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You can find the current article at its original source at https://www.theguardian.com/money/2017/jul/25/ground-rent-scandal-leaseholds-new-build-houses-properties
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| Victims of ground rent scandal demand action on existing abuses | Victims of ground rent scandal demand action on existing abuses |
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| Victims of the ground rents scandal are demanding ministers go further in tackling unfair abuses of the leasehold system, amid claims that as many as 100,000 existing homeowners remain trapped in properties that are “unsellable”. | Victims of the ground rents scandal are demanding ministers go further in tackling unfair abuses of the leasehold system, amid claims that as many as 100,000 existing homeowners remain trapped in properties that are “unsellable”. |
| The communities secretary, Sajid Javid, on Tuesday outlined plans to ban developers from selling new-build houses in England as leasehold, and restrict ground rents on new flats to as low as zero, following widespread outrage over exploitative contracts. | The communities secretary, Sajid Javid, on Tuesday outlined plans to ban developers from selling new-build houses in England as leasehold, and restrict ground rents on new flats to as low as zero, following widespread outrage over exploitative contracts. |
| However, while the move has been widely welcomed, the proposed ban would relate to future sales, prompting existing homeowners to demand that the government come up with solutions for them. | However, while the move has been widely welcomed, the proposed ban would relate to future sales, prompting existing homeowners to demand that the government come up with solutions for them. |
| Baz Jafar bought a one-bedroom flat in Edmonton, north London, just over two years ago, and under the small print of his lease, his ground rent – currently £200 a year – will double every 10 years to reach £6,400 by year 50. | Baz Jafar bought a one-bedroom flat in Edmonton, north London, just over two years ago, and under the small print of his lease, his ground rent – currently £200 a year – will double every 10 years to reach £6,400 by year 50. |
| He told the Guardian that, while it was good news for future buyers, the announcement “doesn’t seem to offer any way out or resolution for people who are currently stuck with dodgy leases, doubling ground rents or other unfair terms”. | He told the Guardian that, while it was good news for future buyers, the announcement “doesn’t seem to offer any way out or resolution for people who are currently stuck with dodgy leases, doubling ground rents or other unfair terms”. |
| Jafar added: “We really need Sajid Javid to step up and give us some solutions for the mess that has already been created, as well as trying to prevent a bigger mess in the future. We need options that don’t involve a massive outlay of money.” | Jafar added: “We really need Sajid Javid to step up and give us some solutions for the mess that has already been created, as well as trying to prevent a bigger mess in the future. We need options that don’t involve a massive outlay of money.” |
| Tens of thousands of homebuyers have found themselves trapped in spiralling ground rent contracts where, in many cases, the annual amount they have to pay to the freeholder doubles every 10 years. | Tens of thousands of homebuyers have found themselves trapped in spiralling ground rent contracts where, in many cases, the annual amount they have to pay to the freeholder doubles every 10 years. |
| Jafar’s situation is not unusual, though there are some whose plight is arguably even worse: last October, the Guardian reported on the case of a first-time buyer in Coleshill, near Birmingham, whose ground rent has already climbed to £8,000 a year, and would in theory keep doubling so that in 95 years’ time it would reach £8m a year. | Jafar’s situation is not unusual, though there are some whose plight is arguably even worse: last October, the Guardian reported on the case of a first-time buyer in Coleshill, near Birmingham, whose ground rent has already climbed to £8,000 a year, and would in theory keep doubling so that in 95 years’ time it would reach £8m a year. |
| During the last few years, developers – particularly in the north-west of England – have been increasingly selling houses as leasehold that would traditionally have been freehold, with clauses that allow the ground rent to rise dramatically in later years. In many cases the developers sell on the freeholds to third parties – often offshore investment companies. | During the last few years, developers – particularly in the north-west of England – have been increasingly selling houses as leasehold that would traditionally have been freehold, with clauses that allow the ground rent to rise dramatically in later years. In many cases the developers sell on the freeholds to third parties – often offshore investment companies. |
| In a consultation published on Tuesday, the government appeared keen to show that it had not forgotten about those already affected by these practices, saying that it “recognises the challenges faced by existing leaseholders with ‘onerous’ ground rents”. | In a consultation published on Tuesday, the government appeared keen to show that it had not forgotten about those already affected by these practices, saying that it “recognises the challenges faced by existing leaseholders with ‘onerous’ ground rents”. |
| It added: “We are very keen to hear views on what steps could be taken to improve the situation of these leaseholders, which could include steps to tackle unreasonable and onerous rises in the future and strengthen the rights of consumer redress from unfair trading practices.” | It added: “We are very keen to hear views on what steps could be taken to improve the situation of these leaseholders, which could include steps to tackle unreasonable and onerous rises in the future and strengthen the rights of consumer redress from unfair trading practices.” |
| However, there was little detail about how this might work, and in a BBC Today programme interview, Javid said there were not as yet any definite government plans to compel builders to take action to assist those already affected. | However, there was little detail about how this might work, and in a BBC Today programme interview, Javid said there were not as yet any definite government plans to compel builders to take action to assist those already affected. |
| Tory MP Sir Peter Bottomley, who has long campaigned on this issue, said: “We should be saying that the doubling of ground rents every 10 years is an unfair term, and it should be ruled unenforceable.” | Tory MP Sir Peter Bottomley, who has long campaigned on this issue, said: “We should be saying that the doubling of ground rents every 10 years is an unfair term, and it should be ruled unenforceable.” |
| Bottomley said it was scandalous that some homeowners desperate to escape the escalating payments have reportedly been quoted as much as £30,000 to £40,000 to buy the freehold to their property, when this should have cost them perhaps just a few thousand pounds. | Bottomley said it was scandalous that some homeowners desperate to escape the escalating payments have reportedly been quoted as much as £30,000 to £40,000 to buy the freehold to their property, when this should have cost them perhaps just a few thousand pounds. |
| He added that those responsible “should be brought in front of a select committee” and face questions from MPs in the presence of the homeowners that these companies “are trying to fleece”. | He added that those responsible “should be brought in front of a select committee” and face questions from MPs in the presence of the homeowners that these companies “are trying to fleece”. |
| Javid said the government was taking action to make future leases fairer, adding that homebuyers were being “exploited”. The consultation stated that in some parts of northern England, leasehold had become the default tenure for consumers wanting to buy a new-build house. “It is particularly common practice in parts of Cheshire, Greater Manchester, Lancashire and Merseyside, but is not limited to these parts of the country,” it added. | Javid said the government was taking action to make future leases fairer, adding that homebuyers were being “exploited”. The consultation stated that in some parts of northern England, leasehold had become the default tenure for consumers wanting to buy a new-build house. “It is particularly common practice in parts of Cheshire, Greater Manchester, Lancashire and Merseyside, but is not limited to these parts of the country,” it added. |
| A Guardian Money campaign has highlighted reports of buyers trapped in properties valued at zero just six years after being built, £2,500 fees demanded by freeholders for permission to build an extension, and quotes of £35,000 to buy freeholds on detached houses that are only a few years old. | A Guardian Money campaign has highlighted reports of buyers trapped in properties valued at zero just six years after being built, £2,500 fees demanded by freeholders for permission to build an extension, and quotes of £35,000 to buy freeholds on detached houses that are only a few years old. |
| The Department for Communities and Local Government said other recent cases included a family house that was now unsaleable because the ground rent was expected to hit £10,000 a year by 2060; and an individual who was originally told that buying the lease would cost £2,000, but was presented with a £40,000 bill. | The Department for Communities and Local Government said other recent cases included a family house that was now unsaleable because the ground rent was expected to hit £10,000 a year by 2060; and an individual who was originally told that buying the lease would cost £2,000, but was presented with a £40,000 bill. |
| Some companies are taking action. In April this year Taylor Wimpey announced it was setting aside £130m for an assistance scheme for its customers facing doubling ground rents, and the government said it was “keen for others to follow suit”. | Some companies are taking action. In April this year Taylor Wimpey announced it was setting aside £130m for an assistance scheme for its customers facing doubling ground rents, and the government said it was “keen for others to follow suit”. |
| The company has also stopped selling new-build houses as leaseholds, except where it does not own the freehold. | The company has also stopped selling new-build houses as leaseholds, except where it does not own the freehold. |
| “We are working hard with the freeholders to convert our customers’ doubling leases to ones which resolve concerns around how easy it is to sell or get a mortgage on these properties,” a Taylor Wimpey spokeswoman said. | “We are working hard with the freeholders to convert our customers’ doubling leases to ones which resolve concerns around how easy it is to sell or get a mortgage on these properties,” a Taylor Wimpey spokeswoman said. |
| Persimmon, another housebuilder, said: “The vast majority of houses sold by Persimmon are freehold. It’s too early for us to make any further comment at this time.” | Persimmon, another housebuilder, said: “The vast majority of houses sold by Persimmon are freehold. It’s too early for us to make any further comment at this time.” |
| Martin Boyd, a trustee at Leasehold Knowledge Partnership, which has been one of the sharpest critics of abusive practices, said tacking the problems for existing homeowners may not be an easy task because many developers had sold the freeholds to anonymous investors, often based offshore. “The government faces a challenge on how it’s going to undo this,” he added. | Martin Boyd, a trustee at Leasehold Knowledge Partnership, which has been one of the sharpest critics of abusive practices, said tacking the problems for existing homeowners may not be an easy task because many developers had sold the freeholds to anonymous investors, often based offshore. “The government faces a challenge on how it’s going to undo this,” he added. |
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