Property problems hitting homeowners in Ellesmere Port have left the town's MP fuming while affected residents have set up a campaign group to raise awareness of their plight.
Justin Madders MP is seething at what have been claimed to be ground rent 'scams' in leasehold houses.
Unlike flats, most houses have traditionally been sold freehold with the occupier owning the land the property stands on.
Leasehold dwellings involve a third party owning the land, with occupiers entering into a lease for a fixed number of years when they purchase.
There are a large number of new-build leasehold houses on estates in Ellesmere Port and issues surrounding them have now been raised at Westminster by Mr Madders, who is a member of the all party parliamentary group on leasehold reform.
As well as problems over escalating ground rent, other residents have run into problems when trying to buy the freehold on their home – discovering it would cost them three or four times what they were originally promised.
‘The PPI of the house building industry’
Mr Madders has called on ministers, along with other MPs who represent areas where a large number of leasehold homes are now being built, to end what he described as ‘the PPI of the house building industry’.
Major developers including Bellway, Redrow and Taylor Wimpey were cited, with Taylor Wimpey since pulling out of leasehold sales.
Mr Madders also asked for the Government to ensure existing homeowners with leases are compensated.
When housing minister Gavin Barwell MP indicated some developers were no longer going to continue selling leasehold properties, Mr Madders said: “It is welcome that this practice is not going to continue but my constituents are anxious to know what the Government can do to deal with the onerous conditions that exist in leases already.”
The minister agreed and raised the possibility of compensation for those already affected.
He also said: “We must also address the situation of hard-working people who believe that they have bought their home but who may find themselves unable to sell that home further down the line.”
Mr Madders set out cases of Ellesmere Port residents who have been affected.
The debate also drew attention to numerous other abuses involving leaseholds including:
- Purchasers who felt they had been put under pressure to appoint solicitors recommended by the developer
- Excessive service charges
- 40% insurance commissions
- Charges rising to thousands of pounds for consent to carry out home alterations
- The forfeiture of homes by leaseholders who battle freeholders
Following the debate, Mr Madders said: “Thousands of people in this area feel that they have been misled and ripped off by major developers.
“While the comments of the housing minister were very welcome and represent a good start, I will not rest until this scandal has been fully resolved.
“The developers and freehold companies behind this knew exactly what they were doing and the impact that it would have on the individuals involved.”
The situation in the town is gaining widespread attention helped by Facebook pages created by local campaigner Katie Kendrick who says: “As the word is spreading up and down the country people are suddenly realising that this actually affects them.”
Katie has set up a Facebook page ‘Leasehold Scandal Ellesmere Port’ to raise awareness of the issue.
She points out the Redrow estate at Ledsham is all leasehold and Mr Madders is in contact with them ‘objecting to this massively’ as he and other MPs firmly believe there is no requirement for homes to be sold as leasehold.
Katie said: “Yes I understood I was purchasing a leasehold house when I bought it back in 2014.
“I was informed I was legally entitled to purchase my freehold after I had lived in the property for two years which I fully intended to do.
“However Bellway sold my freehold on after 18 months.
“The impact on me meant my freehold value had gone up from approximately £4,000 to £13,350 in less than a year.
“The Taylor Wimpey side of the estate have seen their freehold values rocket from £2,600 to £33,000 once they were sold on.
“There are so many issues additional to rises in ground rents and increasing freehold valuations."
The Guardian newspaper reported that when Clare Budgen bought her first house in Ellesmere Port in 2009 for £155,000 the last thing on her mind was the lease.
Taylor Wimpey, the developer, arranged the lease on a 999-year basis so what could the then 22-year-old possibly have had to worry about?
But just seven years later, when she looked into buying the freehold to enable her to sell the home more easily in the future, she was astonished to find that, first, Taylor Wimpey had sold her freehold to another company and second, that company wanted £32,000.
What the developers say
Redrow, which is building the 2,000 home Ledsham Garden Village, has not responded to enquiries.
But it told the Leasehold Knowledge Partnership, an advice charity linked to the all party parliamentary group: “Redrow is a responsible company and does not condone ground rent increases which are well above the prevailing market rate, or unreasonable additional charges.
“Redrow completed over 4,700 private and social homes in the last financial year and sells the majority of its houses as freehold.
“There are parts of the country in which leasehold sales are common practice.
“In these areas – in practice a small proportion of our total house sales – Redrow sells leasehold.
“The process is made clear to buyers and their advisers in the run up to and at the point of sale.”