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Leasehold Solutions has labelled evidence by Housing Minister Heather Wheeler MP as ‘factually incorrect’ and a ‘disgrace’. Wheeler was questioned by members of the Housing, Communities and Local Government select committee at the final session of its inquiry into leasehold reform.
Louie Burns, Managing Director of Leasehold Solutions, said: “Based on Heather Wheeler’s statements, it seems she was there to defend the freeholders and to blame leaseholders for the mess they found themselves in. This is surprising, given that the Government she represents has already published a White Paper on tackling the unfair practices in the leasehold system, and promised reforms to make it simpler, fairer and cheaper for leaseholders.
“In fact, Wheeler’s ‘evidence’ was a litany of factually incorrect assumptions. The one thing which became glaringly obvious in the course of her select committee debacle is that she does not understand leasehold at all, which is a disconcerting thing to see in a housing minister.
“For example, Wheeler informed the committee on Monday that not all freeholders monetise ground rents. In fact, I have a database of 1.6 million leasehold properties across the whole country, of which only 891 properties do not have a ground rent fee attached to them. That is only 0.0006% of properties that have no monetised ground rents, which is hardly worth crowing about!”
Wheeler also blamed leaseholders for getting so “caught up in the moment” when buying a home that they simply overlooked the implications of owning a leasehold, and argued that the lease contains all the information a buyer needs to make an informed decision.
Louie continued: “Wheeler is completely wrong on this, as the lease does not spell out the all terms by which the leaseholder will be bound. For example, the terms will not contain: the fees a freeholder will demand for service charges; fees for any ‘major works’ for which the leaseholder will foot the bill; ‘administration fees’ the freeholder will demand for collecting service charges or late ground rent payments; or fees for licences and permissions.
“Perhaps most importantly, the lease terms will not indicate the costs to extend the lease or buy the freehold in the future, which are essential if the leaseholder intends to maintain ownership of their property.
“By citing caveat emptor (“buyer beware”) Wheeler is blaming leaseholders for getting themselves into such a mess. Leases are incredibly complex and often worded in a way that purposefully hides the true meaning of the terms for the freeholder’s benefit.
“Indeed, caveat emptor doesn’t apply to most other consumer purchases, which are covered by legal protection, such as taking out a loan or mortgage, buying a new car or even a toaster. It’s truly shocking that consumers have more legal protection if they buy a toaster for £10 than if they buy a leasehold property for £300,000.”
Mrs Wheeler said she would prefer to rely on developers and property companies voluntarily giving families better terms. She said legal advice showed legislation would be ‘horrendously expensive’, adding: ‘I’d much rather go down the voluntary route.’
Louie explained: “Let’s be very clear here. The leases with onerous terms were written by housing developers and freeholders to maximise their profits at the expense of the leaseholders. The terms did not end up in the lease by accident.
“A voluntary arrangement is a preposterous suggestion that is deeply insulting to the many leaseholders trapped in an exploitative web that has been spun by developers and freeholders in the first place.
“In short, Mrs Wheeler does not understand the many issues that plague hundreds of thousands of leaseholders in the UK and her so-called evidence was a disgrace. Housing ministers these days come and go like buses, so I hope Mrs Wheeler moves on quickly to a role that suits her better.”
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