Which Leasehold Scandal?

Leasehold Scandal

When you buy a property in England, you enter into a leasehold agreement with the freeholder. This means you have to stay in the house for a long time and can’t make changes to it without the freeholder’s consent. It’s an antiquated system that’s rooted in feudal times. In Scotland, the leasehold system is replaced by commonhold tenure, which gives buyers full ownership of the property and management of the block, allowing them to build a conservatory or get planning permission for a garage extension.

Increasing ground rents, unforeseen costs and legal fees are making life difficult for homeowners in their Leasehold Services Ltd homes. For example, they’ve been charged thousands of pounds for services that weren’t included in the original purchase price. They’ve also been slapped with a range of eye watering fees to cover things like a survey, a surveyor, planning permission and even a new bathroom suite.

The leasehold scandal hit the headlines in 2017 as it emerged that many of Britain’s biggest housing developers were selling new houses with a clause meaning that their ground rent would double every 10 years. This had left homeowners trapped, dubbed ‘leasehold prisoners’ and struggling to sell their properties.

Which Leasehold Scandal?

This has led to a growing number of people becoming trapped in their homes and the government is looking at ways to help them. It has launched an investigation into the practices of four big housing developers – Taylor Wimpey, Barratt Developments, Countryside Properties and Persimmon Homes.

A new report by the Competitions and Markets Authority (CMA) has found “troubling evidence” that some leaseholders had been mis-sold their homes with a clause meaning they would have to pay escalating ground rents for years on end. The CMA has opened enforcement cases against the developers.

There are now plans to ban the sale of leasehold homes and reduce ground rents to zero. It is hoped that these measures will ease the pressure on people who have been caught up in the scandal, but experts say it’s unlikely they will fix all of the problems at once.

Whichever way it ends up, the issue of which leasehold scandal is one that can’t be ignored and needs to be addressed as soon as possible. If it isn’t, there will be more people like Wendy Bowen – an older woman who has been paying escalating service charges for over five years.

These problems don’t just apply to the wealthy and the elderly; they affect young families too, says Wendy Toon. She and her husband have been living in their house in a small rural village for nearly a decade but it feels “unfair”. They want to move upsize, but the leasehold has deterred potential buyers.

The government is taking action to address the scandal, but campaigners say it should include compensation. Robert Jenrick, the housing secretary, has said he wants to restrict the ground rents in new leases to zero and introduce a compensation scheme for those who are unfairly affected.