Victory for some leaseholders who have seen ground rents soar as developers pledge to ease contracts
- Over 40 developers and freeholders sign Government-backed pledge
- Freeholders have committed to changing lease terms for existing leaseholders
- Developers Taylor Wimpey, Persimmon and Barratt Homes have all signed
More than 40 leading property developers and freeholders have signed a Government-backed pledge to free leaseholders from unfair and costly deals.
The new industry pledge, which includes signatories Taylor Wimpey, Persimmon and Barratt Homes, commits to doing away with onerous ‘doubling clauses’ that can result in ground rents soaring exponentially over a short period of time.
Significantly, some freeholders who have signed the pledge have also committed to changing the terms of leases for those who have already bought their homes.
Additionally, a number of managing agents have put their names down, vowing to ‘act fairly and transparently in their dealings with leaseholders’, according to an announcement today from the Ministry of Housing, Communities and Local Government.
Communities Secretary James Brokenshire urged more developers to sign up to the pledge
The communities secretary, James Brokenshire MP, said: ‘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.’
The full list of signatories
Association of Residential Managing Agents (ARMA)
Aviva Investors Global Services Limited
Consensus Business Group
Croudace Homes Group
E & J Estates
Estates & Management Limited
Fairview New Homes
Ground Rents Income Fund Plc
Home Builders Federation (HBF)
Homeground Management Ltd
Long Harbour Ltd
Mainstay Group Limited
McCarthy and Stone
Mears New Homes
Millgate Developments (part of the Countryside Group)
Nicholas King Homes
PGIM Real Estate
Royal Institution of Chartered Surveyors (RICS)
Spitfire Bespoke Homes
St. Modwen Homes
Stewart Milne Group
Wallace Partnership Group Limited
Ministers have also today announced plans to close the legal loopholes that force leaseholders to pay unjustified fees when they take their freeholders to court over pernicious service charges.
The plans include a 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.
The leasehold scandal came to light in 2017 after it emerged that developers had been selling leasehold properties with high fees and spiralling ground rents attached.
Some of these developers included clauses that saw ground rents double every 10 years, effectively trapping the homeowners in homes they could not sell.
Once the purchases were complete, in many cases property developers then sold on freeholds to third party companies without informing the homeowners.
In some of the worst cases, freeholders were slapping homeowners with fees to make elementary amendments to their own homes – £252 to own a pet or £60 to put up a doorbell.
A survey by estate agent tradebody NAEA Propertymark last year found that a third of leasehold house owners are struggling to attract a buyer because they don’t own the freehold.
As a result of this, 93 per cent of the UK’s 1.4million leasehold households say they definitely wouldn’t buy another leasehold property.
Last week This is Money reported that pressure is mounting on the Competition and Markets Authority to investigate the scandal.
Members of Parliament accused developers, solicitors and investors of ‘deliberately running a racket’ to rip off customers and called on the CMA to take action.
It comes just days after the CMA rebuffed calls for it to step in, despite pressure from James Brokenshire.
If you feel you have been mis-sold your leasehold new build property, you can take your developer to task via National Trading Standards.
The SRA, the body responsible for regulating solicitors, says you should make a complaint if a solicitor did not fully inform you of the nature of your lease.
For This is Money’s guide to leasehold property, click here.
If you are stuck in the leasehold trap, get in touch: email@example.com