Brokenshire announces pledge cracking down on toxic leasehold deals

Brokenshire announces pledge cracking down on toxic leasehold deals

7:43 AM, 28th March 2019, About 4 years ago 9

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A new industry pledge to stop leaseholders being trapped in unfair and costly deals has been unveiled by the Communities Secretary, Rt Hon James Brokenshire MP, today (28 March).

More than forty leading property developers and freeholders, including big names such as Taylor Wimpey and Barratt Homes – have already signed the government-backed pledge, which commits them to doing away with onerous ‘doubling clauses’ that can result in ground rents soaring exponentially over a short period of time.

The freeholders who have signed have committed to changing the terms of leases for those who are affected. Other industry bodies such as managing agents have also put their names down, vowing to act fairly and transparently in their dealings with leaseholders.

Ministers have also today announced plans to close the legal loopholes that force leaseholders to pay unjustified when they take their freeholders to court over pernicious service charges. This includes consultation with industry on whether these changes should apply to existing leases too.

Under current rules, leaseholders who wish to take their landlords to court to challenge exorbitant fees or unfair hikes in annual charges also run the risk of being forced to pay their landlord’s legal fees. This applies even if the court rules in their favour – hitting some tenants with bills of tens of thousands of pounds.

Scrapping this loophole will reset the relationship between freeholders and leaseholders – stopping tenants being unfairly burdened with legal fees and ensuring they can access justice.

The Communities Secretary, Rt Hon James Brokenshire MP, said:

“Since becoming Communities Secretary, I have repeatedly made clear my ambition to end those exploitative and unfair leasehold arrangements that have no place in a modern housing market.

“The new industry pledge – signed by leading freeholders and property developers – will further support existing and future leaseholders by protecting them from onerous fees. It’s great news that leading names such as Taylor Wimpey and Barratt Developments have already signed up to the pledge, and I want to see others who have not yet signed up do the right thing.”

Housing Minister Heather Wheeler MP said:

“We want to make sure we have a leasehold system where people are able to challenge exorbitant rates and high service charges. It is unacceptable that the burden of legal fees – potentially running into tens of thousands of pounds – is preventing people from seeking justice.

“The plans announced today will stop leaseholders from picking up the tab for unjustified legal costs – creating a housing market that truly works for everyone.”

 Richard Silva, Executive Director of Long Harbour said:

“This pledge is a crucial first step towards positive change in the residential leasehold market and it reflects our commitment to eliminating bad practice from the market.”

And to further protect leaseholders from excessive costs, older people and their families will be better protected across the retirement sector from unfair fees – sometimes called ‘event fees’ – charged in some leasehold retirement properties, where owners are required to pay extra charges when they become ill or die.

The measures announced today will stop older homeowners and their families being hit with surprise fees when they may least expect or be able to afford it, often when they are at their most vulnerable, such as following the illness or death of a loved one.

This is part of ongoing action by the government to reform and modernise the home-buying process and crack down on unfair practices in the leasehold market – helping to create a housing market that works for everyone.

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Appalled Landlord

15:01 PM, 28th March 2019, About 4 years ago

The National Leasehold Campaign has posted and emailed the following comments:

“Hot on the heels of the damning Select Committee Inquiry report into the leasehold scandal the developers and freeholders come out fighting like a wounded animal by signing a pledge to behave themselves. This exercise in style over substance demonstrates the increasing influence of the National Leasehold Campaign, with the Facebook Group now approaching 14,000 members.

This pledge is the “as little as they think they can get away with” response that the NLC predicted when asked what we think developers and freeholders will do to try to resolve the leasehold scandal they created, and until recently denied existence of.

The Select Committee Inquiry report noted that “too often leaseholders, particularly in new-build properties, have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit”. Converting doubling leases to RPI does not solve the problem.

Many thousands of onerous leases with ground rents above 0.1% of property value remain. There is no mention of removing onerous permission fees or taking a more ethical approach on excessively increasing service charges. There is no commitment to end the new and growing fleecehold scandal where new supposedly freehold homes are sold with estate maintenance charges.

It is a sad reflection of our broken housing market that this pledge has to be made at all. It’s time for Government to take a much stronger stance and avoid being taken in like Little Red Riding Hood as the leasehold wolves dress up like Granny.

We’ve seen developers posting obscene profits; they can afford to do the right thing, they choose not to.”

Appalled Landlord

15:20 PM, 28th March 2019, About 4 years ago

The NLC has a petition calling for leasehold to be abolished.

michelle green

0:41 AM, 29th March 2019, About 4 years ago

Reply to the comment left by Appalled Landlord at 28/03/2019 - 15:01
So far all mouth and yet to see the trousers!
What will really change things is the fact that conveyancers are now having to be more diligent (explain what onerous terms mean),and also are advising lenders not to lend on these properties.
As time goes on and people want to sell up and move for a variety of reasons, and can`t because no-one will buy (due to not being able to finance), then the proverbial will hit the fan.
This is a slow moving snowball that will be gathering pace in the near future.

michelle green

0:43 AM, 29th March 2019, About 4 years ago

Reply to the comment left by Appalled Landlord at 28/03/2019 - 15:20
Please do sign this. It has deeper implications - not just the leasehold scandal, but any change to the current situation will have a knock on effect on the cost of lease extensions and service charges.

Appalled Landlord

11:35 AM, 29th March 2019, About 4 years ago

Louie Burns, managing director of Leasehold Solutions, which advises leaseholders on purchasing or extending their lease, said: “This pledge is a pathetic attempt by the Government to row back on its commitment to leasehold reform."

Frederick Morrow-Ahmed

11:46 AM, 30th March 2019, About 4 years ago

More waffle from the Rt Hon James Brokenshire MP. However, it needs to be ascertained how much fault lies with the conveyancers. Whether they brought these clauses to the attention of the buyers. And, if so, then the buyers themselves, whether they took any notice of the advice given.

I would hazard a guess that what the developers did was to market these properties at a substantial discount to the market value to entice buyers, and then lumber them with these ongoing charges. Thus, a fair solution would be to buy these properties back from the purchasers at the original sale price, perhaps adjusted for any rise or fall in the market, and then offer them back for sale at market prices without these conditions.

Agreed that these conditions should never have been legal in the first place, but if buyers knew the conditions but jumped in greedily anyway because the asking prices were too good to be true, then they must also carry a share of the blame.

Alternatively, reduce the ongoing charges but then demand the differential between the sale price and the market price at the time.

There are too many people around on both sides of the fence who are guilty. Developers trying a fast one and buyers who went for a bargain bottom price and now coming up with a sob story because of charges that were a quid pro quo for that low price in the first place.

Frederick Morrow-Ahmed

11:55 AM, 30th March 2019, About 4 years ago

Reply to the comment left by Frederick Morrow-Ahmed at 30/03/2019 - 11:46
But the Rt Hon Waffler James Brokenshire MP is either too stupid to think of a logical and fair solution, or too much of a wily politician eager for soundbites.

Appalled Landlord

22:08 PM, 3rd April 2019, About 4 years ago

“Government must not allow developers & freeholders who created this crisis to be allowed to define the solutions” – Clive Betts


15:12 PM, 11th May 2019, About 4 years ago

Are there any systems or legeislations in place to assist people who own properties with doubling ground rents that are no longer owned by companies such as Taylor Wimpy. I own a flat built by Taylor Wimpy but i am the second owner, they say i don't fall into the bracket for help on renegotiating my lease structure as i didn't buy directly from them. The free holder is Fairthatch GR Limited, does anyone have any experience or advice relating to renegotiations of lease structures with this company??? any help would be much appreciated!! Thanks

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