By Harry Scoffin
Mortgage lenders refusing to issue loans on freehold houses blighted by rip-off ‘fleecehold’ charges condemn families desperate to move – divorce, death, debt – to staying put.
The banks’ decision now forces policymakers to bring an end to fee-generating covenants and unregulated estate management schemes, LKP trustee and National Leasehold Campaign co-founder Katie Kendrick told BBC Radio 4’s You & Your programme yesterday.
She said that fleecehold has ensured that “our homes” and the estates they sit on are being “used as an endless income stream”.
Despite the properties being freehold, she says the homeowners who live in them are not “free from hold”.
Ms Kendrick said that developers have moved on from playing the angles of leasehold property tenure to monetise estate charges, or fleecehold, instead.
“These fees were not open and transparent at the point of sale,” she added.
Ms Kendrick’s intervention follows Santander’s decision to stop lending on properties where management charges are uncapped.
Reporter Melanie Abbott claimed that there are over a million homeowners with onerous management fees written into the freehold deeds to their house.
Nationwide is also reported to have refused mortgages on fleecehold homes.
Barclays says it will review its policy on houses with management fees.
High street banks refusing mortgages on new builds with escalating estate fees – Your Money
Santander has refused to lend on new-build homes if the developer has included uncapped management charges in the freehold contract, YourMoney.com’s sister title Mortgage Solutions can reveal, while Barclays and Nationwide are also taking action in this area.
Banks Refusing Mortgages on New Builds with Escalating Estate Management Fees
Banks Refusing Mortgages on New Builds with Escalating Estate Management Fees As developers saddle new build properties with uncapped and escalating estate management fees, high street banks are refusing mortgages for some of them. Santander has refused to lend on new-build properties if the developer has put uncapped management charges in the freehold contract, Mortgage Solutions has reported.
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BBC News, today, 23 Nov 2019 – a quote from Andrew Whitaker
“Andrew Whitaker from the Home Builders Federation says because of cuts to local authority budgets many local councils just don’t have the money to adopt estates like they would have in the past.
“As part of a development we [developers] build places – not just homes. So things like parks, shared spaces, roads,” he says.
“In the past we used to hand all of this to the local authority and they’d maintain it in the future. Because of cuts and local authority budgets being strained they are less keen to do this.”
Surely the above comments cannot be true.
The property owners all pay full Community Tax etc and are entitled to same rights as other non fleecehold sites.
Fleecehold is just another money making scam instigated by developers/builders.
Perhaps Mr Whitaker would like to produce documentation proving which councils have refused to adopt sites.
So, is Mr Whitaker saying that fleecehold only exists because councils refuse to adopt, I don’t think so – he should have been a politician coming out with such misleading information.
If councils have refused, then that information should be declared at the planning application etc, but then very few sales would happen if people knew the truth before purchase!
I’m as ready to condemn greedy housebuilders as anyone else, but I think this criticism is mostly misplaced.
My understanding is that the developer doesn’t actually make any profit from these rentcharge arrangements. The money from the house owners is is paid to a management company, not to the developer, and the management company has to match income with expenditure. It’s not a trading company, and is not set up to make a profit.
And the reason they exist in the developments in which I’ve been involved is not because the Council couldn’t afford to adopt the roads etc – it was because the residents wanted to keep the roads private, so as to exclude the local riff raff from driving their Astras up and down.