Leasehold campaigners have expressed fury at suggestions put to MPs that the leasehold market is not in need of major reform.
On Tuesday, Matthew Jupp, head of mortgages at trade body UK Financial, told the Housing, Communities and Local Government Committee that the leasehold market “as a whole works fairly well”.
He claimed that there was little evidence of a “leasehold trap” where people are unable to sell homes because they are difficult to mortgage.
He said: “There are 4m leasehold properties in the country at least, and the market generally works okay.”
But Leasehold Solutions, a firm specialising in helping people with lease extensions and freehold purchases, angrily refuted the claims.
Managing director Louie Burns said Jupp’s claims were “devoid of reality”.
He said: “The scandal of doubling ground rents affects hundreds of thousands of people who own leasehold homes. It’s not just a handful of cases – we see countless examples of leaseholders adversely affected by onerous ground rents every year.
“Leaseholders are also forced into paying exorbitant fees for lease extensions, service charges, and fees for licences and permissions to carry out home improvements.
“We also see numerous cases where leaseholders are unable to sell their property because mortgage lenders refuse to provide the prospective buyer with a mortgage due to the onerous terms of the lease, particularly in the case of new-build houses.
“This effectively makes those properties worthless, as the value of the property depreciates year-on-year, until, inevitably, the freeholder takes control of the asset when the lease expires, or the mortgage repayments become unaffordable due to the increased burden of doubling ground rents, at which time the leaseholder forfeits their property to the lender.”
“Contrary to Matthew Jupp’s evidence to the select committee, we are already seeing a two-tier market developing for leasehold properties, where new-build properties with zero ground rents are attractive to buyers, while existing leaseholds with onerous ground rent terms are virtually unsellable.
“The Government promised real action to end feudal leasehold practices and cut out unfair and abusive practices within the leasehold system. Since then we’ve had numerous consultations but precious little action to make the system fair and just for leaseholders.
“It is high time the Government fulfilled its commitment to reform the leasehold system.”