, insists his company has been “clear and consistent throughout”.
“We have always been completely clear with all homebuyers at Gwel Y Mynydd that their homes are purchased as leasehold properties, not freehold,” Mr Gilmartin told the Daily Post.
“We have always stated the cost of purchasing the freehold on properties would be subject to market value at that time.”
He then added:
“In reality we would make more money by retaining the freehold ourselves and collecting ground rent for the remaining lease term.”
What is unresolved is why Beech Developments would not sell the freeholds at the same time as the leasehold interest.
Mr Gilmartin is quoted saying: “At the time of purchase the option to buy the freehold was not available to residents.” But he has not explained why this was the case.
Beech Developments has now told its not entirely happy customers that they would have until the end of January to give notice of interest and to the end of May to complete.
Louie Burns, of Leasehold Solutions, advised the residents to act as a group to buy their freeholds.
“The benefits will be an economy of scale. You will be able to get your legal and valuation fees reduced.
“More importantly it means you have much more bargaining power.
“Freeholders often use the threat of going to tribunal as a weapon as most leaseholders would want to avoid the extra legal fees and so they are able to bully you into paying more.
“If you are part of a group, the costs are split between you all so it shifts this power to the leaseholders.”
LKP has asked for Mr Gilmartin to explain Beech Developments conduct in this matter.
Llandudno Junction councillor Mike Priestley said:
“If Beech Homes promised one price, and then residents find it has been inflated, then it doesn’t seem right.
“This should serve as a warning to people when they buy a new house, to check the small print.”
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BBC R4 You and Yours now turns to Countryside’s doubling ground rents
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See? Everyone is at it now….???? Get more money out of the people who mistakenly thought they bought their houses, so they have to pay to buy the freehold to their own house. Because if they don’t they will not have a house to speak of in a few years time. Not to mention that enfranchisement is not always possible-say if there are commercial units on the premises or if the freeholders own a couple of units.
It does indeed look as though everyone is at it now! I was browsing on Rightmove looking for a freehold property (as I intend to sell my leasehold flat as soon as the lease is extended as I have no desire to remain under a system that is oppressive and unjust and stacked in favour of the freeholder and allows him/her to act as though he/she is some sort of feudal overlord entitled to treat leaseholders as though they are their own personal cash cows) and I came across some overpriced two beds new builds selling for £285,000 (no garage) on a shared ownership basis via a Housing Association on a leasehold basis.
It seems that the market in our area is overpriced by about 15% to 20% as a result of the Governments Help to Buy policy and I was astounded to see a Housing Association that portrays itself as a caring company selling properties (and they are selling) at prices that are 100%+ of the freehold value on a leasehold basis! A two bed freehold in top condition (with garage) would be expected to sell for around £240,000 to £250,000. I am not sure whether the leasehold terms include escalating ground rents but it might be worth asking the All Party Parliamentary Party to investigate how many Housing Associations are selling properties on a leasehold basis and if so whether the buyers have taken out any Help to Buy loans. If so, I recommend that the Government puts a stop to the Help to Buy scheme for leasehold properties and so help bring about a market correction to more affordable prices for all concerned.
My apologies for not mentioning my name but I have no desire to enter into a cyber battle with anyone whilst I am in the middle of a lease extension process. I just wanted to point at that at least one Housing Association has gotten into the leasehold game and I have noticed a number of recent local developments of a leasehold nature that are out of character with the area which suggests that the local planning authorities are only to happy to authorise leasehold developments when the people want and need freehold properties with garages and gardens at affordable prices.
Another Leaseholder,
Don’t forget if you are extending your lease only opt for the statutory 90 year extension. Do not be persuaded by the freeholder to take any other option that might even appear to be a bargain.
Bargains can prove to be very expensive!
Well put “another leaseholder”. I have also raised the point in other sections. Help to Buy Scheme, taxpayers money, should not be allowed to be used to buy a lease (you are not buying a house). Keep us posted if you can
All the best
Have a look at the Help To Buy Wales website.
Many of these properties on the Beech Developments Llandudno Junction site are sold “help to buy”.
Beech Development and Help the Buy scheme are congratulating themselves on its success.
What happens when these purchasers come to sell. Has anyone thought of a Help to Sell scheme.
Spot on ME. A success? Ha, only for Beech Developements, not the leaseholders
Mike Hawthornwaite has been mentioned in the past. Did he not once purchase the freehold for a development in Church Stratton from a Peverel connected company?
Michael,
Mike Hawthornwaite was mentioned in the past, they purchased the freehold at Ashbrook Court for £33k a development of 29 flats worth over £3.1 Million Pounds from a local company Meridian Housing where Peverel connected company had a 125 year lease?
They have a Post Office number only, refusing any contact.
Many of the companies that purchase freeholds and management companies have PO Box numbers. Getting in touch with them is impossible.
That is a very good point! The luck of transparency is intentional and needs to be addressed by the law. Are any MPs reading this?
Looks like Leasehold Solutions are using this honest platform as a vehicle to drive sales…. Would love to know how much money Leasehold Solutions make in fees from Leaseholders each year!!
If you want to buy the Freehold, go to your local surveyor , you will always get a better service and save £000’s!
It was LKP’s decision to reference Leasehold Solutions in this article, after involving it in this case to offer advice.
There are only a minority of surveyors firms out there with a track record of serving leaseholders (most suck up to the money, as do solicitors).
Every surveyor has a duty to the RICS to get the best deal for their client, LH or FH!
Your comment makes a mockery of the code of conduct that surveyors abide too.
My experience is that bulk claims result in the clients not getting a 1-2-1 service and actually paying higher than they would on an individual basis.
They also save money on case handling fees which I know companies charge.
Please do an article on the costs of valuers and legal fees. This is not mentioned at all but in reality LH’s can get stung for £1000’s cause they are railroaded by slick sales team for the larger leasehold surveying firms.
I am sure many people that visit this site have reason to be very grateful to the advice freely given by Leasehiold Solutions .
It just seems to be a logical course of action, that when advice is sought by LKP to help others, they use those that have proved to be very helpful.