Leaseholders are ‘a steady source of profit’ say MPs pushing for reform

Katherine Johnston (27 March, 2019) Politics Housing

'Our legal advice was that it would cost more to challenge in court than to pay' says Sydenham homeowner slapped with £50,000 bill

26745MP Helen Hayes.

The leasehold system is leaving homeowners exploited as ‘a steady source of profit’ says a damning new report by a parliamentary committee including Dulwich  MP Helen Hayes.

The report, published on March 11 by the House of Commons’ housing, communities and local government committee, argues commonhold should become the primary model of ownership for future builds; calls for leasehold mis-selling to be investigated; pushes for existing ground rents to be limited to 0.1 per cent of present value up to a maximum of £250 per year;  new ground rents set at a peppercorn; and says service charges should be itemised for greater transparency.

Its authors explained: “Too often leaseholders – particularly in new-build properties – have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a steady source of profit.”

Although it fell short of proposing an outright ban on leasehold, key recommendations include new legislation is brought in to make sure freeholders cannot recoup legal costs from tribunals they have lost through service charge bills, and introducing low-interest loans to help leaseholders struggling to finance purchasing the freehold or extend their lease.

The report comes after shocking cases have come to light where homeowners have been effectively trapped in unsellable homes with escalating ground rents.

The issue has highlighted wider problems within the sector including high service charges, difficulty challenging freeholders in court, and expensive lease extensions.

In 2017, Savid Javid described the practices as ‘practically feudal’ during his tenure as secretary of state for housing.

One leaseholder from Sydenham, who submitted evidence to the committee, described the report as ‘damning’ and said she was supporting a petition to abolish leasehold ownership altogether – along with 22,000 other signatories.

In her block, from 2013 to 2017 major works costing £79,000 spiralled to £600,000 leaving leaseholders with bills of around £50,000 each despite challenges over discrepancies made by the homeowners.

In total, the owner of the two-bed flat was forced to pay £41,800 for the major works and, after a failed attempt at litigation, a further £8,000 covering the landlord’s legal fees.

“Our legal advice was that it would cost more to challenge in court than to pay,” she said.  “This should not be the only choices available to leaseholder consumers.”

To sign the petition, click here.

 

michelle greene says:

Hundreds of thousands of people being used as cash cows as the ground beneath them is auctioned off to the highest (often offshore) bidder, who knows he has a steady, uncapped income for life. People who should feel safe and secure in their own homes are just a commodity to be milked.

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