Getting the keys to your new home following the arduous home buying process is usually a milestone memory of joy that is difficult to replicate. However, for the thousands of people trapped in unreasonable leasehold agreements, their home can become an unsaleable prison.
The majority of stories seem consistent, highlighting a clear mis-selling of leasehold properties by the building companies. Whilst viewing the properties, the houses are introduced as virtually freehold, told their ground rents are inconsequential and pennies per year and advised that they will be able to buy the freehold for an affordable price.
The reality is very different, with ground rents doubling every decade and land actually owned by third parties, willing to sell at an exorbitant fee.
Jo and Mark Darbyshire purchased their five-bedroom forever home near Bolton for £400,000. This was an expensive price considering the average detached property in the area costs a mere £281,962.
After paying a premium price for the property, they would be confronted with a myriad of leasehold complications.
When they purchased the home, Taylor Wimpy insisted that they could buy the leasehold after a determined period for approximately £5,000. At no point were they advised that the land could be sold to a third party who then had the right to value it as they pleased.
The couple had planned to purchase the freehold just before their ground rent doubled in 2020. Following a recent letter, they have been informed that an investment company called ‘Adriatic Land,’ have bought the land on which their house resides.
The couple were disgusted that the freehold price was offered to a neighbour at over £50,000, ten times more than was promised at purchase. It was only when another neighbour was quoted £40,000 that the extent of the problem became apparent.
Jo Darbyshire, owner of the leasehold and a commercial director, says: “After this happened, another person decided to get a quote, thinking that £50,000 may have been a misprint.
“They came back with £40,000. We all thought: ‘Oh my God, what have we got ourselves into?’
“My ground rent, which is currently £295, is due to double every ten years up to 50 years, to a maximum of £9,440 a year. We feel that we were mis-sold.
“There are some wins for leaseholders. But the reforms are unlikely to make my freehold available for the £5,000 I was told it would be when I bought the house.
“The onward sale of freeholds has caused huge customer detriment . . .this mis-selling scandal needs to be addressed.”
A Taylor Wimpey spokeswoman says that leases provided by the company ‘were clear’ and ‘all customers received independent advice from regulated legal firms’.
‘We would expect solicitors to explain all aspects of the transaction, including ownership and any rent reviews.’
When the building company use legislation that states they are under no obligation to inform the people buying their property and current leaseholders about selling on land, the struggle for the leaseholder is only set to worsen.
As legislation on leaseholder property is set to change and rights of the leaseholder are set to increase, it is hoped that the price of freehold titles and the nightmarish atmosphere may diminish.
Do you agree with Taylor Wimpy that the role of informant sits with the conveyancer and not the building company? Have you been involved with leasehold transactions where the buyer has been mis-informed or mis-sold?
8 Responses
So pleased to see the statement re missellng by developers in this article. The whole thing is a cleverly constructed scam using psychology – key trigger words – and withholding of essential information.
It is NOT the responsibility of the buyer to first study leasehold law before purchase to be able to understand the “cleverly worded” lease . It is the responsibility of the developer to use transparent marketing and the responsibility of the solicitor to provide a duty of care when translating the lease for their client.
It’s the builders who sold on the freehold title – how would the conveyancer ever know that it was the builders intention to sell them on as soon as the development was completed. Also was rushed by the builder to buy the property in order to get the “offer” price! I was told we could purchase the lease for a few £1000 after 2 years but then then the lease was sold to Adriatic Land before the two years. Not got a doubling ground rent clause but still feel sadly let down – and yes, definitely mis-sold !
Culpability lies, first and foremost, with developers. They clearly decided not to include the freehold in house sales and instructed salesroom staff the tell clients they could purchase it for a reasonable price after two years. Most people bought their property on that understanding, but have been conned.
Developers’ legal teams have manipulated traditional Leasehold into a money-sucking scam, using a legal loophole where the freehold of a leasehold house can be sold on without giving the tenant first right of refusal.
Now they have moved on and are manipulating traditional Freehold.
The next housing scandal will be Freeholds subject to fee generating covenants and “private estate” maintenance fees.
I feel I was mis-led by the developers and sales staff the second I walked into the sales office. The leasehold tenure was played down by sales staff, I was told “don’t worry all newbuilds are leasehold now a days its standard practice, it’s virtually freehold and you can buy the freehold after a couple of years for a few thousand”. Purchasing the freehold in a couple of years’ time was portrayed as a simply process, this couldn’t be further from the truth.
The leasehold scandal is a cleverly orchestrated scam. Leases were purposefully worded in a way to catch people out and maximise profit and provide and endless income stream. Crucial information was withheld at the point of sale that would have had direct impact on my decision-making process. We were not able to give informed consent with the key information being withheld from us.
I have since been told the onward sale of the freeholds was standard practice within the industry. Why were we not informed of this if it was “standard practice”?. How was I to know the land from beneath me would be sold on and that the onward sale would have a detrimental impact on us? Whilst not illegal practice, one that is totally immoral.
Whilst I agree my conveyancing solicitor should of highlighted to me to all of the above issues. I firmly believe the developers knew what they were doing. They only focused on the short-term gain for themselves not the long-term impact of their customers who I feel they have sold down the river without a paddle. Developers pointing the finger at conveyancing solicitors is a cop out.
The leasehold scandal is a catalogue of errors by professionals. When you purchase a home you put your trust in professionals to act in your best interest. Similar to when you enter the NHS. When informed consent is obtained for a surgical procedure you don’t expect the patient to have a degree in medicine and understand the complexities of the procedure. You put your faith in those professionals to advise you based on your best interests.
You don’t know what you need to know unless you know it. Now that I know it I would never of bought a leasehold house. I feel totally mis-sold
This one bad area we need to consider the service charges as well.
The mention of the current failure of buyers of the freehold failing to honour their predecessors’ promises about price reminds me that the Scottish Leases Act addressed the problem of such buyers failing to honour their predecessors’ promises and evicting leaseholders. In 1449!
Will it never end?
We were NEVER given the information at point of sale. Our solicitor didnt know the lease would be sold to another party. We were misold. My house Is now unsaleable as banks are no longer lending against it.
This is much worse than the PPI scam.
If only developers would focus on building decent quality houses at a reasonable price life would be so much better.
To think that they are to all intent and purpose tricking consumers into buying the unknown ticking time bomb is outrageous and scandalous.
Then pay themselves millions in bonuses as a big thank! Unbelievable.