The Leasehold Knowledge Partnership warmly endorses the Communities Select Committee report published today.
We have campaigned since January 2012 to see a parliamentary report turn such a clear-eye to this murky and exploitative corner of the housing market. The report is a huge vindication of our efforts.
The report amounts to a demolition of the leasehold system.
It urges government to replace it with commonhold, which exists in virtually every jurisdiction outside England and Wales.
It urges the absurd description of “home ownership” to be dropped when applied to leasehold tenancies, with them being marketed as “lease – rental” instead. That is an excellent piece of advice.
It wants the Law Commission to examine the whole of leasehold law – which the Law Commission itself says it would prefer to do – rather than the incomplete reforms currently under consideration.
The report is devastating about how developers have taken their customers – and us, the wider taxpayers – for a ride by squirrelling in an investment asset in the homes of ordinary families.
New report accuses housing firms of exploiting buyers with leasehold contracts These contracts impose crippling ground rents and ‘excessive’ fees on buyers Ministers have already banned the sale of new houses with these toxic deals But MPs say there is no excuse for not helping 100,000 victims already affected The law must be changed to help families stuck in toxic leasehold deals escape their unsellable homes, MPs are demanding tomorrow.
The report also called for ground rents on new leases to be set at zero, and for a Help to Buy-style scheme to help leaseholders buy their freehold. Katie Kendrick, of the National Leasehold Campaign (NLC), who lobby for property reform, said the report had been “massively welcomed by all leaseholders”.
It is clear that MPs think that developer-recommended solicitors have been little more than stooges: dumping their supposed clients in onerous lease terms. Some of these – the doubling ground rents – have made these properties unsellable.
The committee is absolutely right to call for a ban on developers offering discounts and other financial incentives to persuade a customer to use a particular solicitor.
It is good that the committee sees any ground rent as onerous if it materially affects a leaseholder’s ability to sell their property or obtain a mortgage.
The great hope for leaseholders trapped in existing leases is that the committee feels that it is legally possible for the Government to introduce legislation to remove onerous ground rents in existing leases.
However, it passes this task to the Competition and Markets Authority to investigate mis-selling, and make recommendations for appropriate compensation.
The way leasehold properties were sold in the past left developers coining it in and unsuspecting buyers left with homes they struggle to sell or even get a new mortgage on – with potentially millions now in line for compensation
The Government should require the use of a standardised key features document, to be provided at the start of the sales process by a developer or estate agent, and which should very clearly outline the tenure of a property, the length of any lease, any ground rent or permission fees, and—where appropriate—a price at which the developer is willing to sell the freehold within six months.
The report makes devastating criticisms of the government’s monopoly quango the Leasehold Advisory Service, which should have leaseholder representatives on its board. It failed to alert government to the ground rent and leasehold houses scandal.
The full Communities Select Committee report is here:
Clive Betts MP press release comments.
The property leasehold system has left people trapped in unsellable and unmortgageable homes in the worst cases and wide-ranging reforms are needed, according to a committee of MPs. Too often, leaseholders – particularly in new-build properties – have been treated as a source of steady profit and the balance of power is weighted too heavily against them, the Housing, Communities and Local Government Committee (HCLG) said.
Property system was spread throughout British empire but has since been almost completely scrapped in the former colonies