New research shows that almost two-thirds of buyers of leasehold houses feel they were mis-sold their homes – almost entirely by developers’ sales staff who are not bound by the Estate Agents Act, the NAEA has claimed.
A poll of 1,103 home owners who bought a leasehold new-build house over the past ten years shows that an astonishing 94% regret their purchases.
Of the total number surveyed, 45% were unaware of the leasehold status and 62% feel they were mis-sold.
The analysis reveals that 78% of leasehold house owners bought their home directly from a developer, rather than going through an estate agent, meaning there is no recourse under the Estate Agents Act 1979.
Just one in seven said they were first shown the property via an estate agent, 6% liaised with an agent the whole way through and 2% were selling another property with an estate agent at the same time.
The research also found 65% used the solicitor the house builder recommended, and of those, 15% said they were never told they wouldn’t own the freehold.
Respondents also highlighted steep charges for leaseholders when seeking permission to make cosmetic alterations.
On average, freeholders charged home owners £1,422 to install double glazing, £887 to change the kitchen units, and £689 to replace the flooring. Some even faced bills for changing their blinds (£527) and installing a new front door (£411).
The situation has now left a third struggling to sell because they don’t own the freehold, while 25% have had potential buyers lose interest due to the leasehold situation, NAEA Propertymark reveals.
The trade body is backing reform of the leasehold sector for existing home owners, calling for purchasers of new-build homes to have access to an ombudsman scheme that freeholders should also be part of for redress.
Other suggestions include banning developers from building on land that they do not own the freehold for and extending the “right to first refusal” to purchase a freehold – currently only available with new-build flats – to houses as well.
The report also suggests the creation of a digital log-book for each property, storing information on the house and showing timescales and deadlines for the transaction.
Mark Hayward, chief executive of NAEA Propertymark, said more needed to be done to support existing leaseholders.
He said: “Buying a home is a big undertaking, and one of the biggest financial and emotional investments we make.
“Those who buy a new-build are often under the impression that buying something brand new means it will be perfect, but unfortunately that isn’t the case and most buyers have no idea about the trappings of a leasehold contract until it’s too late.
“If you buy a new-build house, you’d usually deal directly with the developer’s sales team rather than an estate agent.
“But sales assistants aren’t bound by the Estate Agents Act 1979, leaving buyers vulnerable and without protection, which explains why so many feel like they were mis-sold.
“Almost all of the home owners we surveyed say they wouldn’t advise their friends or family to buy a leasehold home, which is a damning indictment on the industry.
“It’s time we listened to this and sought a robust solution for all those affected, unable to sell their homes, and serving a leasehold life sentence.”
- Separately, a new Facebook group has been started for disaffected purchasers who are unhappy about guarantees on their homes https://www.facebook.com/groups/268430317098312/
Comments (8)
“New research shows that almost two-thirds of buyers of leasehold houses feel they were mis-sold their homes – almost entirely by developers’ sales staff who are not bound by the Estate Agents Act, the NAEA has claimed.”
Oh, great – the toothless tiddler from Warwick sets its gums away on something else it thinks it can make a few quid out of.
Note the bit they appear bothered about – that NH Sales Staff are not bound by EAA1979. ‘cos if they were – a point I will come back to – then they would have a few more potential Members to bolster their coffers.
But let’s have a look at this “research”.
“A poll of 1,103 home owners who bought a leasehold new-build house over the past ten years shows that an astonishing 94% regret their purchases.”
Probably. 100% of 94% of those 1103 homeowners – plus a fair few more – will now be the proud owners of properties worth less than they paid for them… or may have already sold them at a loss.
You’d think they’d be orgasmically overjoyed at the experience. Bl00dy ungrateful if you ask me…
“The analysis reveals that 78% of leasehold house owners bought their home directly from a developer, rather than going through an estate agent, meaning there is no recourse under the Estate Agents Act 1979.”
1. So – CPRs etc 2008 mean nothing? Or PMA before that legislation ‘kicked in’?
2. That means that 22% bought a new home through an Estate Agent? By my reckoning that’s a massively incorrect figure.
“Of the total number surveyed, 45% were unaware of the leasehold status…”
********. Complete, utter, unadulterated merde de taureau.
“…and 62% feel they were mis-sold.”
Only 62%? I’m frankly surprised. Tell someone they’ve bought a lemon instead of a golden egg – which is clearly the case here – and 99.9% absolute minimum would be pretty darn wazzed off in my humble opinion.
“Just one in seven said they were first shown the property via an estate agent, 6% liaised with an agent the whole way through and 2% were selling another property with an estate agent at the same time.”
What the chuff has all that b0ll0cks got to do with the price of eggs?
I take this as nothing other than flimsy padding for an uberflimsy “report”. I bet they’ve even got a whole wazzoo of pie-charts in the ‘king thing. And pretty graphs – not to mention comment boxes from aggrieved homeowners with pics of them looking proper hurt and upset and all…
“The research also found 65% used the solicitor the house builder recommended, and of those, 15% said they were never told they wouldn’t own the freehold.”
*Statistical *********** (credit: Jonnie) point first. The “report” doesn’t make it clear whether the “15%” is of the total 1013 (152), or 15% of the 65% (99)?
Either way – that’s not a huge number. I’d have expected a whole lot more. But it also brings into question what percentage of those 1013 homeowners would, in fact, never be able to own the Freehold – which is a major failing of the “report” if you ask me.
SO… Mr Hayward – it’s no show without Punch – then chips in his tuppence:
“But sales assistants aren’t bound by the Estate Agents Act 1979, leaving buyers vulnerable and without protection, which explains why so many feel like they were mis-sold.”
Clearly he doesn’t understand the legislation in place to protect buyers – or as he would no doubt with to describe them as – “consumers”.
“It’s time we listened to this and sought a robust solution for all those affected, unable to sell their homes, and serving a leasehold life sentence.”
Is this guy for real? If an “Estate Agent” – and one that is MD of the trade association of Estate Agents to boot – can’t put a single nanogramme of positive spin on this then we’re all effed period!
He wants to get himself a proper job – I gather Bernard Matthews are looking for a Life Coach for their turkeys.
Here’s yer man Bernie!
I missed the ‘new-build’ section of the title to start with, and was curious how you could be mis-sold a house!
Regarding the interior cosmetic changes, that is nothing to do with the lease-holder surely? The own the land, you own the bricks and mortar. If you decide to remove the bricks and mortar and just leave a bare patch on the ground, then surely that is your choice? It’s like a Landlord kicking off because he put in red curtains, and the Tenants took them down and stored them as they wanted blue. And are they going to come and check if the kitchen units are the same?
That is disgraceful behaviour, and hopefully there will be some come-back.
The whole leasehold house scenario is a complete con. Why does any house on a new housing estate need to be leasehold? Why are the developers then immediately allowed to flog the freeholds on to another company which supposedly has nothing to do with the developer?
When buying a new build and using the developers own solicitor you also have to question if this solicitor (which is unable to act 100% for the purchaser as they are being paid by the developer) is giving proper advice upon the downsides of buying a leasehold house.
We have a housing estate near us, built in the last 5 years, and the vendors i have met…some didnt even know their home was leasehold…all did not know they had to wait 2 years before being able to buy the freehold…and those that enquired as to the cost (during the buying process) claimed they were told buying the freehold would be about £1000, yet the actual cost was around £5,000
Developers need to held accountable for this sort of practice
I really struggle to see how a massive 45% “were unaware of the leasehold status.” All conveyancers need to report (in detail) to their clients before contracts are exchanged. That report would mention the leasehold status. Most clients need to sign a contract. The contract would mention the leasehold status. I would love to see the relevant files to ascertain what information was passed to the buyer by their conveyancer. If this figure is correct something very basic, is going wrong far too often. For example, are the conveyancers not mentioning it, or is the client (for whatever reason) not picking it up in the paperwork?
You make an assumption that A) conveyancer is doing the job correctly, and B) that every purchaser reads their paperwork properly!
Consumer Protection Regs.
I don’t believe for 1 minute the buyers weren’t aware, but did they understand?! I’m sure most had mortgages and we know how solicitors are risk averse on such things, it was there in black and white. This is most likely that people were ignorant and in a rush to buy and now the market is changing, are ‘hindsight’ experts fanned by the publicity building.
IF the conveyancing genuinely did not highlight the status…sue them to kingdom come and open the Tower of London once more for miscreant residents!
Beware recommendations from builders for their professional advisers….and for that matter panel solicitors for agents. I have a client who has just bought a high priced apartment from a retirement developer. I flagged up my concerns and the ‘approved solicitor’ who initially had indicated that the contract appeared suitable, after being challenged re visited the contract meticulously. Suddenly, all the bugs started appearing! The defense was ‘this has been a contract in circulation fro 18 years and was suitable in the past, but sorry, the world has changed, so we will amend all contracts in the future’!!
I suspect that this is more a case of a buyer being correctly told that a property is leasehold and the buyer being confident that they can buy the freehold. As such, they don’t worry about unreasonable terms as they assume that once purchased, they are irrelevant.
What they may not be told is that under the Leasehold Reform Act 1967 they have to hold the lease for 2 years before they qualify to buy the freehold.
In my experience, this gives them no chance as there are queues of investors paying large multiples for freeholds and a developer is unlikely to wait.
Well put and totally correct, Mr W.
But of course no-one (within NAEA, at least) wants someone like you – or anyone for that matter – to put a reasoned viewpoint forward.
Gets in the way of the agenda…