The wider media have taken up the story of the Elan Homes leaseholder whose freehold doubled in price to £15,900 four months after being sold to ground rent speculators Landmark Investments
Ian Rice’s case was reported by LKP on April 18, but this week it appeared in both the Liverpool Echo and the Mirror.
Ian and Deborah Rice inquired about buying the freehold to their £270,000 leasehold house at Borromeo Close in Liverpool in September last year. The ground rent is £250pa linked to RPI every ten years and the lease length is 999 years.
Elan Homes told them that the price would be £7,500.
This price has been confirmed to Sebastian O’Kelly, director of the Leasehold Knowledge Partnership, by Elan Homes CEO John Kendrick: it represents 30-times annual ground rent of £250.
However, Elan Homes sold the freehold on to ground rent speculators Landmark Investments in December 2018, after which the price leapt to £15,900.
That is 63 times the annual ground rent.
A builder who thought he had bought his “dream home” says he will have to pay more than £20,000 to buy the the freehold. Ian Rice, from Liverpool, thought he owned the home on the Aigburth Grange estate after moving in two years ago.
In the press reports, there appears to be some effort by Landmark Investments CEO Mark Hawthorn / Hawthornthwaite (he uses both names in his enterprises) to question whether Elan Homes did offer Mr Rice his freehold for £7,500.
It is a curiosity of the leasehold scandal that the house builders and the speculators in residential freeholds cannot get their story straight about freehold values.
So, Persimmon and Bellway were telling the Communities Select Committee that the difference in price between a freehold house and a leasehold one at around £250,000 would be a matter of a few thousand pounds. Indeed, rather less than Elan Homes’s £7,500.
This in itself is disproved by Persimmon hitting reverse gear after the leasehold scandal broke at Harrow View West.
Here freehold houses are selling at £50,000 less than identical leasehold ones flogged off to unfortunate Persimmon customers earlier in the build.
Freehold speculators on the other hand have created a shaky edifice of valuation models to establish prices for their freeholds. Reforming these in being addressed by the Law Commission, although the ultimate decisions on how to establish fair enfranchisement models will be taken by our elected politicians.
A Liverpool builder has told the ECHO that he will have to pay over £20,000 to buy the freehold of a house that he thought he owned. Tempted by an attractive sales brochure Ian Rice bought the ‘dream home’ in Borromeo Close on the Aigburth Grange estate. He moved in two years ago.