A ripe candidate for the mis-selling investigation by the Competition and Markets Authority, perhaps?
Shanly Homes – owned by patriarch Michael Shanly – is the latest house builder revealed to be dumping its customers in unsellable homes.
Today’s article in the Daily Mail features a couple in Berkshire who bought a £300,000 flat with £500pa ground rent who have now discovered that it is unsellable.
The Competition and Markets Authority launched an investigation into the mis-selling of leasehold homes earlier this month, and LKP has urged the home buyers to report their case.
Trapped by a toxic leasehold: Problems due to £500 ground rent
Are you in a similar situation? Email s.murphy-bates@mailonline.co.uk Kim Healy and Craig Gibson were desperate to move into their new home before the birth of their first child. The young couple from Binfield, Berkshire, had planned to move from their two-bedroom flat to a three-bedroom house on the same new-build estate as Kim’s mother, so she could help with childcare following the birth in August.
Mortgage lenders are shunning homes where ground rents exceed 0.1 per cent of the sale price.
Inevitably, first-time buyers Kim Healey and Craig Gibson, used Shanly Homes’s recommended solicitors to purchase this turkey.
It does not appear that the solicitors warned the buyers that the ground rents might affect the future value of their property.
The couple were also assisted by the Help To Buy scheme, so wider taxpayers have a stake in this flawed purchase.
Kim and Craig asked Shanly Homes, which still owns the freehold to their two-bedroom flat in Binfield, to vary the lease to reduce ground rents from £500pa to £300pa.
But Shanly Homes wanted more than £7,000 to do so plus £1,250 in legal expenses.
These legal expenses evaporated once the Daily Mail journalist began investigating the case.
Removing them was a “gesture of goodwill”, Shanly Homes said.
Sebastian O’Kelly, director of the Leasehold Knowledge Partnership, told the Daily Mail:
“Who knows what appalling smoke and mirrors lie behind Shanly’s calculation to reduce the ground rent?
“It drew up the leasehold contract, recommended the solicitor, and that solicitor did not spot the trap in the terms and conditions.
“The company is exploiting this couple’s circumstances. The power to compensate them is in Shanly’s hands, yet its response is to charge them more than £7,000.”
A spokesperson for Shanly is quoted by the paper saying: “We are transparent about ground rents at the point of purchase.
“Where customers have signed leases and subsequently wish to alter terms, we take a flexible approach and a fee is calculated based on the loss to the freeholder. We are regularly in discussion with large-scale lenders to ensure we are taking a fair approach.”
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Sajid Javid vows to ‘stamp out abuses’ over leasehold that make homes unsellable
No help for leaseholders trapped in unsellable homes, says government
Tory MP Eddie Hughes moves private member’s bill to cap existing ground rents at £250
Nearly bought one of those in Theresa May’s constituency.
Keep conning gullible consumers.
Why is Theresa May not protecting her constituents from legal robbery.
What’s the name of the site and where? We will ask her.
Intervening to make it right can be part of her departure ‘legacy’.
Looks like Boulter’s Meadow.Shanly Homes are massive builders in Maidenhead. Best check with Daily Mail. I find £500 pa for 300k flat unbelievable and never got to discussing GR at POS.Most homebuyers haven’t a clue about GR until too late and you are financially committed.
If you have entered into a contract/lease where the rent is shown as £500 per annum, then in all fairness both parties should be expected to rely on the terms and stand by them.
The argument appears to be that as lessees and or their professional advisors did not understand the term about paying rent then it must be abusive and unfair and must be removed with no compensation.
It is the failure to value that obligation that has occurred which is the root of the problem and why I believe that the NPV of the ground rent should be shown in the prescribed clauses of the lease and updated in any contract when the property is being sold. Also SDLT to be paid not only on the value of the property but on the ground rent passing. In this way the purchaser will fully understand the nature of the obligation they are being asked to enter into. Therefore the 10 years doublers would have been exposed as the NPV of such a ground rent would be very high indeed and the jump in the SDLT would have been yet another warning of the implications of such a ground rent
If inflation roared away and rendered the ground rent uneconomic to collect lessees would be aggrieved if the freehold owning community applied to have the rents restored to their original purchasing power. The Law Society have warned that we are a high functioning sophisticated economy and that interfering with contracts entered into when both parties have been professionally represented should stand and not be interfered with
The article makes the point that ground rent is for no service; and indeed it is for no service. The lease agreement will show that these rents are not to be applied to the service charge account. It is therefore an integral part of the consideration sort by the freeholder on granting the lease and advice and consideration should be sort by the purchaser and applied as in any other large purchase .
Therefore if the lessee wants the rent lowered then adequate compensation should be paid. The article is confusing in that two different figures are mention but it appears that the premium sort would be around £6000 to £7,000. The ground rent we are told rises by inflation every 20 years. It appears that the freehold is seeking around 30 yp as compensation for the reduced rent. This is a little on the high side – but not outrageous.
The legal fees are however. A simple deed of variation requires no prescribed clauses and does not warrant a fee of £1,250
If you have entered into a contract/lease where the rent is shown as £500 per annum, then in all fairness both parties should be expected to rely on the terms and stand by them.
The argument appears to be that as lessees and or their professional advisors did not understand the term about paying rent then it must be abusive and unfair and must be removed with no compensation.
It is the failure to value that obligation that has occurred which is the root of the problem and why I believe that the NPV of the ground rent should be shown in the prescribed clauses of the lease and updated in any contract when the property is being sold. Also SDLT to be paid not only on the value of the property but on the ground rent passing. In this way the purchaser will fully understand the nature of the obligation they are being asked to enter into. Therefore the 10 years doublers would have been exposed as the NPV of such a ground rent would be very high indeed and the jump in the SDLT would have been yet another warning of the implications of such a ground rent
If inflation roared away and rendered the ground rent uneconomic to collect lessees would be aggrieved if the freehold owning community applied to have the rents restored to their original purchasing power. The Law Society have warned that we are a high functioning sophisticated economy and that interfering with contracts entered into when both parties have been professionally represented should stand and not be interfered with
The article makes the point that ground rent is for no service; and indeed it is for no service. The lease agreement will show that these rents are not to be applied to the service charge account. It is therefore an integral part of the consideration sort by the freeholder on granting the lease and advice and consideration should be sort by the purchaser and applied as in any other large purchase .
Therefore if the lessee wants the rent lowered then adequate compensation should be paid. The article is confusing in that two different figures are mention but it appears that the premium sort would be around £6000 to £7,000. The ground rent we are told rises by inflation every 20 years. It appears that the freehold is seeking around 30 yp as compensation for the reduced rent. This is a little on the high side – but not outrageous.
The legal fees are however. A simple deed of variation requires no prescribed clauses and does not warrant a fee of £1,250
If you have entered into a contract/lease where the rent is shown as £500 per annum, then in all fairness both parties should be expected to rely on the terms and stand by them.
The argument appears to be that as lessees and or their professional advisors did not understand the term about paying rent then it must be abusive and unfair and must be removed with no compensation.
It is the failure to value that obligation that has occurred which is the root of the problem and why I believe that the NPV of the ground rent should be shown in the prescribed clauses of the lease and updated in any contract when the property is being sold. Also SDLT to be paid not only on the value of the property but on the ground rent passing. In this way the purchaser will fully understand the nature of the obligation they are being asked to enter into. Therefore the 10 years doublers would have been exposed as the NPV of such a ground rent would be very high indeed and the jump in the SDLT would have been yet another warning of the implications of such a ground rent
If inflation roared away and rendered the ground rent uneconomic to collect lessees would be aggrieved if the freehold owning community applied to have the rents restored to their original purchasing power. The Law Society have warned that we are a high functioning sophisticated economy and that interfering with contracts entered into when both parties have been professionally represented should stand and not be interfered with
The article makes the point that ground rent is for no service; and indeed it is for no service. The lease agreement will show that these rents are not to be applied to the service charge account. It is therefore an integral part of the consideration sort by the freeholder on granting the lease and advice and consideration should be sort by the purchaser and applied as in any other large purchase .
Therefore if the lessee wants the rent lowered then adequate compensation should be paid. The article is confusing in that two different figures are mention but it appears that the premium sort would be around £6000 to £7,000. The ground rent we are told rises by inflation every 20 years. It appears that the freehold is seeking around 30 yp as compensation for the reduced rent. This is a little on the high side – but not outrageous.
The legal fees are however. A simple deed of variation requires no prescribed clauses and does not warrant a fee of £1,250
I have tried posting on this topic but there appears to be a problem
You are right. I don’t know why. Sorry.
If you have entered into a contract/lease where the rent is shown as £500 per annum, then in all fairness both parties should be expected to rely on the terms and stand by them.
The argument appears to be that as lessees and or their professional advisors did not understand the term about paying rent then it must be abusive and unfair and must be removed with no compensation.
It is the failure to value that obligation that has occurred which is the root of the problem and why I believe that the NPV of the ground rent should be shown in the prescribed clauses of the lease and updated in any contract when the property is being sold. Also SDLT to be paid not only on the value of the property but on the ground rent passing. In this way the purchaser will fully understand the nature of the obligation they are being asked to enter into. Therefore the 10 years doublers would have been exposed as the NPV of such a ground rent would be very high indeed and the jump in the SDLT would have been yet another warning of the implications of such a ground rent
If inflation roared away and rendered the ground rent uneconomic to collect lessees would be aggrieved if the freehold owning community applied to have the rents restored to their original purchasing power. The Law Society have warned that we are a high functioning sophisticated economy and that interfering with contracts entered into when both parties have been professionally represented should stand and not be interfered with
The article makes the point that ground rent is for no service; and indeed it is for no service. The lease agreement will show that these rents are not to be applied to the service charge account. It is therefore an integral part of the consideration sort by the freeholder on granting the lease and advice and consideration should be sort by the purchaser and applied as in any other large purchase .
Therefore if the lessee wants the rent lowered then adequate compensation should be paid. The article is confusing in that two different figures are mention but it appears that the premium sort would be around £6000 to £7,000. The ground rent we are told rises by inflation every 20 years. It appears that the freehold is seeking around 30 yp as compensation for the reduced rent. This is a little on the high side – but not outrageous.
The legal fees are however. A simple deed of variation requires no prescribed clauses and does not warrant a fee of £1,250
Test comment – to aide identifying a hitch