LEASEHOLD SCANDAL: '˜This is all one great racket for making more money'
It is being tipped to be the new PPI scandal.
And housebuilders are coming under increasing attack for leaving buyers in “leasehold limbo” or, worse, with a home which is unsaleable.
Now the Government has announced an eight-week consultation to crack down on leasehold abuse after thousands of owners are finding themselves locked into spiralling ground rent charges as freeholds on their properties are being sold on to investment companies.
The Post highlighted the practice this week and featured one couple, Laura Tomlinson and Andrew Seed, hit by hidden charges for their house.
The reaction from Post readers was overwhelmingly one of shock and anger. Today we print just some of the responses the story prompted on social media, including additional reaction from Andrew Seed.
Denise Yates: You would think the buyers’ solicitors would be advising their clients of the loopholes of buying with leaseholds.
Andrew Seed: The problem is we used the builders recommended solicitors and they advised nothing. There is a large group on Facebook with almost 7,000 members pushing for changes. Solicitors and house builders have wiped their hands of the situation at the moment. But they won’t get away with it forever, as more people realise what they have bought. Obviously, if we were to buy again we would get our own. But as first time buyers we didn’t know any different and it seemed like the simplest thing to do at the time. The amount of people that this affecting shows that there is something wrong here.
Gary William Cragg: Never ever use the solicitors that the builders recommend because clearly they work for the best interests of the builders and not the buyers.. I would always get my own and don’t understand why people would not get their own? Clearly they think it saves hassle but it doesn’t as we are now seeing with more and more people getting stung big time. I can see how that would make people think it’s ok to use their solicitors. I guess who would think their solicitors would not give you all the correct info. Surely this is something that needs reporting to the ombudsman.These practices do not seem right to me. I don’t understand why people would buy a house on leasehold. I can understand why you would with a flat but never ever a house. These builders should never have been able to get away with doing this. But people still had a choice when they decided to buy a house with leasehold.
Claire Davis: I’ve recently bought a house and it’s leasehold. I live in Manchester and I looked at dozens of houses, none of which had a freehold. I fear the leaseholds of a lot of houses have been sold off over the years. I thought it was only common in newly built houses, but all the houses I saw were 50+ years old and were all leasehold. It’s all money and greed to these big companies.
Rachel Barnish: We were never ever told by Taylor Wimpey that once sold it would double like these people in the article. Luckily we read up and had the contract changed to give us six years instead of three months to buy it from them. I can’t believe they get away with it. It’s so unfair on people.
Colin Sinnott: Everyone has a choice to to buy leasehold or freehold, why would anyone buy leasehold? Just buy somewhere else it’s that simple. The practice will soon stop when people stop buying these houses. Don’t buy a house with leasehold, simple! The companies will soon change their policies when their houses don’t sell. Well done LEP for highlighting it!
Jennie Rowley: Unless it was a flat in a block with common areas why would you even consider it? No point moaning after the fact not like they didn’t know.
Andrew Seed: We were first time buyers and although we knew they were leasehold, we didn’t really understand the complications that this could have. We used the builder’s recommended solicitor and they never mentioned anything to us. We didn’t have a problem with leasehold as such, but never knew that the freehold could be sold on to an investment company and that we would be charged for making improvements, remortgaging etc.
Ken Davies: They aren’t cheaper. They sell them and never explain the downside to leasehold. Just say they are 250 or 999 years long so won’t impact on you and then solicitors never explained the downside either. It’s one great big racket for making money.
Paul Towers: Solicitors definitely never mention it to you or explain any of the pitfalls. It’s a con.
Jennie Rowley: How is it a con, it’s not like you didn’t know it was lease hold it’s just that you didn’t understand the potential implications, that’s either a failure on the solicitors part to warn you or your part to understand the terms of lease hold properties. Many new builds have greens or play areas that need maintenance hence the lease holds as councils don’t want the extra work and costs, so lease hold charges pay for private companies to do this maintenance. If no one was so willing to purchase a lease hold house, builders would have no option but to sell them as free hold, probably at a higher upfront price.
Andrew Seed: Leasehold costs do not pay for maintenance of green areas. They are simply there to make extra money for the builders. On top of the yearly leasehold costs there is also a maintenance fee which does pay for the green areas, roads etc. That part was actually explained and there is no issue with that fee. I would say the solicitors are to blame here, as much as if not more so then the house builder. But to be honest they are all in it together to make money. There is no reason that these houses cannot be sold as freehold to start with and soon hopefully they will be as the government may shortly be banning leasehold going forward. We knew the house was leasehold, which was fine. But we were never advised of the complications from this. Now our freehold has been purchased by an investment company who want to charge four times what it should cost to buy it.
Ken Davies: Same all over Lancashire. Sell house as leasehold, hold back on the details and say use our recommended solicitor for a quick purchase, then the solicitors hold back on details too. Mis-selling or fraud? I know what I’d call it.
Robert Eastham: Sorry, but you home owners knew that before you bought it. Understand and agree if your leasehold has been sold on and the rent has trebled, that’s shocking.
Carolyn Hornby: The leasehold should always be offered to the purchaser before another company. There’s a large booklet you can get for free. I’ve tried to look into this and I will be doing a lot more research on it now.
Adam Wilcock: The reason for leasehold is so that the big house builders can make even more money, but it’s down to a fundamental failure by the government to give local councils the money to manage new housing developments maintain lighting tidiness cutting grass etc. You will always have leasehold if this doesn’t change. I have a flat that won’t sell as ground rent is £85 a month!
Judith Kerrigan: When we bought our first home together didn’t have a clue what the difference was.
André Bisson: Nothing comes without a catch in the UK, especially new builds.
James Mackie: It’ll be the new PPI claim in years to come.
James Mackie: The solicitor should have picked it up and explained it. Potentially a claim against the solicitor. It’s been well debated already all the potential outcomes.
David Park: The old saying “buyer beware.” Is this going to end up as the next PPI scandal?
Gemma Redmond Mountford: I’m not buying new now and will always check that with an older property.
Neil Eccles: The leasehold charge is there to make the extra money needed to bribe the councils for MORE new houses!
Phil Oddie: Seems very common on new build sites and I’d imagine it’s on most of the new developments round Preston and South Ribble. I have it on mine.
AJ Callaghan: Now you have 5 yrs to buy the freehold on new houses.
Sean Murf: Most houses are leasehold these days. Nearly impossible to buy without it being leasehold. So it is what it is.
Natalie Hicks: I know but get your solicitor to look over the contracts and check how long until they can sell it. And if you can buy it. Oh and if it’s a doubling one too.
Paul Simpson Regina: We’re waiting for a response from the builders as we asked about purchasing the freehold when we first enquired. With the government looking at it, it can only fall in our favour.
Gareth Jones: £5,900 we’ve been quoted to buy it! I knew then what I know now....