Bellway today confirmed that it is wary of a buyers’ backlash over the leasehold houses scandal.
Chief executive Ted Ayres has robustly stated that there is no such thing as a leasehold houses scandal, even though Taylor Wimpey has undertaken not to build them from January 1 this year.
Between 2007 and 2011 Taylor Wimpey built leasehold houses and flats with ground rents doubling every 10 years, which has trashed their value and made them unsellable, owners claim.
Bellway, based in Newcastle, sells leasehold houses with ground rents linked to RPI.
Bellway chief executive Ted Ayres said: “This is a problem for the industry.
“It is getting quite a lot of publicity at the moment.”
Bellway posted a 9.3 per cent rise in half-year profits to £247.6million. Revenues rose 5.9 per cent to £1.1billion as the firm sold a record 4,462 newly-built homes – up 6.5 per cent on the same period the previous year.
Bellway said its leases go up in line with inflation and do not double every decade.
Yet the company has infuriated many of the leading figures in the Facebook National Leasehold Campaign, including Katie Kendrick.
She bought her detached four-bedroom Bellway house in Ellesmere Port in July 2014, assisted by the government’s Help To Buy scheme.
Katie, who was to have addressed today’s cancelled All Party Parliamentary Group on leasehold reform at Westminster, described her case as “very mild compared to thousands caught up in the abuse of leasehold”.
She has a 150 year lease with £150pa ground rent increasing after 10 yearsrs in line with RPI, and every 5 yrs thereafter.
Yet although she bought the property in in 2014, the lease started in 2006, so she lost eight years immediately.
Sales staff repeatedly used nonsense terms to describe the leasehold property, saying it was “virtually freehold”.
She was also told that the freehold would cost £2,000 to £4,000 and that she would be able to buy it after two years.
In fact, she had the right to buy it after two years, but Bellway could have sold her the freehold at any point, if it chose to do so.
But it didn’t. Instead, it sold the freehold 18 months later to Adriatic Land 4 (GR1) Limited, which hides its beneficial ownership behind nominee directors.
This freehold owning group is managed by the HomeGround group owned by Will Astor, who worked for leasehold gameplayer Vincent Tchenguiz for six years.
Tchneguiz, until his arrest by the Serious Fraud Office in March 2011, claimed to own one per cent of all the residential freeholds in the country, including the freehold books of McCarthy and Stone, Berkeley Group, Barratt, assorted smaller builders and defunct housing associations, and the City of Huddersfield.
For Katie to even inquire about buying the freehold, she had to pay HomeGround £108.
She was then told it would cost £13,000, while Bellway would have sold for £3,750, she claims.
HomeGround would not explain how it had come up with its valuation, and after a counter offer came back with a price of £7,680.
She is now going to enfranchise through the statutory route. And she is furious with Bellway.
“We have been miss-sold our homes on a massive scale,” she says. “This is our homes. Our futures. Our children’s inheritance. But it has been sold onto greedy third-party investors.
“Who are they? We have no idea. Are they based in this country or are they offshore?”
A Bellway spokeswoman said:
“Bellway have never offered a ten year doubling lease. After a period of 8 years from the term commencement date, the ground rent will increase in line with the retail prices index (RPI). Following this, it will increase by the rate of RPI every five years thereafter for the duration of the lease term. The reason for this is to ensure that the ground rent remains at the same value, in real terms, as at the time when the lease was granted. Unlike those stated recently in the press, it does not double.”
Related posts:
‘Fright night’ for Taylor Wimpey as profits fall 24% over leasehold scandal, says Times
Bellway Homes attempts to explain why leasehold houses are just fine. And it is self-interested rubbish …
Families challenge Long Harbour for freeholds to Bellway leasehold houses, The Times reports
Help To Buy cheat Persimmon racks up £1bn profits – and spread the plague of leasehold houses around the country
MP urges Commons to condemn developers selling leasehold houses with onerous ground rents. And names Taylor Wimpey, Persimmon, Bellway and Adriatic Land …
APPG on leasehold reform cancelled owing to terror attack on Westminster
Bellway go to long lengths to explain that they have never sought doubling Ground rents and that their RPI increases can be justified. They say that this keeps the ground rent at the same value. Which maybe true, and they may have got away with that for a few years until the leaseholders asked to purchase the freehold.
But if Bellway felt they could justify RPI increases to give themselves a fair income, why do they go and sell the freeholds off to shady finance companies.knowing full well that the leaseholders will never get them back for a reasonable price.
This was just greed with no thought for their customers.. So they must now assist them to buy these freeholds back.
To Ted Ayres CEO Bellway Homes.
Dear Mr Ayres,
Since I know you or your senior colleagues read LKP postings, I will address you via this forum.
I note your comments with interest, but to a large degree what you say is not particularly relevant to what Bellway homes actually face in the future?
Your actions have alienated both current and future customers (and that is never a good position to be in?)
So however successful Bellway have been in the past, the future is less assured.
Clearly the leasehold mess that you created is going to have to be resolved and will end up costing your company a great deal of money which you will have to make provision for.
And remember, its not just the provisions of the ground rent clauses in the lease that are onerous, the charges imposed by third party freeholders that you sell the freehold to is simply extortion.
So, I can see a great deal of compensation winging its way to your customers.
And before you come out with the “It was all legal guff” may I remind you of your responsibility when your agent acts on your behalf? A defence of “One rogue representative” will not hold water as a literally thousands of customers have been misled.
So let me assume for a moment you do rectify your wrongs? What then?
Well, unfortunately, a consequence of your actions in selling homes on a leasehold basis has shed light on so many other of your practices, which have been a great money spinner for you.
Customers are getting wise to using your recommended solicitors. So bang goes many of those commissions.
Using the tempting offer to have kitchen appliances or carpets supplied and fitted by you?
Sorry, customers are wising up as to how much cheaper it would be to buy them themselves. So bang goes that easy money!
Customer, now know not to buy/complete on a house within two months of your year-end account publishing date.
What’s that going to do to your end of year accounts and your cash flow?
Your business model depends on a quick turnover of new builds. If sales slow, you have to keep paying the interest charges, You have to keep an expensive sales team together along with a site office. Eventually, you will have to offer substantial discounts to complete the sales on your developments. And how long do you think it will be before a purchaser insists that you agree that if you sell any homes at a discount, they will be entitled to a refund on the purchase price equivalent to the discount you will be forced to offer?
At present you are a profitable company. How do you think your shareholders react will react to a 25% fall in profits?
To me it appears that you acted in the way you did not only for sheer greed, but even worse because in your arrogance you thought you could act in the way you did and get away with it.
Vincent Tchenguiz and his Peverel Group had the same attitude. Look at what happened to them.
Well said . Ole Ted Ayres CEO of Bellway homes is punching above his not inconsiderable weight. Clearly a greedy fool who has sent the company on a one way ticket to Nowhere due to his avarice and greed.
Are Building Societies/Mortgage Lenders and the Help To Buy Scheme – Ludicrous?
See Dragons Den, BBC2, Episode 16, 26th Feb, 29 minutes in (8 days left to View on BBC I Player)
In the above episode, the well-respected very successful entrepreneur and businessman, Peter Jones, CBE, was aghast that two applicants looking for an investor had already spent £250,000.00 on their business.
It became worse when they made Peter Jones aware that the money had been spent on a lease.
Peter questioned why they had paid a quarter of a million pounds in “rent”, in advance, as opposed to buying what would have been an appreciating asset.
Peter declared their action to be absolutely ludicrous stating that nobody in their right mind would pay a quarter of a million pounds for 20 odd years “rent” in advance!!!
Peter declined to offer any financial investment.
Therefore, looking at the bigger picture, as houses rarely have to be built leasehold, should we not be questioning as to why our building societies and the like are giving such massive singular advance payments to these builders who are building properties with such onerous leases.
Surely if the building societies knew what unacceptable terms were in some leases, and they certainly should know, they should have refused any mortgage.
Is it not time to insist on explanations from the building societies and mortgage lenders that offer loans on onerous leasehold houses.
Should they not be giving some prominent advice and support to their mortgagees and, even more so, putting pressure on the builders involved to assist with the freehold purchase at an acceptable original valuation.
Also whilst we are waiting for some meaningful action from the government which, due to red tape/white papers etc., can unfortunately take time the building societies are in a position to change their terms and rules almost overnight.
There is no reason whatsoever why building societies could just not declare that with immediate effect no mortgages will not be available on any new build houses that are leasehold.
In the rare circumstances that leasehold is necessary; the lease should be subject to severe scrutiny not only by the purchaser’s solicitor, but also the building society/mortgage lenders lawyers.
The bottom line is there is no need for leasehold houses, other than greed of the builder and freeholder.
Could it be that in some instances the practice has developed that instead of a developer borrowing money to build a development, they are entering into agreements with third party freeholders who will advance the funds needed to build in return for the sale of the freeholds to them at a very advantageous price? And could this be the real reason behind the artificial creation of leaseholds?
Michael That is genius. Why has nobody thought to mention that scenario before? It make so much sense..
Well, it. Needs senior people from these building societies to step up to the plate and confirm if they are involved with loans or not
The same question goes to the administrators of the Help To Buy Scheme. To whom is the scheme money paid to.
If the money is to assist with leasehold property purchase why is the lease not scrutinised by the HTBS legal dept.
It seems to easy to spend taxpayers money, which is what the HTBS is
Well, will the Building society lenders just ‘Step up to the plate” and confirm if they are Involved in these loans or will it be up to the purchasers of these properties to reveal who the lenders are? Ultimately it will be up to the the purchasers to put their collective brains together and sort this out, Michael Epstein post was extremely illuminating -the blighted purchasers that subscribe to this website should pay great heed and respect to Michaels post.
The process sounds akin to the way drugs are dealt with, which of course would be illegal.
The Barons (the Developers) sell the freeholds to the Traders (the finance companies). The proceeds are used to finance further leasehold developments.
The finance companies make a mint in selling them to the users (the leaseholders).
And just like drugs they blight the leaseholders lives.
It’s time this trade was also made illegal
ME, MH, Cercie, Leaseholder2, whether your thoughts are right or wrong, it will still be the usual premium building societies and Mortgage Lenders that the leaseholders are paying their loans back to.
Hence why they should “come out” with their responses as I stated