Angry leaseholders are to hold a peaceful protest at Redrow’s new 2,000 home Ledsham Garden Village on Saturday (March 18).
The issue of housebuilders across the town selling new build properties leasehold rather than freehold has exploded since last autumn with Ellesmere Port and Neston MP Justin Madders describing the problem as ‘the PPI of the house building industry’.
The MP is seething at what have been claimed to be ground rent scandals in leasehold houses as most houses, as opposed to flats, 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.
This involves them in an annual ground rent, which is subject to increases and charges – for example to build an extension.
Owners can seek to buy out the lease but this comes at a cost. And the company granting the lease can sell it on without informing the occupier.
Activist Katie Kendrick, who has taken to television and radio to raise the profile of the issue, now reported widely in national newspapers, has launched a Facebook page which already has 2,100 members.
She said: “As the word is spreading up and down the country people are suddenly realising that this actually affects them.”
Campaigners say they want to warn potential buyers of the ‘rising costs’ of leasehold properties.
The demonstration will take place from noon to 2pm with Katie saying: “I have invited campaigners from all over the north west to join us on this day.”
Katie wants to see a change in housing law after seeing the price of the freehold on her home rocket.
Mr Madders is also to attend along with specialist advice group Leasehold Knowledge Partnership.
The Government insists that problems and concerns with leasehold are to be dealt with and that it is intent on taking action to promote ‘transparency and fairness’ for the growing number of leaseholders.
Its current consultation says: “Leasehold has been a traditional part of the housing market in this country but there are areas where urgent reform may be needed, particularly when buying a house on a leasehold basis.
“New leasehold houses can be marketed at a reduced price compared to freehold. But some purchasers are not aware at the point of sale that the associated costs of buying a new leasehold house can make it more expensive in the long run.
“Some freeholds and ground rents of leasehold houses are sold on and traded with leaseholders left in the dark and facing increasing and onerous payments. This is not in consumers’ best interests.
“In particular ground rents with short review periods and the potential to increase significantly throughout the lease period may not be offering a fair deal.
“We are absolutely determined to address this. We will therefore consult on a range of measures to tackle all unfair and unreasonable abuses of leasehold.”
Matt Grayson, spokesperson for Redrow, said: “Everyone in the leasehold debate has a right to express their opinions.
“Along with the rest of the house building industry, we’re currently engaging with Government on leasehold and new build houses, as part of its Housing White Paper which was issued in early February 2017. That consultation is ongoing and we’re playing an active role in the discussions.
“We sell new houses on a leasehold basis in pockets of the country where it is commonplace and not unusual for land to be acquired on leasehold in the first place.
“The process is talked through with purchasers and customers have access to independently-regulated financial and legal advisers acting in their interests.
“In our leases, any third-party acquirers of freeholds are bound by standard ground rent review clauses which generally allow a review every 10 years and only in-accordance with RPI.”
The issue of new build leasehold houses on estates in Ellesmere Port was raised at Westminster by Mr Madders who is a member of the all party parliamentary group on leasehold reform.
Major developers including Bellway, Redrow and Taylor Wimpey were cited with Taylor Wimpey since pulling out of leasehold sales.
Mr Madders also asked the Government to ensure existing homeowners with leases are compensated.
He told the minister: “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 commented: “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 while the debate also drew attention to ‘numerous’ other abuses involving leaseholds.
- 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.
Mr Madders added: “Thousands of people in this area feel that they have been misled 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.”