Campaigners have expressed confidence that both the Conservative and Labour parties will include leasehold reform in their election manifestos.
It comes as Tory MP Peter Bottomley yesterday launched an early day motion in Parliament that condemned developers and sellers of houses with onerous ground rents. Early day motions (EDMs) are normally tabled to raise concerns.
Sebastian O’Kelly, of the Leasehold Knowledge Partnership, said the EDM had been released following a meeting of the All Party Parliamentary Group on leasehold reform last week.
The EDM states: “That this House condemns the developers and sellers of houses unnecessarily marketed to first-time buyers and others, especially if the ground rent provisions were onerous, and where the freeholds were sold on above the heads of leaseholders to investors who later demanded unfair, unreasonable or unjustified prices for sale of the freehold to the leaseholder, or charged fees above costs for adaptations to the home.”
It goes on to demand that “Taylor Wimpey, Persimmon, Bellway, the Adriatic companies and others restore all affected leaseholders to a position of fair, affordable enjoyment of their home by assistance to own that freehold and by cancelling unaffordable ground rent terms”.
So far just Bottomley has signed the motion.
O’Kelly told EYE it was an “absolute certainty” that leasehold reform will be addressed by the next Parliament, particularly the onerous ground rents impacting on resale values.
He said: “We are pretty confident that leasehold will be referenced in both Labour and Conservative manifestos.
“Developers have been selling leasehold houses for no good reason at all in most cases. They have dumped them on the north-west in particular because the region is accustomed to leasehold houses from the factories era.
“Some developers have spread this wealth-eroding tenure to Essex, Wiltshire and Somerset, which have no tradition of leasehold houses at all.
“Developers have then compounded the grief by adding high ground rents, some of them doubling every ten years.
“Consumers buy the properties with developer-recommended solicitors and are not warned of the onerous lease terms.”
Caveat Emptor!
“Consumers buy the properties with developer recomended solictors and are not warned of the onerous lease terms”
I cant believe that to be the case as they would be neglecting their duty of care not ony to the buyer but more often than not to the lender and open to being sued
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Taylor Wimpey have anounced this morning that they are reimbursing leaseholders who have been sold houses on ground leases with onerous terms A total sum of £130m representing 3% of TW’s total assets has been set aside as an exceptional item
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There is no justification for charging Ground Rents other than a peppercorn to establish that there is a contract. Why do Government not just ban any ground rent in excess of £10.00 p.a.? They seem to want something similar with agents charging tenants for the work they do for tenants!
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Not so long ago there was a maelstrom surrounding Right To Buy properties whereby those acting for claimants alleged that the arrangement between the lender (often at high interest rates) and the solicitor was in conflict of interest such that the solicitor did not act to the client’s benefit and advise that the loan terms could be bettered by different lenders. The truth often was that there was only 1 option and it isn’t a Solicitor’s role to give financial advice of any sort.
Not advising a client of a referral arrangement with a third party is a breach of SRA code of conduct.
As I understand it 1 PII insurer settled at the door of the Court but other cases involving other PII insurers were withdrawn. The claims arose out of a mass advertising campaign organised by CMCs who, of course, received referral fees. Oh, the irony!!
This nonsense to do with leaseholds and rent reviews and charges is similar in nature. It arises out of the fact that solicitors and licensed conveyancers are statutorily regulated and have the benefit of professional indemnity insurance and that Courts are perceived to be only too willing to find negligence. In other words, easy pickings. The legal entity behind this latest scare is an Alternative Business Structure-so not a traditional law firm.
I doubt that there is any solicitor or licensed conveyancer or ABS that does not disclose a referral arrangement and the referral fee to its clients. I doubt there is any such legal business which does not advise a client of onerous terms or potential problems before exchange and again before completion. If there are any then they deserve what they get given the requirement to disclose such arrangements has existed for years.
There is a real issue with the attitude of builders and the solicitors who process property sales for them. There is an unwillingness to amend documentation even when errors are identified or when legal issues are established. The attitude is that the matter must proceed and the purchaser can buy whatever insurance is considered relevant. The seller isn’t interested if there are any title issues. It should be illegal-subject to a custodial sentence-for any property developer to enter into any arrangement with preferred purchasers’ lawyers so as to promote those law firms to potential purchasers. It is none of the seller’s business and purchasers should be protected.
It is the attitude towards such issues which must change and which Parliament must address because the SRA is not willing to do so-and neither are the property developers.
Despite warning clients they more often than not wish to proceed.
It is a case of caveat emptor-but it is also a case of powerful companies and their lawyers being unwilling to act decently.
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