Disgruntled leaseholders are putting together cases to report developers to Trading Standards for failing to make clear that they were being sold leaseholds.
A spokesman for campaign group the National Leasehold Campaign told EYE that activists are hoping to emulate the success of home owners on a Persimmon estate in Cardiff who convinced the developer to give them the freeholds amid the threat of legal action for mis-selling from Trading Standards.
The spokesman said: “There are lots of groups now forming on the back of the Persimmon finding, and trying to take cases via Trading Standards.”
It comes as a survey of 1,500 leaseholders by NLC found 89% said they were not informed of the difference between freehold and leasehold by their solicitor and 91% were not informed about the contractual obligations of estate rent charges or maintenance fees.
More than four out five home-owners (84%) were not told that the freehold could be sold on to a third-party investor, while 80% said they were not informed about the legal right to enfranchise.
Meanwhile, 39% revealed they were offered incentives to use the developer’s recommended solicitor and 87% either did not know or could not remember receiving information on their solicitors’ complaints procedure.
Cath Williams, co-founder of the NLC, said: “For far too long leaseholders have been told that it is their own fault for signing these toxic agreements, but this report shows how little information they were actually given, meaning they were not able to make an informed choice when deciding to buy or not.
“The acid test has to be that almost all would not buy their property again on the same basis.”
The findings will be sent to the Competition and Markets Authority as part of its review into the leasehold sector.
Comments (93)
If a Conveyancer has fallen below the standard of a reasonable Conveyancer then a client can, quite rightly, claim against them and they deserve to be compensated. There are many avenues for redress (complaint through the firm, negligence claim, legal ombudsmen). I don’t think anyone is standing up for Firms that have provided poor advice. However, accusing the entire profession of being complicit in a scam is unreasonable.
The suggestion that the legal industry is clinging on to Leasehold as a cash cow is wrong. If Leasehold was abolished, and Commonhold was favoured instead, I wouldn’t lose any sleep. My fee income would be unchanged as the amount of work involved would be largely the same.
The reality is that Commonhold is largely untested and unused. Developer’s Solicitors do not have established processes to set up Commonhold sites and, given the small margins they would earn on a site, it is not viable to them to spend the time drafting fresh documents in an area in which they have little experience. They have Leasehold precedents in place and applying them to a new site is far simpler. On an individual level, it is hard to blame them.
In any business, people have sought to maximise their revenue in whatever way they can. There are practices involved in Leasehold arsing from this that need to be controlled, but that has been the case before and will be again. The underlying concepts behind Leasehold are sound.
The Government need developers to build more houses. They are unlikely to take any action that could result in barriers to this. I think the Leasehold Campaign would be better served in focusing on specific areas that they wish to change (eg. regulation of management fees; simplifying the Tribunal process) rather than seeking to abolish the entire system.
I completely agree that it would be unfair to tarnish all solicitors as complicit. The vast majority are very well-intentioned people simply trying to do a job to the best of their abilities, sadly many were caught out by other parties playing the system. Hindsight.
Complaints to the solicitor and/or Ombudsmans are of little value since a conveyancer has often done their role within their remit, yet their client may still have incurred losses. Negligence cases are very expensive and difficult to win, plus the losing party must pay the (high) costs of the other side – people are often priced out of justice. That said I’m aware that negligence cases on this issue are being won, but they are typically subject to non-disclosure agreements.
The UK commonhold system is based on the strata title systems of Australia, New Zealand and Singapore, it has also borrowed on the condominium system of land ownership of North America. Whilst the UK legislation is indeed new, the system has been well tested in other countries. http://www.practicalconveyancing.co.uk/protected/lawguides/commonhold.pdf
The Government and Law Commission have stated that Leasehold is an unfair system. Whatever they decide to do, I hope they make the system fairer and simpler for everyone because that’s what is more important.
https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/news/leasehold-reform-report-published-17-19/
https://www.lawcom.gov.uk/a-fairer-deal-for-leaseholders-of-houses-and-flats/
I find some of the comments on here ignorant. To blame the buyer for not understanding and suggesting they should have “Googled” or “asked Alexa” what leasehold means is just plain ignorant. If that were the case, what do we pay solicitors for? Not everyone fully understands legal jargon and you would expect your conveyancing solicitor to explain everything fully and highlight all relevant points and possible flaws. They have a duty, acting for their client’s best interests, to fully advise. I would recommend those that have commented as such, to take a look at the National Leasehold Campaign and take time to read some real life situations that people are facing, and the resulting pressure, turmoil and anxiety this is causing to thousands of people, both emotionally and financially. My situation is such that I bought a 50% share in a house over 10 years ago through a housing association. I was a 28 year old female, purchasing alone and although I consider myself to be intelligent, I am not legally trained and expected my solicitor and the housing association to explain everything to me fully. The HA’s are also very good at explaining the advantages of purchasing shared ownership, but not so good at highlighting the negatives. I’ve lived quite happily in my home for the last 10+ years but is not until coming to sell this year, that some quite serious points that I was never advised of are coming to light. I cannot totally put the blame on my solicitor for everything, since there are some issues that have become apparent that are not stated in my lease however I would have at least expected my solicitor to explain that my lease would need extending before dropping below 80 years, and the financial implications of this, but this was never explained to me. I would have also expected them to explain that I was already buying the property with a 79 year lease and the implications of that but they never did. There was one line in my property report under the heading Tenure which was “This property has a 99 year lease from 1987” – is that actually advising their client fully on the tenure?? On speaking recently with an Estate Agent, about selling my property, when she asked who my solicitor was, her words were “well that explains it all, they are a warehouse of brokers just pushing through sales as quickly as possible avoiding all complications to get their fees”. And that solicitors firm was one recommended to me by my well known mortgage company. I am in the process of selling my SO and it has come to light that my buyer can’t get a mortgage unless I extend the lease. The lease extension is potentially going to cost me £20-25k – half of what I originally paid for the share. Not to mention the £600 survey fee I have had to pay, the £350 admin fee to my HA, the cost of the HA’s solicitor for the lease extension of up to £1500 plus my own solicitors fees of £940. That’s £3390 in fees alone before even considering the lease extension premium. None of this was ever advised to me until I have come to sell. The surveyor has recently been to my property and he himself said my solicitor should have advised me of the implications of buying with less than an 80 year lease and this is not the first case he has seen of conveyancing negligence. To blame me for not “Googling” this issue is just plain insulting.
This is exactly one prime example that it would be evident pee and wooden are in denial of ! They have their views and it is to defend their profession they may be very good at this and open and honest with their conveyances but to actually deny there is an actual scam with leaseholds and to put any blame at all on the victims of this scam is downright ignorant and naive but the fact is this is widespread nationwide and there are several parties in the house sale sector who are colluding to carry out this scam ! Maybe they think they are so intelligent they know it all and are in total denial of their fellow so called professionals ! No mater what gets said here they will stick to their views and they are right everyone else is wrong ! Full stop!
…and you will stick to yours! Full stop! New paragraph:
Please try to find something to fixate upon that isn’t so injurious to your mental wellbeing.
Please try and remember that these people are being asked to pay £20-£25k.
Their legal representatives did not warn them – shortcomings in the existing system allowed this to happen.
It’s completely understandable that they are upset and angry.
Kann28 – innocent question…
I’m sorry to hear of your difficulties. As you owned a Shared Ownership Lease in a house, did your Lease allow you to staircase to 100% and own the Freehold? Thus allowing you to buy and then immediately sell the Freehold?
We’ll leave Peebee and Woodentop in their deluded world, defending the indefensible. No where else in the world is rushing to adopt leasehold as used in England and Wales. Sensible, forward thinking lawyers should get behind reform. A solicitor we are using to buy and sell 2 freehold houses at the moment says she hates leasehold and she is not alone. Some lawyers are very arrogant, think they know best, and don’t like to be told by people outside their circle that there are systemic failings. They also make a good living from the staus quo.
You have either not read my last post, above – or you have ignored it, which would go further to indicate who is the deluded one here.
WHY would anyone in the property industry “rush to the defence” of something that could make their job more difficult by any one of numerous factors, and by varying degrees – from ‘a bit harder’, to ‘var nigh bl00dy impossible’ and every shade of grey (or “gray” if you prefer that version – hate to kick you off on another one…) in between?
Our point is that there are millions of Leases that are not problematic. Not today… not tomorrow – a good chunk of them not in our lifetimes even. “Campaigning” is poisoning the entire sector of tenure and, worse still, knowingly so.
Prats banging on about a property tenure being akin to slavery ain’t helping a single Leaseholder – quite the opposite. So I would suggest you owe apologies to SIX MILLION people whose lives your dumb@ss comments may have already adversely affected.
I’d start now if I were you – that’s a big number to get through…
What a hysterical reply. Many of the 6 million are in blissful ignorance until a problem occurs or an unexpected bill arrives because of leasehold tenure. What I and others are trying to do is educate people so they are aware of all the issues with leasehold so they can make an informed buying decision, and help those already trapped in the web.
The conveyancing association, government, law commission, the Competition and Markets authority, and the APPG (170 MPs) on leasehold reform recognise there are big problems with leasehold as it is, including people not having clear information at point of sale, which has caused many to be trapped in a situation they would not have chosen to be in otherwise. See Kann28 post below mine.
My daughter had a so called benign lease of 900+ years with non rising ground rent of £5 per year, the house was built in the 1950s. However the freeholder wanted £150 when my daughter changed mortgage provider a few years ago. My daughter has now bought the freehold for £1300 which included £500 for the freeholder’s legal fees. Lawyers, freeholders, and their appointed managing agents constantly dipping their hands in people’s pockets because of issues like this around leasehold needs to be stopped. My friend is on an estate of leasehold houses, park homes, but he has a brick built house, 900+ year lease. Massive £6000 per year service and amenity charge for a 3 bed house for a bit of grass cutting and access to a pool and bar. He can live there 26 weeks in a year . He cannot get rid of the freeholder appointed managing agent, or maybe with great difficulty and expense.
You are weakening your argument by hurling insults.
No one is saying historic leases are toxic.
No one is saying they want to burden people in the property industry, indeed the existing leasehold system is well know as being overly complex and the Law Commission is looking to reform this. They could make it easier for people who work in the property industry.
The slavery rhetoric came from a solicitor, whilst it is strong rhetoric it is raising a valid point – a lot of people are trapped.
I’ve posted a lot of evidence, it’s worth a read because the more the problems are understood the more they can be avoided in future.
I still remain optimistic that the Government will help those trapped without causing issues to historic properties.
“No one is saying historic leases are toxic.”
You clearly haven’t read the comments. Are there SIX MILLION “new” leases – EVERY ONE of them “toxic”??
Some older leases could become toxic, if a new freeholder takes over and has a generous interpretation of what a “resonable” admin or permission fee is. What is reasonable, £10, £100, £500 ?
Informal lease extensions of older leases are dangerous for leaseholders, and can lead to rising ground rents and permission fees being inserted.
“Some older leases could become toxic, if…”
“Some”.
“Could”.
“IF”
Words I probably use before every lottery draw.
Good to see you have 0000s-to-1 type uses for them also.
Evidence for your assertion ? I mentioned my daughter’s older lease, and plenty of examples on the NLC group where people have fallen foul of informal lease extensions.
You are the one who keeps going on about the 6 million figure.
The original quote points out that many of the 6 million were not clearly told about all the issues at the point of sale. That’s a valid point, just as it’s true that historic leases are less affected.
But You are the one snatching on this and trying to turn it into an argument and then throwing insults instead of trying to understand the issues. Even when I made a conciliatory comment you proceeded to snipe.
First they came for the free holders of leasehold property, then they came for the restrictive covenants…………..
In all seriousness my first buy was a rubbish flat in a great location and it all worked out fine, now that my oldest children are hitting their mid late teens and I am haemorrhaging money on driving lessons its all very familiar to my life arc but would I counsel following me down the leasehold route when the time comes? Hmmm maybe but proceed with extreme caution and preferably not, no.
Peebee and Woodentop – There have been a few attempts in the last 100 years to get rid of long leasehold in England and Wales, for good reason. It has not just been a problem in the last 10 years. Thankfully now with the help of social media and the great campaigning by dedicated people, leasehold finally apears to be on the way out, although it could take decades for it to fully die off. Vested interests inevitably will resist change, like the slavers did 200 years ago. Read Louie Burns book about leasehold, also available on line. If some lawyers and rapacious freeholders are crying into their beer because the end of leasehold is in sight, then they will attract very little sympathy. Start looking at Commonhold and support it with good laws, and leave the rotting edifice that is long leasehold behind. I am no lawyer, I used to work in IT and systems, and I can see that leasehold is not fit for purpose. A total rebuild is needed, not more t*** polishing.
The second you started to compare your situation to slavery earlier today, you lost any credibility whatsoever. Then you refer to it again.
Beggars belief that you think you can link the two.
Suggest you give your head a damn good shake and use whatever common sense gets shook loose before spouting off frankly idiotic analogies.
People trapped in properties they cannot sell or forced to pay a very high financial price to escape. A fair anology, you need to calm down.
No – the worst analogy you could possibly dream up. You need to swallow a reality pill.
I think the ones needing a reality pill are you and wooden top for trying to defend the indefensible and failing to see the real issues and why so many people have been duped by this scam ! It is oh so easy when you are in the profession but the REALITY IS it is not often you buy a house and for some it is the first time so it can be confusing and hard to understand the wording of these leases and what they actually mean .
WHOA THERE… NOBODY IS DEFENDING ANYTHING HERE!
I and others are simply stating that ALL Leases are not the same. YOU and others are implying otherwise… and as a result, properties with perfectly acceptable Lease terms – 999years OT, low or zero (peppercorn) ground rents – are becoming extremely difficult to sell due to buyer misinformation gleaned from toxic social media that you all think so wonderful.
There are NOT six million ‘toxic Leaseholds’ out there. There are older ones… there are newer ones – poisoned in different ways – but there is a BIG chunk in the middle that currently have no issues and won’t have in your or my lifetime, or several generations to come for that matter.
Oh – and I have very bitter personal experience from nearly 40 years ago of what would now lablled a ‘toxic Lease’ by the way. As a result of my own experiences I advocate buying Freehold wherever possible – but most people buy with their hearts, not their heads – as I suspect you did.
Never tried to defend leases, just educating you on what is out there in the real world in response to you blinded venom because you were on the recieving end of a bad lease, or poor advice and wish to blame all as bad, as demonstarted on this thread.
The ‘conveyancers’ of those ‘leaseholders’ who ‘complain’ need not fear, as conveyancers are obliged to keep their files for years afterwards, so there will be a written record of exactly what the leaseholders were sent, what they did or did not read, and thus where they had questions, what they were and how the conveyancer answered them.
But a PPI equivalent witch hunt of conveyancers, that is a fantasy for those legal businesses trying to stir up the idea so they can make money.
The reality of any such witch hunt is so unlikely for two simple reasons:
1. conveyancers join far too late in the day, after all the following has the chance to explain leasehold :
– the Government – no required information imposed before selling a leasehold
– estate agents explanations on their websites
– Rightmove/Zoopla etc
– surveyors
– mortgage valuers –
– mortgage advisers
– mortgage companies when lending against leasehold
– Law Society / CLC / CILEx – nothing stated on any Protocol forms
– Google – we are the digital age – ‘what is leasehold’ ‘what does owning a lease mean’
– ……..then Conveyancers
To point the finger at one makes no sense. Instead, any leaseholder suffering loss is free to have their own loss considered.
2. the aggressive comments above. It has to be a level headed analysis, calm and with an explanation of how conveyancing is done, and where shortcomings occurred.
It is all about what a conveyancer normally does. The test of a negligent conveyancer is what a ‘prudent and reasonable conveyancer’ would have done. Level headed explanations from conveyancers – thank you Rob as always.
INSTEAD, I predict the next ‘PPI scandal’ will be the massive recovery of payments made by conveyancers to mortgage panel managers. You just watch….
My conveyancing solicitor “lost my file from archive” after 3 year.
Thats convenient don’t you think??
many of the agencies you mention were not involved in the scandal in lots of cases like my own . There were no mortgage advisers no estate agents in fact the only parties to our purchase were the developer and their selected solicitor whom may I add conveyed 48 out of 55 homes on my development alone .This solicitor who I have an ongoing case with for neglect has admitted they were wrong and have offered us a derisory gesture of £90 when their negligence is costing us in the region of £20,000 we have the legal ombudsman involved and SRA . But I cannot see why the developer would dupe people into using any other solicitor other than making sure they do not find out the full facts and pull out of the sale ! Therefore the very fact that our solicitor conveyed 48/55 homes on our development yet are over 40 miles away speaks volumes on why they are part of this scam
Not wishing to put to finer a point on it, but sounds like you were a dream buyer for a rogue developer (if they were one) and didn’t do your own due diligence when spending how much! That doesn’t mean that the developer should be allowed to take advantage of you, far from it but it does sound like you are going on about the “new breed leases” which do need to be stamped out.
The solicitor is supposed to highlight the onerous terms, not just give the buyer the lease and leave them to understand it, that is what they are paid to do !
Correct and if they don’t, you just sign something that you do not understand when you are parting with how many £k’s? Doesn’t absolve the fact there are some horrendous new leases appearing.
Dog failing to bark !!
“…their negligence is costing us in the region of £20,000…”
Apologies if I’ve missed something, jay1jay69 – but where does that £20k figure emanate from?
IThe figure emulates from the price of enfranchisementfromtheoffshore freeholder and mine and their legal fees !
So – you are basically forcing your Landlord to sell you your Freehold that you have no current legal right to buy (under LRA 2 year rule).
That’s never going to be a cheap route.
I consider myself well educated to degree and professional qualification level. A friend of mine is a chartered accountant. Neither of us fully understand leases written in Victorian style English, 50+ pages long.
We both relied on solicitors to point out terms in the lease. My solicitor was ok, my friend not so lucky with his solicitor. I saw 2 solicitors before buying 4 years ago. Some wrinkles with leasehold still surprised me after buying, including unlikely but possible forfeiture, section 20, 25% commercial restrictions to leaseholders rights, issues with Housing Associations and charities, shared ownership leasehold problems, inability of many leasehold housing estates to change appointed managing agents.(my friend’s problem) All buyers should read the government “How to lease” document.
Would I buy leasehold again knowing what I do now ? No way, and most of the other 6 million leaseholders feel the same way if representative samples are anything to go by. This shows systemic failure with long leasehold tenure as it currently is, and everyone including some lawyers need to look forwards and promote Commonhold.
You are right! But an important point is that of the 6 million plus leaseholders many of them having older style leases have yet to find out the sting in the tail of a lease. Yep you know the one! Yeh that one where when you’ve lived in that leasehold property for 35 years, and yeh you guessed it! When you want to move into a more suitable retirement home you can’t sell,because your solicitor didn’t make you aware… even though you paid them to protect you.. that you actually need to extend your lease, now it’s only got 40 years left on it, and now you have to pay double or , depending on the type of mercenary freeholder you have treble what you paid for the lease in the first place!
Abit of knowledge is dangerous! There are set caps and the law provides security for long leaseholders to remain in occupation when the lease comes to an end or even to purchase the freehold. You would be best to seek legal advice if you want a full understanding, lol.
“But an important point is that of the 6 million plus leaseholders many of them having older style leases have yet to find out the sting in the tail of a lease.”
“Many” being, I would suggest, the vast majority. “Older-style leases” being ones probably more than 20 years old.
And of those, a good chunk will be far from problematic – such as 999 year leases, with low (£50pa or under) or zero ground rents.
The 6 million is a sensationalist number. It is there to fuel an agenda. But, like most, the agenda is not fit for purpose.
Do Leasehold campaigners ever stop to think that by kicking up so much dirt they have actually exacerbated the problem?
What a nonsensical reply ! The murky world of leasehold needs to be brought into the light, and if it means leasehold is less attractive and dies off, so much the better. Many of the 6 million were not told clearly at point of sale of all the issues regarding long leasehold, and are only aware of a problem when they try to sell their property, they have to pay an excessive permission fee, the lease is running down, or they cannot change the appointed managing agent. Issues with shared ownership and Housing Associations and charities too.
Many solicitors are complicit in this scam, and are a roadblock to genuine reform because they do too well out of all the conflict and complexity that leasehold brings. Many tried to justify slavery 200 years ago by claiming the slaves had a good life. There is no justification for keeping the financial slavery of leasehold.
All leasehold buyers should be required to read and understand the government “How to lease” document. If they did, most would not touch leasehold in it’s present form.
“Many of the 6 million were not told clearly at point of sale of all the issues regarding long leasehold…”
BECAUSE MANY OF THE 6 MILLION DO NOT HAVE LEASES WITH THE ISSUES YOU ARE PERSISTENTLY BANGING ON ABOUT!
Right on PeeBee and since they have been going since the early 1900’s it would have raised its ugly head alot earlier. It is the new leases that appeared in the last decade or so that are the problem. Not the lease system but the content that some builders have adopted.
If people think they have a problem with leasehold, you want to read the terms and conditions for Park Homes. Now that will make your blood boil.
According to the ONS, 41,686 new houses were sold as leasehold in 2018 i.e 4.2% of all new houses (a large drop from 13.3% the previous year).
If the campaigners hadn’t raised the issue then I suspect there would not have been such a massive drop.
Typical ground rents are most definitely not £50 for new builds – they are usually £200 and increase with RPI (as stated by the builders themselves during the Select Committee enquiry).
tonyfella
If you read my post fully you will note that the £50pa ground rents I referred to were 20+ years old, 999 year Leases.
If you read my post fully, I said *new builds* had a ground rent of typically £200…
You were talking about older leasehold properties without mentioning what the typical ground rent is now.
Because it has no relevance to the point I made.
It has huge relevance.
Developers relied on the perception that leasehold is “normal” and that ground rent is “relatively low” and 999 year leases to create this problem.
Boy… you guys are utter chuffing spin-masters!
Here’s the situation.
I made a plain omelette.
You then took the omelette and argued that it had no mushrooms – to which I responded that the omelette was made without mushrooms.
You now question my original omelette as, in your opinion it should have been chock-full of mushrooms – even though it was clearly stated as a plain omelette and therefore mushrooms were completely excluded from the omelette mixture.
There are many ways to make an omelette, tonyfella – they don’t all have to contain mushrooms just because you want them to.
Now – spin that if you will.
Set by rateable value and has restrictions and limitations.
Modern ground rents are:
– compound RPI calculations (and typically uncapped).
– or what’s commonly been referred to as doubling
https://www.ftadviser.com/mortgages/2018/09/12/barclays-sheds-light-on-ground-rent-policy/
https://www.theguardian.com/money/2017/jul/25/leasehold-houses-and-the-ground-rent-scandal-all-you-need-to-know
Jay Jay, my experience is that most specialist New Build lawyers recommended by developers go to some lengths to explain to the Buyers in writing what they are buying… they also extensively cover their back with the lender, for good reason.
However, far too many Buyers don’t bother read the paperwork to understand what they are buying, and ultimately, those Buyers have only got themselves to blame.
There may be some lawyers who cut corners, and this will be more down to incompetence than developer pressure… however, they will be the exception, not the rule. Those firms deserve everything that gets thrown at them but please don’t throw all New Build specialist lawyers under a bus, through ignorance of what the better firms actually do.
Also, it is certainly not a “conspiracy” between developer and Solicitor.
IMO the people who have been conned into this trap have relied upon their conveyance solicitor to decipher the legal sometimes incomprehensible wording in these contracts and unless you are in this profession in some way or another it is total gobbledygook and this is what they pay their solicitor to do which they are supposedly professionals at and if you believe the solicitors are completely innocent to this scandal you are wrong ! Who in their right mind if they knew would get a mortgage and even put their life savings on something they would struggle to sell on or in fact never ever own ? And how is it moral for an investor to buy the land from under someone else’s home for a fraction of the cost of that home and actually have more rights to that home than the mortgagee? It is corrupt and scandalous as there is no other reason for someone to buy this land other than to milk every penny from the tenant of that home . GREED UNSCRUPULOUS HEARTLESS AND IMMORAL CAPITALISM that’s a fact
I can not see that the point you make that these specialist solicitors make clients aware of what the lease is and that buyers don’t bother to read the advice. If they were any kind of solicitor worth their salt they would look at that lease and reply to their client in the FIRST line of their advisory letter DO NOT BUY THIS PROPERTY. Quite simple.
I can not see that the point you make that these specialist solicitors make clients aware of what the lease is and that buyers don’t bother to read the advice. If they were any kind of solicitor worth their salt they would look at that lease and reply to their client in the FIRST line of their advisory letter DO NOT BUY THIS PROPERTY. Quite simple.
Fairfax87 you won’t win with these two. Burried their heads in the sand with their anger towards Leasehold that they forget to mention that there are millions of leasehold properties in the UK and have been traded and swopped hands since the early 1900’s when homeonership really took off WITHOUT ANY PROBLEMS. And none of the things they say have commonly arisen.
It is the new breed leases that are the problem and drawn up by specialists in law, not local solicitors.
People on here trying to tarnish the whole industry riddle with unscroupolous developers and solicitors is so very wrong.
Many of the bad cases during conveyancing are not solicitors but conveyancers!
Unfortunately the new breed of leases have become STANDARD across all the main developers for roughly the LAST 10 YEARS i.e. just after the financial crash (apologies for the capitals, I’m mirror’ing your technique for highlighting key words).
A select committee enquiry this year confirmed it is almost the whole industry. https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/inquiries/parliament-2017/leasehold-reform-17-19/
Totally agree with your earlier point that there is a difference between a solicitor and a conveyancer… that’s another factor which has enabled this mess. My (developer recommended) conveyancer:
1. did not explain the difference between leasehold and freehold
2. did not warn that the freehold could be sold from under me (without any notification)
The only thing my conveyancer did say was that buying the freehold after completion would incur an extra legal fee for the time. NB the Select Committee report says I am far from an isolated case.
However I was lucky, I managed to get myself out of the situation… but a lot of people have been unable to do so because of the extreme costs involved (here’s an example https://www.leaseholdknowledge.com/pensioner-paid-38000-taylor-wimpey-freehold-ground-rent-speculators-ej-capital-partners)
Yes Leasehold properties prior this time mostly have favourable terms, I agree with you… but is that a reason for thousands of people to keep quite over such a major scandal?
NB Also a huge number of ground rents are uncapped. (https://www.furleypage.co.uk/uncapped-ground-rents-on-homes-the-latest-trend-will-need-to-be-capped-itself/)
It isn’t a case of winning against us two and I for one have not buried my head in the sand over this . My last house was leasehold and I never experienced any problem with it at all . why ?
Because the lease was. It toxic like all new build leases ! It had a peppercorn rent and had no permission fees no service charges and absolutely no hidden covenants ! How can you compare ? We have found ourselves in this trap because we thought nothing of it due to our last house lease but we couldn’t have been further from the truth ! I also find it hard to believe that most leasehold conveyors go to extreme lengths to inform their client and explain in detail if this was the case I very much doubt anyone in their right mind would go ahead with such ridiculous contracts ! Would you sign up to a contract if you knew you had to pay some third party a fee of £90 just to paint the front door of the house you have spent £289 k on ? Or agree to open your house for a detailed interior inspection to a total stranger at 3 weeks notice ? If anyone is burying their heads in the sand over this it is you who is doing what you can to condone such measures you should be ashamed of yourself
One is not condoning bad practice, far from it I think everyone agrees it should be banished. I have seen so many leases over the years and as tonyfella highlighted it is only in recent years that it all started to crumble. Created by new breed possibly silver spoon brigade with no morals, more interested seeing who can get their Bently first, that their grandfathers who started up the honourable business so many years ago would be turning in their grave.
As PeeBee has highlighted many were 999 year leases. Much has already been done with reforming leasehold and dependent on type of property; statutory right to buy freehold and first refusal, reasonable service charges and standard of work, lease extension, limit forfeiture, tribunal service to resolve disputes.
How many years has it been said …. read the small print before signing! If you don’t understand it, advice has to be, speak to someone who does and not the poachers mate.
Do not be deluded into thinking that Commonhold is the answer to all your problems. From experience it isn’t.
Nice choice of words that the new practises should be banished and the grandfathers who started the honourable business would be turning in their grave. Like it.
Sadly though the right of first refusal does not apply to houses for the first 2x years.
Sadly the right to buy the freehold also does not apply for the first 2x years. It’s called enfranchisement and requires the occupier to pay:
1. their own (now specialised) legal costs
2. for a chartered surveyor
3. the other sides legal costs
Enfranchisement is a very lengthy and expensive process, the other side can happily dispute things to make it worse.
There is no regulation for Service Charges to be reasonable, at best the occupier can dispute them and go to a tribunal.. but if they loose they have to pay the other sides legal costs (which could be very high).
This is why the law commission has stated that existing leasehold legislation is not fit for purpose.
Yes I do take your point about reading the small print before signing… but many of the issues were not in the small print. Instead the developer’s legal people cunningly used open wording, e.g. “the occupier must pay all permission fees for any external changes” NB this word does not state exactly *what* the permission fee is! So the freeholder can legally charge whatever they like. Contracts also do not mention that the freehold can (and often is) be sold on.
Do not trust the poachers mate? You mean the regulated legal professionals who by law are supposed to protect their clients interest… (in reality of course they have also been caught out by the new sharp practises).
“Do not trust the poachers mate?”
Correct and they should face the full weight of the law. When buyers are told they have to use the poachers mate, warning bells should be sounding. Regrettably some buyers neglect to look after their own interest and should take a second opinion but trying to save a few hundred quid of a third party solicitor looking a the lease, if they do not understand. Yes I know that will be objectionable to some but look at it from the point of view of spending all those £k’s putting it all at risk because you left it to someone, not of your choosing linked to the seller to tell you “Its fine, just sign here!” Safeguards only work if they are done. Assuming it would be, because it should be, results in losing out if your working with a crook. Too many take the easy route or feel pressured and that needs to change.
Buyers pay for a legal professionals who by law must look after their client.
You are forgetting that ‘trusting the poachers mate’ (i.e. your own phrase) was quite common in the industry and only with hindsight been raised as a problem.
You are also forgetting that:
a) open wording has been used to obfuscate the true nature of the leases
b) these are conveyancers only, their role is far more limited than people realise
The Select Committee investigation concluded that is far more than just objectionable… it is clear scandal and abuse of the system.
You need to read the report in full.
The results to this survey are alarming. I do not believe Conveyancers should take the whole blame for this mess. But the Developers are willing to hang them out to dry. In all the correspondence I’ve seen from developers they all point the finger at solicitors. They are happy for solicitors to take the blame. Developers are the root cause of this mess. Each had a part to play but the developers are the reason so many are trapped in leasehold.
Leaseholders now have the evidence we need to take steps forward to end this and bring those responsible to account.
Like it or not the gravy train has been stopped and leaseholders will get justice.
Developers are the root cause of this mess. Each had a part to play but the developers are the reason so many are trapped in leasehold.
Absolutely. The “content of the lease” is all down to individual developers.
Yes all played their part. All did it to make their living. All obviously no moral compass and should actually be struck of practicing. Not doing their job properly. Developers instructed the leases to be drawn up in a particularly cruel and parasitic way.
You are correct but not all. I’ve seen some rather alarming lease clauses and in all such cases everyone did not go ahead with the purchase as the solicitor acting for the buyer advised them very strongly not to proceed.
The leasehold / freehold contracts are lots of small print with complicated wording which is total jargon for even some conveyance solicitors and the majority of people caught out by this scam believed that the solicitor they were so cunningly duped into using would be acting in their best interests and only after several months or even years has the problems come to light wether it is finding out there are permission fees or having sales collapse last minute via mortgage companies withdrawal ! I very much doubt that these solicitors would let any members of their family or friends enter the contracts they let the people paying them to unravel and check over the legal jargon enter into such contract . And your comment regarding surely 1 of 4 million people would pick up on these issues is ignorant to the fact there most definitely has been thousands of people picked up on these issues but they are not in the 4 million simply because they pulled out of the purchase . But like myself we were so cunningly conned by people we trusted and paid for their professional service which we did not get !
The solicitor has a client, its their job to explain the legalities of what they are buying -simple. Except everyone wants someone to blame.
Yes . The solicitor cannot be working for both developer/ seller and buyer. This has happened and is still happening. Not good . Disaster actually for the buyer. All good for the developer/seller.
There are so many issues with leasehold, and these are not properly explained at point of sale. When solicitors were working in cahoots with developers and fail to inform customers, then that is negligence and mis-selling. Many 1000s of people cannot all be wrong in describing their experience in the sales office and with the developers recommended solicitor. 6 million leaseholders deserve far better than what is happening at the moment.
Nearly all leaseholders are not aware of the issues with leasehold tenure. This includes the ground rent and increasing terms, permission fees, admin fees, rising service charges, section 20 costs, cost to extend a lease or buy the freehold, 80 year cliff edge with leases, possible forfeiture of the whole lease for owing a small debt. Also that freeholds can be sold on to 3rd party speculators, inability to do Right to Manage or Enfranchise if more than 25% commercial in the building, restrictions if the property is with a charity or Housing Association, even less rights if a shared ownership property. Freeholder appointed managing agents who may be impossible to remove. Freeholders who have only paid 1% of the building value for the freehold interest, but scam leaseholders on the buildings insurance, or even fail to insure the building. These people have near 100% control of leaseholders lives, yet it is the leaseholders who pay for everything.
England and Wales unique with long leasehold, Commonhold not perfect, but would get rid of many of these issues where a remote freeholder and associate managing agent is always putting their hands in leaseholders pockets.
Basically what you are saying these matters were never explained to the buyer. I will not defend that this has not happened, I’m sure it has but where the real problem comes under scrutiny is the buyer left the only option but to sign by the builder, even if they are in full knowledge or they don’t get the property.
There are good reasons for leasehold and why it exists and I have seen buyers who fully aware of what they were getting into, coming around later to not liking it and often fuelled by mates in the pub backstreet lawyers. All gets very messy and argumentative from denial.
I have seen developers that have had green/amenity space forced on them at planning stage, which require management (the lack of, is another subject) and charges to maintain the developments environment, one of the factors some buy. Some builders have tried the Freehold route with a covenant for a limited company and equal liability of all property owners to maintain the green/amenity space. Solutions solved one might think, but then the neighbours start infighting over how things are managed and there is often one particular sole who has nothing better to do than wind the others up! They still have to pay a service charge but it isn’t necessarily the solution as some have to become directors of the company, accounts, AGM’s etc and it can be counter productive to neighbourly behaviour.
There are no good reasons for long leasehold. Commonhold is used everywhere else except England and Wales. A remote offshore freeholder will take no interest in the building, other than to extract as much income from it as possible via ground rents, permission fees, lease extensions and enfranchisement costs. There is even the added bonus of forfeiture, or threat of it. An excessive punishment and unjustified windfall to the freeholder. How people manage themselves in a communal setting is a separate issue, and having a remote freeholder will not assist in that task. Leasehold conveyancing is more costly and slow because there is an unnecessary 3rd party freeholder in the transaction.
There is even the added bonus of forfeiture, or threat of it. An excessive punishment and unjustified windfall to the freeholder.
This is also open to Freehold properties who do not comply with their covenants!
How people manage themselves in a communal setting is a separate issue
is it?
Common Hold has no time limit ….the building or estate which forms the commonhold is owned and managed jointly by the owners (referred to as unit-holders) through a commonhold association.
Principle of ‘self-management’ means that you will not need, and do not have, many of the rights and protection that leaseholders have by law. So it isn’t as clear cut as you believe. All very messy because of the content of some builders leases but not all!
You still do not explain why a remote offshore freeholder is necessary, or how they would assist people living in a communal setting.
Commonhold can have rights and obligations built in by law if necessary, leasehold is not a requirement for that.
Forfeiture in any form is excessive, any debt plus costs should be the cost to pay, not lose the whole lot !
It is instructive that nowhere else uses long leasehold. My Italian friends who all live in apartments think of leasehold as legalised extortion. Commonhold is not perfect but it is democracy, not autocracy.
Not posting any more on this because using a phone and not great comments facility here.
Offshore or onshore freeholder has nothing to do with it. It is the clauses in the lease that are the issue for a leasee. Many leases are perfectly acceptible and never caused anyone any problems.
Its the “I’ll hook you in at all costs” and “how they were handled”, the rougue lessor are the problem.
What is the point of an offshore freeholder, other than for their own benefit ? They do not help the leaseholde at all, just add costs including at the conveyancing stage. They may not even bother to insure the building.
Whilst not strictly on topic to give people an idea of what goes on.
When I worked (briefly) at a factory firm in their newbuild department they employed clerks to do all the work. The principal was I would provide a standard report on sale one which would then be copy and pasted for all other purchases. Fine except nobody was legally minded and could answer questions from clients who were literally told anything if they rang up with queries. And when a freehold property came in on the Estate the Leasehold Reports would be sent out at the press of a button, and vice versa.Because these people were targeted to be paid bonuses on the number of exchanges they even exchanged contracts for clients without getting instructions. Some of the notes that went on files were scary. And all this was over seen by a sales person who was nominal Head of Department who used to tell everyone we had to keep the Builders happy. You will note no mention of clients there. So this might explain how this can happen it is certainly feasible if everyone is as unprofessional as the Firm I worked for (although that would be pushing it).
I left very quickly shocked by what I was seeing and reported all the nonsense I had seen to the SRA. Who did……….nothing! Which I guess explains everything really.
There you go ! In a nutshell why exactly would a developer have a few selected firms of conveyors they insist and dupe the buyer into using ? No other reason than hiding the scam ! And that form of solicitors end up with an awful lot of work on one development alone ! But there is more to the scam as the developer does not mention they will be selling the freeholds to an offshore investor before the two year period is up for the home buyer to buy their own freehold ! Anyone who disagrees with this is either vesting in such companies or part of the vicious circle and I wonder how these people get to sleep at night knowing they are destroying normal hardworking people’s lives .maybe instead of counting sheep they count their money
Maybe you should make your evidence more widely known?
This has the potential for hundreds of thousands of major claims in the PPI style. Anyone out there ready to approach some of these PPI companies to look out for their next victims? It is time for those hundreds of cheap, poor, bucket shop conveyancers to check their Pi or quickly go into liquidation and start up again to avoid damaging claims which could easily run into billions? They may still not be safe even if the buyers signed their usual disclaimers unless they gave strong clear guidance on the huge pitfalls in leaseholds.
Maybe they need PPI PI, they got the idea on PIE.
I think your right, but of course their insurance will take care of all the pay outs.
Yet another expert on a subject they obviously know nothing about ! Ask yourself if the reason over four million people from all classes and professions have fallen into this scam ! Simple reason is the solicitors are in on the scam with the corrupt greedy developers !
Reason ! They get so so much work from them they are not going to be fully transparent with the facts which would cause a buyer to pull out and this is why they are recommended by the developer and part of the scam ! So before you make such ill informed comments try and educate yourself on the subject you think you are expert in !
Yet another “person” who thinks they are an expert on a subject they obviosuloy know nothing about. Please take the blinkers off. No-one is saying if builders and conveyancers have colluded to dupe buyers is acceptible, it certianly isn’t and should suffer the consequences but to claim 4 million people from all classes and professions have fallen into this scam sounds hysteria. At least one would have noticed out of 4M!
Siri…Alexa….Google…..Firefox…..Rightmove…..Zoopla…….my conveyancer – ‘what is leasehold?’ / ‘what does buying a lease mean?’
in 2020, none of us has an excuse of not asking questions when we do not understand something.
And yes, Rob H is correct, is there really a conveyancer who does not explain what a purchaser is buying, what the document they are signing up to says. That is the whole point of a conveyancer’s role. That is all we do do; explain the papers we have received.
(True, some provide more detail than others, but not at all? I’d be shocked if that were true, as that would need investigating)
Yet another expert on a subject they obviously know nothing about ! Ask yourself if the reason over four million people from all classes and professions have fallen into this scam ! Simple reason is the solicitors are in on the scam with the corrupt greedy developers !
Reason ! They get so so much work from them they are not going to be fully transparent with the facts which would cause a buyer to pull out and this is why they are recommended by the developer and part of the scam !
Every single purchaser would have signed a contract that stated the property they were buying was either freehold or leasehold. I agree that does not in itself explain the difference between both forms of ownership. However most purchasers would have seen their conveyancer when signing, or received a report on the property before signing. Either way, it is highly likely that the difference was explained.
If buyers were not told/advised correctly then it is important that the professionals involved should be held to account.
What is also important going forward, is finding the best, easiest and clearest way to explain to the lay person what buying a leasehold property means.
it’s infuriating to see such ill informed comments on this subject you obviously know nothing about . Firstly the conveyance solicitor who gets recommended by the developer and get so much work from is not going to highlight anything untoward to the homebuyer that will possibly have them pull out of the purchase because then they will no longer be recommended by that corrupt developer ! Secondly over 4 million people who have fallen for this scam have been duped as lies to by that developer and the solicitor who has been economical and untransparent with the truth and the hidden covenants in the contract ! These people are from all classes some very educated professionals but they have been made victims of this scam by trusting the developer and the solicitor they paid so before you make ill informed comments on the subject try and educate yourself a little as to why so so many people have fallen for this feudal practice !
Chill out man. Clearly you have no idea who Rob Hailstone is and he is correct. If you can support your claims that the builder and conveyancer acted together dishonestly, there is a system in place for redress. Is this industry wide …. no builder has control over every individual conveyancer/solicitors practice. As to hidden covenants in the contract, none are hidden. They are not read or understood or explained.
Also the purchasers solicitor usually has to also consider the purchasers mortgage company.
I’m not sure the mortgage companies would be too happy if solicitors were in cahoots with developers to trick buyers, as they would also be tricking buyers mortgage companies.
I think you will find in the case of a mortgage lender they were more than well aware if it was freehold or not as it would be raised prior to mortgage offer. Next jay1jay69 … will be claiming lenders were in cahoots too!
I am more than aware of who Rob Hailstone is and his views that “Buyers have themselves to blame, not solicitors over leaseholds” (Legal Futures, 2017). He is incorrect and buyers are NOT to blame for the Leasehold Scandal. But of course a conveyancing solicitor is never going to admit that. Leaseholders have evidence to support their claims and we will be collectively taking these forward.
Enough is Enough !!
for someone with the experience Rob Hailstone has I find his comments ignorant and find it hard to believe he has not seen or even been part to some of the scans these developers and their recommended conveyors have carried out .
Exactly what incentive does a developer have to get the buyer to use a certain solicitor ?
it is apparent he does not want to tarnish his profession
Starting to show your metal now, it’s rather tarnished, attacking people you do not know. Shameful behaviour.
The best advice any conveyancer should give to someone thinking of buying a Leasehold property is quite simple. DONT BUT IT there is no justification for any property to be Leasehold. The rest of the world exist without Leasehold, so can we.
The reason conveyancer & Solicitors don’t give proper advice about Leasehold is because they don’t have a clue about it. & are influenced to give as little information as possible by developers