Leasehold scandal
The Leasehold scandal (also known as the Ground rent scandal) is an ongoing scandal in the United Kingdom concerning the sale of new-build houses as leasehold.
Allegations[edit]
Traditionally, houses in the United Kingdom have been sold as freehold.[1][2]
In May 2017, Nationwide Building Society announced it would stop lending against any new-build leasehold flat or house where the ground rent is more than 0.1% of the value of the property and would refuse loans on new flats with lease lengths of less than 125 years or new houses with less than 250 years.[3][4]
In 2018, Barclays announced that in light of the coverage of complex lease terms the bank had "reviewed [its] lending policies, particularly in relation to ground rent as these can escalate to unacceptably high levels".[5]
Reactions[edit]
Legal[edit]
Competition and Markets Authority investigation[edit]
On 11 June 2019, the Competition and Markets Authority (CMA) opened an investigation into the leasehold housing market over concerns about potential leasehold mis-selling, and whether leasehold contract terms were onerous and unfair in relation to ground rent, permission and other charges.[6][7] On 28 February 2020, the CMA announced that it had found "troubling evidence of potential mis-selling and unfair contract terms in the leasehold housing sector" and would be taking enforcement action.[8][9][10] On 4 September 2020, the CMA opened enforcement cases into Barratt Developments, Countryside Properties, Persimmon Homes, and Taylor Wimpey.[11][12][13] On 19 March 2021, the CMA ordered Countryside Properties and Taylor Wimpey to remove leasehold terms that double the ground rent every 10 or 15 years.[14][15][16]
Pledge[edit]
On 28 March 2019, the Government announced that 45 property developers and freeholders, including Taylor Wimpey and Barratt Homes, had signed the "Public pledge for leaseholders", a government-backed pledge that commits them to remove ‘doubling clauses’ and refrain from using them in the future.[17] As of 27 June 2019, the number of signatories has grown to 63.[18]
The National Leasehold Campaign called the pledge “as little as they think they can get away with”.[19]
Legislative reform[edit]
On 25 June 2019, Eddie Hughes, Conservative MP for Walsall North, introduced the Ground Rents (Leasehold Properties) Bill, a private members' bill that would cap ground rents at 0.1% of the value of a property, up to a maximum of £250 per year.[20] The Bill failed to complete its passage through Parliament before the end of the session.
On 7 January 2021, the Government announced it would be introducing reforms to make it easier and cheaper for leaseholders to buy their homes in the upcoming session of Parliament. This would involve introducing a right for leaseholders to extend their lease by a maximum term of 990 years at zero ground rent, prohibiting ground rents on all new retirement properties, and establishing a Commonhold Council.[21][22][23] The Times described the proposed reforms as "long overdue".[24] Propertymark welcomed the reforms and encouraged the Government to extend the prohibition on ground rents for new retirement properties to all retirement properties.[25]
Corporate[edit]
Political[edit]
MPs[edit]
- Justin Madders, Labour MP for Ellesmere Port and Neston, described the situation as “morally indefensible” and called for a ban on leasehold for estates of houses. Madders further said that "it is clear this system is being abused to drive huge profits at ordinary homeowners’ expense. There is no need for there to be leasehold properties, particularly those on an estate where the properties are mainly detached houses".[26]
- Kevin Hollinrake, Conservative MP for Thirsk and Malton, said that "the current system for leaseholders is flawed leaving householders at risk of exploitation by developers, freeholders and managing agents and needs immediate reform".[27]
- Mike Amesbury, Labour MP for Weaver Vale, welcomed the Government's proposed reforms to leasehold but said that "more still needs to be done" and that "with so many announcements and false dawns from successive housing ministers the proof will be in the delivery".[28]
See also[edit]
References[edit]
- ↑ Collinson, Patrick (25 July 2017). "Leasehold houses and the ground rent scandal: all you need to know". The Guardian. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Longman, James; Ailes, Emma (2 February 2017). "The new property trap affecting thousands". BBC News. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Suter, Laura (5 May 2017). "Nationwide stops lending on leasehold homes with punitive ground rents". The Telegraph. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Collinson, Patrick (6 May 2017). "Three cheers Nationwide for bloodying housebuilder noses". The Guardian. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Shave, Carl (12 September 2018). "Barclays sheds light on ground rent policy". FT Adviser. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "CMA launches consumer law investigation into leasehold market". Competition and Markets Authority. 11 June 2019. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Jones, Rupert (11 July 2019). "Leasehold trap: watchdog investigates if homebuyers are treated unfairly". The Guardian. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "CMA finds evidence of serious issues in leasehold selling". Competition and Markets Authority. 28 February 2020. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Leasehold property buyers 'misled by developers'". BBC News. 28 February 2020. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Sweney, Mark (28 February 2020). "Watchdog to act as homebuyers 'misled and overcharged'". The Guardian. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Leasehold homes: CMA launches enforcement action". Competition and Markets Authority. 4 September 2020. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Shabong, Yadarisa (4 September 2020). "UK watchdog investigates homebuilders over leasehold contracts". Reuters. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Peachey, Kevin (4 September 2020). "Court threat to housebuilders over leasehold 'trap'". BBC News. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "CMA requires Countryside and Taylor Wimpey to remove leasehold terms". Competition and Markets Authority. 19 March 2021. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Builders told to remove 'unfair' ground rent terms". BBC News. 19 March 2021. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Sweney, Mark (19 March 2020). "Taylor Wimpey and Countryside told to remove 'unacceptable' leasehold terms". The Guardian. Retrieved 20 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "James Brokenshire announces industry pledge to crack down on toxic leasehold deals". Ministry of Housing, Communities & Local Government. 28 March 2019. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Public pledge for leaseholders". GOV.UK. 27 June 2019. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Tims, Anna (31 March 2019). "Homeowners caught in a crippling ground rent trap". The Observer. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Ground Rents (Leasehold Properties)". Hansard. 25 June 2019. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Government reforms make it easier and cheaper for leaseholders to buy their homes". Ministry of Housing, Communities and Local Government. 7 January 2021. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Osborne, Hilary (7 January 2021). "Ground rent scandal: leaseholders in England get new rights". The Guardian. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ York, Melissa (7 January 2021). "Ministers plan an end to feudal leasehold property laws". The Times. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "The Times view on leasehold and the housing market: Home Injustice". The Times. 7 January 2021. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Peachey, Kevin (7 January 2021). "Government vows to end complex leasehold costs". BBC News. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Collinson, Patrick (29 October 2016). "The new-builds catching house buyers in a leasehold property trap". The Guardian. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ "Calling for urgent reform to leasehold and 'fleecehold'". Kevin Hollinrake. 19 March 2019. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help) - ↑ Murphy, Scott (7 January 2021). "Northwich MP welcomes reform in law for leasehold owners". Northwich Guardian. Retrieved 21 March 2021. Unknown parameter
|url-status=ignored (help)
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