Two leasehold triumphs today but there is still a long way to go. Leasehold, a feudal form of tenure unique to England and Wales has been trapping home-buyers for decades with contracts that cost them dear.
Today Taylor Wimpey, the builder, has said that it will no longer build new leasehold houses with ground rents that can double every ten years. These leases have trapped buyers, who have been unable to sell on their properties.
Last year 95% of all new properties sold in London were leasehold and 670,000 of houses were leasehold in England and Wales, including 2,829 new detached houses.
Leasehold contracts are money spinners for builders
Leasehold properties have been a long-term money making projects for builders as they get annual ground rents, which can increase as the years go by. Recently many buyers have found that when they wanted to sell the properties mortgage lenders have refused to lend on houses that have ground rents that double.
The annual service charges paid by leaseholders can be expensive and are largely unregulated, other than a requirement that the charges should be reasonable. One group of tenants, who received bills for an extra 30% – or £400 - six months after the financial year end to cover costs incurred in the previous year. There had been no major works and while inflation was around 1% they could not understand the bills. The tenants got together and advised by Money Fight Club they compared bills over four years and sent a dossier to the management company detailing where the charges were wrong.
Leaseholders must do the work and fight back
Today they have heard that the company has gone through the accounts for four years and has discovered even more mistakes. The mistakes in favour of the residents will be ignored but those that benefited the company will result in refunds. It has taken time but it is a good outcome.
And just to add to the triumphs the Law Commission is to investigate how leasehold contracts work. Sebastian O’Kelly, director of the Leasehold Knowledge Partnership has made the pace with a campaign against bad practice. More victories should be on the way.
And builders have been making money on this unregulated