A major UK house builder was put under the microscope this weekend, accused of mis-selling leasehold property to their customers.
Persimmon reached an out of court settlement with their customers in a Cardiff development after it emerged the company failed to adequately inform the buyers they were purchasing a leasehold property.
Homeowners in the St Edeyrn’s Village estate in Cardiff complained to trading standards, claiming they were mis-sold their leasehold properties.
Trading Standards had started the process of legal action against Persimmon citing mis-selling. The court case, due to start in September and last for seven weeks, has now been cancelled because of the settlement.
Following the initial story breaking in the Daily Mail, it has been suggested that the Cardiff development may be a proverbial drop in the ocean and Persimmon should be widening their focus and opening the settlement offer to all buyers mis-sold under similar conditions.
Whilst this move would cost the company millions, it may prove more media savvy than waiting and being forced to give up the freehold title to many houses by regulators following new governmental changes to the sector introduced by former Secretary of State, James Brokenshire.
Under the new regulations, all leaseholders who were incorrectly sold a leasehold property would be able to get their freehold title outright at no extra cost.
There was also immediate action to ban Help to Buy developers selling leasehold houses. Homes England will now renegotiate all Help to Buy contracts ‘to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.’
James Brokenshire also confirmed that pernicious ground rents on all new leases will be reduced to £0 in a bid to prevent leaseholders from being charged excessive fees without receiving any benefit.
The changes also looked to improve efficiency and speed in the leasehold buying process. Freeholders would be capped on the time they can take and the amount they are able to charge for vital information regarding a leasehold contract. Moving forward, freeholders will have a maximum of 15 working days to send pertinent information and can charge no more than £200 for the service.
Katie Kendrick, founder of the the National Leasehold Campaign, commented:
“This case is of significant national interest. It is not an isolated case. Thousands feel they have been mis-sold their leasehold properties.”
A spokesperson for Persimmon said:
“We’ve given all our leaseholders the right to buy the freehold which we own at a price which is capped at the market value.”
What will this mis-selling settlement mean for homeowners currently trapped in similar leasehold scenarios?
One Response
“Freeholders would be capped on the time they can take and the amount they are able to charge for vital information regarding a leasehold contract. Moving forward, freeholders will have a maximum of 15 working days to send pertinent information and can charge no more than £200 for the service.”
The Government should not be imposing obligations on landlords to provide information but making that information open data as simple to access as Land Registry copy entries
Copy what works elsewhere as part of the process of “professionalising” property management.