The Daily Telegraph ran a powerful article by journalist Emma Lunn on the leasehold houses scandal on Saturday airing the possibility of a nationwide “ground rent strike”.
The notion was aired by Sebastian O’Kelly, LKP trustee, who elaborates here:
“Last week I was contacted by a Taylor Wimpey first-time buyer in Exeter who had bought a £169,000 flat on a 125-year lease with ground rent doubling every 10 years throughout the term and starting at £250.
“That means it reaches £512,000 in the final decade of the lease.
“But more immediately relevant is that soon – say, in 25 years – this flat will need its lease extending. The cost of this will be based on the ground rent multiples.
“It is extremely unlikely that this flat is worth anything like what the young man paid for it.
“He has minimal capital invested in the property and it has very likely gone. Does it make any sense to continue with it at all.
“As I asked in the Telegraph: Can the government stand by and let hundreds of homes be forfeited? It would be an utter outrage.”
LKP estimates that around 65 leasehold properties are forfeited every year. (The Law Commission urged reform of forfeiture years ago; no one – even in this most grasping of sectors – attempts to justify the windfall element of forfeiture. So, why hasn’t government done anything about it?)
Justin Madders, the Labour MP for Ellesmere Port and Neston, raised the issue of the Help To Buy scheme for leasehold properties with onerous ground rents – which are aimed at making the freeholds particularly appetising for investment funds.
“I think government-backed initiatives such as Help To Buy should now make it a condition of purchase that the property is freehold,” said Mr Madders.
“They [housebuilders] have pursued a business strategy that was far from transparent and has left countless people in a less secure position than they thought they would be in.”
The article focussed attention on the conveyancing solicitors, the overwhelming majority of whom were recommended by the housebuilders.
“Controversially, many if the solicitors involved were recommended by the builders, with some purchasers claiming that they were forced to use certain firms. Legal experts say this would amount to a conflict of interest and go against the Consumer Code for Home Builders, which says they “must not restrict the homebuyers’ choice of legal representative”.
“Telegraph Money has seen a reservation document for a Taylor Wimpey home where the buyer was given £4,000 towards legal costs with “Non sol only” (nominated solicitor) clearly written in the terms of sale.”
Taylor Wimpey told the newspaper that it had a panel of solicitors “like most major developers” and that “all solicitors on this panel are completely independent of Taylro Wimpey and there is no obligation to use them”.
Mari Knowles, head of Leasehold Law, suggested that affected home owners get their legal file “reviewed by a specialist and then consider legal action against the conveyance”.
LKP has urged leaseholders to attend talks by Mari Knowles and Louie Burns, an expert in lease extension values and enfranchisement, which have been staged around the country.
Miss Knowles is addressing the All Party Parliamentary Group on leasehold reform on March 22.
LKP has had almost 500 responses to its detailed survey of leasehold buyers with onerous ground rents, the vast majority of whom own leasehold houses.
Its results will be presented to the APPG.
The survey can be filled in here
Related posts:
Now Daily Telegraph wades into the leasehold house racket
Guardian reports the Taylor Wimpey £130m offer to settle ground rent scandal
Telegraph reports case of Taylor Wimpey pensioner who has paid £38,000 for his freehold … and now won’t help him
Why is the Tory party not supporting real home ownership, asks Daily Telegraph
Telegraph reports ‘marketing cobblers’ of 999-year ‘virtual freeholds’ with lethal ground rents
Government considers adding leasehold abuses to consumer protection law
Filled in the survey.
If a Ground Rent Strike is on the cards, then this Government needs to act quickly as it could cause major problems for the leaseholders and freeholders alike.
Perhaps some charitable, sympathetic organisation (maybe Campaign against retirement leasehold exploitation/LKP) could set up a fund into which disputed Ground Rents can be paid. It could stay there until there is a fair solution. Any interest that the fund accrued could help finance that Charitable organisation..
Also the Government has promised to fully finance LEASE so that it can deal with all Leaseholders problems including Ground Rents. They need to make a start now, as at present LEASE can only come up with bland unhelpful statements on this subject.
For example if a leaseholder asked for advice on the doubling of ground rents, a typical LEASE answer would be as follows.
“The ground rent is usually fixed in the lease, but some leases contain a rent escalation clause which allows the ground rent to be increased in certain circumstances. The ground rent may increase by fixed amounts in certain circumstances.”
This type of advice make LEASE appear about as helpful as a Taylor Wimpey appointed Solicitor.
What I would like to know more about is the black hole that was opened up by a certain politician in the wake of the Pension pot deficit. It appears that since this time this same gap now is being filled up with Leaseholders monies without scruples. The Hedge Funds being connivingly based off shore should be addressed here, especially those that do fall within our Jurisdiction. If they are connected to us then they surely are liable? Just a thought…