Crackdown on leaseholds brings hope for thousands – but could hammer housebuilders


I’ll rescue the leasehold home victims, says new Housing Secretary – but crackdown could hammer housebuilders

  •  Housing Secretary Robert Jenrick is planning to take action within weeks
  •  His intervention is likely to heap more pressure on the major housebuilders

Housing Secretary Robert Jenrick is plotting a crackdown to tackle the leasehold mis-selling scandal, The Mail on Sunday can reveal.

He is planning to take action within weeks, giving hope to thousands of homeowners who claim they were misled when they bought leasehold properties and now find themselves trapped.

His intervention is likely to heap more pressure on the major housebuilders, which have been criticised for making huge profits and paying multi-million pound bonuses to bosses while failing to fix Britain’s housing crisis.

Crackdown on leaseholds brings hope for thousands – but could hammer housebuilders

Crackdown on leaseholds brings hope for thousands – but could hammer housebuilders

Thousands of homeowners claim it was not made clear at the point of purchase that the house was leasehold and not freehold.

That means while they own the property, the developer owns the land it is on and can sell it on to third parties. Many have complained about exorbitant ground rents, including high fees for repairs, and of the difficulty of selling a leasehold home.

Jenrick’s predecessor, James Brokenshire, brought in rules limiting the sale of new-build homes as leasehold. But homeowners and campaigners want the action to extend to existing leaseholders who feel trapped.

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Jenrick, who was appointed in July by Prime Minister Boris Johnson, has campaigned in his Newark constituency in Nottinghamshire against leaseholds.

Speaking for the first time about the scandal, the Housing Secretary told The Mail on Sunday that the ‘inappropriate use of leasehold is wrong and must be brought to an end’.

He added: ‘I am very concerned by the number of homeowners who appear not to have fully understood the arrangements they were entering into.

‘Buying a home is one of the biggest and most important purchases people ever make and so it’s essential buyers understand the contract they are signing and receive good quality advice from their professional advisers and the salespeople they are dealing with.’

Housing Secretary Robert Jenrick is plotting a crackdown on leaseholds

Housing Secretary Robert Jenrick is plotting a crackdown on leaseholds

Any move would coincide with an investigation being carried out by the Competition and Markets Authority, which is looking into whether homeowners were mis-sold leaseholds or are paying unfair ground rents.

It would also likely receive support from Johnson, who has told MPs he will tackle the ‘injustice that many leaseholders have been facing’.

Last week, Jenrick, 37, revealed plans for a shake-up of shared ownership equity rules in an effort to allow homebuyers to increase their stake in a property in smaller steps. People who own their property with a housing association will be able to buy as little as 1 per cent of their house every year.

His latest move follows revelations last week in The MoS that housebuilder Persimmon had struck an out-of-court settlement with Cardiff Council over alleged mis-selling of leasehold homes.

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Dozens of buyers claimed they were not told at the point of sale that their properties were leasehold.

Persimmon admitted it 'could have communicated better or more clearly' when people purchased leasehold homes there in 2016 and 2017

Persimmon admitted it ‘could have communicated better or more clearly’ when people purchased leasehold homes there in 2016 and 2017

Persimmon admitted it ‘could have communicated better or more clearly’ when people purchased leasehold homes there in 2016 and 2017 and offered all leaseholders the freehold title for free and said it would reimburse ground rents paid.

After the scandal emerged in 2016, housebuilder Taylor Wimpey reviewed its contracts and set aside £130million to compensate some buyers. It apologised for the ‘unintended financial consequence’ of spiralling ground rents.

There are more than four million leasehold properties in England. Campaigners estimate 100,000 homeowners are locked into onerous leases, including where ground rents double every ten years.

Jenrick said: ‘We have committed to reducing ground rents on future leases to zero and to legislating to ensure that in the future – save for the most exceptional circumstances – all new houses will be sold on a freehold basis.

‘We have already seen a significant reduction in the number of new leasehold properties to as low as 2 per cent of all new homes.’

 



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