Housing minister Heather Wheeler is coming under mounting fire after apparently blaming home buyers for lumbering themselves with their own leasehold ‘nightmares’.
One campaigner has suggested Wheeler should quit after she apparently refused to accept that thousands of leasehold owners are trapped in homes they cannot sell because of escalating costs.
Wheeler is Parliamentary Under Secretary of State for housing and homelessness.
However, despite her more junior role, she often seems to take the entire rap for the housing brief rather than Secretary of State James Brokenshire and housing minister Kit Malthouse.
Wheeler is now in trouble after telling MPs that buyers were too “excited” and too “caught up in the moment” to read the small print before they bought leasehold homes.
Dismissing claims of mis-selling, she said new legislation would trigger a “horrendously expensive” wave of compensation claims.
Instead, she called on developers to voluntarily give buyers better terms.
She was giving evidence to the Housing, Communities and Local Government Committee, where her performance has been denounced by furious campaigners who want major reforms in the leasehold sector where they claim that widespread mis-selling is a scandal.
Kate Kendrick, of the National Leasehold Campaign, said it was “absolutely appalling . . . Heather Wheeler just does not get it”.
Sebastian O’Kelly, of the Leasehold Knowledge Partnership, said developers “have taken their customers for a ride”.
He said: “Heather Wheeler’s evidence revealed a complacent approach when there should be urgency.”
Leasehold Solutions has also blasted Wheeler, saying that her evidence was “factually incorrect” and a “disgrace”.
Managing director Louie Burns said: “Based on Heather Wheeler’s statements, it seems she was there to defend the freeholders and to blame leaseholders for the mess they find themselves in.
“Indeed, caveat emptor doesn’t apply to most other consumer purchases, which are covered by legal protection, such as taking out a loan or mortgage, buying a new car or even a toaster.
“It’s truly shocking that consumers have more legal protection if they buy a toaster for £10 than if they buy a leasehold property for £300,000.”
Of Wheeler’s remark that she would prefer to rely on developers and property companies voluntarily giving families better terms, Burns said: “Let’s be very clear here.
“The leases with onerous terms were written by housing developers and freeholders to maximise their profits at the expense of the leaseholders. The terms did not end up in the lease by accident.
“A voluntary arrangement is a preposterous suggestion that is deeply insulting to the many leaseholders trapped in an exploitative web that has been spun by developers and freeholders in the first place.”
Burns added: “In fact, Wheeler’s ‘evidence’ was a litany of factually incorrect assumptions.
“The one thing which became glaringly obvious in the course of her select committee debacle is that she does not understand leasehold at all, which is a disconcerting thing to see in a housing minister.
“For example, Wheeler informed the committee that not all freeholders monetise ground rents.
“In fact, I have a database of 1.6m leasehold properties across the whole country, of which only 891 do not have a ground rent fee attached to them. That is only 0.0006% of properties that have no monetised ground rents.”
Wheeler also blamed leaseholders and argued that the lease contains all the information a buyer needs to make an informed decision.
Burns continued: “Wheeler is completely wrong on this, as the lease does not spell out all the terms by which the leaseholder will be bound.
“For example, the terms will not contain: the fees a freeholder will demand for service charges; fees for any ‘major works’ for which the leaseholder will foot the bill; ‘administration fees’ the freeholder will demand for collecting service charges or late ground rent payments; or fees for licences and permissions.
“Perhaps most importantly, the lease terms will not indicate the costs to extend the lease or buy the freehold in the future, which are essential if the leaseholder intends to maintain ownership of their property.
“By citing caveat emptor Wheeler is blaming leaseholders for getting themselves into such a mess.
“Leases are incredibly complex and often worded in a way that purposefully hides the true meaning of the terms for the freeholder’s benefit.”
Burns said: “In short, Mrs Wheeler does not understand the many issues that plague hundreds of thousands of leaseholders in the UK, and her so-called evidence was a disgrace.
“Housing ministers these days come and go like buses, so I hope Mrs Wheeler moves on quickly to a role that suits her better.”
Comments (12)
I think both points of view are correct. The habit of developers of retaining freehold which is sold off later knowing that the terms of the lease will be a money spinner, is a blight on the UK housing market and legislation should be brought forward to ensure some protection for purchasers. Developers should be taking their profit up front at point of sale and not beyond. At the same time I am a property owner and previously walked away from a fantastic property being marketed with Govt. scheme aid reductions. I asked if the property was freehold and walked the very minute I was told all the properties in the development were leasehold. I knew what could potentially happen. There have been issues regarding leasehold properties for many years and particularly recently re the selling on of freeholds and unreasonable rises in costs. Consumers should also take responsibility and make sure that they (or their legal representative) are asking ALL the right questions.
Stone me (once again) for asking but did none of the purchasers of detrimental leaseholds have any professional advice from their conveyancer or mortgage brokers?
There seems to me a wholesale failure of advice to these purchasers which everyone now seems keen to deflect responsibility for.
Charged with professional duty of care and skill advice to a client I would have thought it was my duty to put the kibosh on an unwise purchase by excited and naive buyers. A simple “do you realise the implications of a service charge that compound doubles every 5 years?” would put me in the clear. Just explaining the financial stupidity of the lease and expressing bewilderment that any lender had ever sanctioned lending to borrowers who would face increasing financial challenge that would seriously affect their ability to pay their mortgage would be enough to raise alarm bells
There is excitement in affording a new home, very often any guidance that challenges a blinkered determination is unwelcome. It isn’t down to the vendor or the vendor’s agent to save purchasers from themselves it is down to the buyers’ advisors. Like it or not that is where there is a failure.
Any development left unsold because of the onerous obligations on the purchasers would soon have had the onerous obligations removed. The fact sales went through shows either people weren’t listening or were not advised properly.
This is a massive scam and should be totally unravelled. There was no need for houses to be leasehold. Knew the government wouldn’t have the balls to sort it.
I am both a managing agent and a freeholder.
Across our estate we have 65 leaseholders on 6 developments where the leaseholders were gifted the developer.
Most of my leases double every 25 years, which is not enough to keep up with inflation.
Inflation has been low for the last 10 years, but a lot of the “Angry Squad” never experienced 26.9% inflation in 1974.
Some ground rents are fixed for the entire term. So they are withering on the vine.
No ground rent can be taken to court unless there are 3 years owed.
Service Charges are a different matter and are used for the maintenance of the building.
I have even found leases where a surplus has to be returned to the leaseholders at the end of every financial year.
This makes expensive projects hard to fund over a long period.
Not an ideal system.
Instead of being “Mr/Mrs Angry” let us improve the system and block the abuses.
It is nearly 20 years since the last reform of leasehold.
Let us not squander this once in a generation opportunity.
Finally a Housing MInister who says something logical – well some of what has been said – and almost brave!
“Too “excited” and too “caught up in the moment” to read the small print before they bought leasehold homes.”
EXACTLY – that is a factor Only one, but highly relevant.
Thankfully, law firms keep their files, estate agents their particulars, surveyors their reports, mortgage lenders their offers and valuations, so every buyer will have mutltiple warnings from multiple sources to alert them.
EACH CASE should be considered on it’s own facts, as a sweeping statement to say lawyers do not warn buyers is just ludicrious.
You’re right. As a surveyor dealing with leasehold work it is almost always the case that buyers of leasehold property have either not had or have decided not to read the advice presented in solicitor’s reports on title or surveyors/mortgage reports.
People have to take some responsibility for their own decisions when they have been properly advised of the implications of something and yet have gone ahead anyway. Where they are poorly advised by their solicitor then they have an action against that solicitor. That part of the law may need tightening. If they have been mislead by developers then that indicates a failure on the part of their solicitors to advise them of the risks.
Why do people feel they don’t have to take responsibility for their actions anymore? Blaming everything on government is too easy.
Whilst she could have expressed herself better, she is right. The lease contains everything a leaseholder needs to know – if not specific as to amounts, then the formula to be used will be in there.
Many a times, I have walked away from an auction property because of the Ground Rents formula, especially where the lease clock is ticking down, only to see them sold for more than I was willing to pay had the Ground Rents been reasonable! 99.9% of people who buy property in the UK, do so through a solicitor. That the solicitors are not being sued (at least that is not the story), indicates to me that the solicitors properly advised their clients who decided to go ahead nonetheless. If so, who is to be blamed, if not the leaseholder?
Totally agree.
The houses were sold at low prices – precisely because the developers knew they’d built a long term earner into the deal. If buyers didn’t spot that – and their solicitors didn’t point it out to them (which I’m pretty sure most halfway competent practitioners would have done), one can only assume that their parents didn’t give them the ‘if it looks too good to be true – it probably is’ talk.
Disagree – leases do not contain all the information needed. They do not always contain clear formulas and in many cases you have to hunt across several pages to clarify the ground rent terms. Leases are written in legalese- alledgedly so that the legal profession understands it however there is evidence to suggest that “a carefully worded lease will maximise profit”. Buyers should not have to study leasehold law before purchasing a property- that is why they pay solicitors to do it for them. Tell me which solicitor/conveyancercarefullyitemiseseverysinglele scrutinises every clause and translates it into lay language? “Informed consent” to purchase is definitely not ensured in most cases.
100% agree. And my solicitor told me that even solicitors can’t agree because they interpret the leases differently, the wording is not iron clad.
This poor level of competency is all too familiar with Government and its advisers.
I always wondered when it actually came down to it, if the tory government would be able to get a reform through that effected the income of big companies. Easy to hit the little guy, not so easy potential party donors.
The leasehold situation is a true scandal, doubling ground rents, leasehold houses where the freeholds are sold off to a third party after the site is completed and the possibility that solicitors acting for the purchaser have conflict of interest as they are also retained by the developer are all real issues.
She would be best stepping aside and let someone who actually has an idea take her place.