Labour needs to shout louder.
As Government and local planning teams strive to meet targets for new housing, corporate greed has created a legacy of abuses that provide profit for the few and misery for the many. Thousands of people across the country (and particularly in North West England and London) have found themselves caught up in the national leasehold scandal.
Firstly, there is a fundamental misunderstanding of what leasehold really means. Many think it means that you don’t own the land that your home sits on, but you do own the home itself…WRONG! You own the right to live in the property for the term of the lease, that’s all – you are a tenant.
So, back to how our large developers and their advisors have duped thousands into becoming a cash cow for typically offshore investors…. Here is my story:
I bought (well I thought I was buying) my home from Taylor Wimpey in December 2010. The lovely sales lady told me that the property was leasehold with a ground rent of £295 per annum and that the ground rent would double every 10 years. The doubling did concern me, so we asked her about buying the freehold. We were told we could buy it at any time for about £5k. With the costs associated with moving we decided we would wait a few years and buy it then. We used a conveyancing solicitor that Taylor Wimpey recommended (“They know how we work and it makes things go quickly and smoothly”) and she raised no concerns. Within a year, the freehold was sold to one of the Adriatic Land companies (parent companies are offshore). We weren’t given the option to buy it before it was sold on (perfectly legal as there is no right of first refusal on leasehold houses) and Adriatic bought the freehold on my home for £7,375.
In summer 2016, a neighbour’s house sale fell through because the buyer’s solicitor said that the lease terms were onerous. She asked the management company for a quote to buy the freehold. She had to pay £108 just to get the quote and received a quote of over £50k! We thought it was just a simple typo and they had left an extra zero in by mistake, but no. A number of neighbours asked for quotes and the numbers were always different. The lowest quote was around £27k.
We also discovered that we are now subject to exorbitant permission fees under the terms of the lease. £108 to ask for permission with fees themselves in the thousands for making alterations such as adding a conservatory or extension. Some leaseholders have to obtain permission to change the flooring from carpet to wood, rent out the house, or even have a pet!
We now all find ourselves in this leasehold nightmare where we have limited options and less consumer protection than if we had bought a fridge.
The Government has committed to bringing about leasehold reform and has already announced a ban on new build houses. Developers and investors are already looking to replace it with the next income stream – permission fees remain on the transfer of many new build homes advertised as freehold (“fleecehold”); developers create new estates with token communal areas that are established with their own management companies and unregulated estate management fees; and in conjunction with local councils there is now a growing problem of the non-adoption of public services with very limited understanding from new home owners of what this means for them in the future. There is very little clarity over what will be done for existing leaseholders trapped in this nightmare. Developers have been clever to publicise “offers” to change onerous leases like mine to ones that are not as bad – these “offers” are cloaked with settlement agreements to cap their corporate liability and are often not what they seem. To buy my freehold (known as “enfranchisement”) will cost thousands more than the £5k that the Taylor Wimpey sales person told me it would.
The taxpayer is also set to lose millions of pounds as a result of this scandal when the repayment of thousands of Help to Buy loans are repaid on properties that are now worth considerably less than they were when purchased.
The All Party Parliamentary Group on Leasehold and Commonhold Reform now has over 150 MPs and is one of the largest. The National Leasehold Campaign group was set up on Facebook in January 2017 and now has over 11k members. It has been influential in raising awareness of the leasehold scandal and is calling for a Select Committee Inquiry to hold those responsible for creating this mess to account. They need the Philip Green treatment.
Home ownership is aspirational for many. Millions of leaseholders don’t own their own home. There are some true standout heroes in the Labour ranks fighting for leasehold reform – Justin Madders MP & Jim Fitzpatrick MP, I salute you, but the shadow cabinet has yet to formalise its policy. This issue has the potential to be a huge vote winner if Labour can commit to:
putting an end to leasehold houses,replacing leasehold with commonhold for flats,making the Select Committee Inquiry happen,clamping down on new build home abuses (permission fees, service charges, estate management fees, non-adoption of public services)providing full and proper redress for the thousands of people who have been mis-sold their homes
The leasehold scandal is a fantastic example of an abuse that was for the benefit of the few to the detriment of the many. We need to stop it now and help the thousands of families who have followed the dream of home ownership only to have been conned into becoming tenants with mortgages and income streams for investors.