BBC1’s consumer show Rip Off Britain this morning identified alleged errors by solicitors involved in the conveyancing of Taylor Wimpey leasehold houses: Bannister Preston and Cohen Filippini.
The programme claimed that both firms wrongly informed buyers of the ground rent terms of the leasehold house purchases.
Lisa Roxby, of Taylor Wimpey’s Speakman Gardens in Merseyside, was told her in writing by Bannister Preston solicitors that her £250pa ground rent would double every 25 years.
In fact, it doubles every ten.
Paul Fay, in Manchester, was informed that his £200pa ground rent would increase every 20 years by Cohen Filippini Solicitors.
In fact, it increases every 15 years.
Both firms were recommended by Taylor Wimpey.
Bannister Preston is the legal firm that carried out the most conveyancing of Taylor Wimpey houses in the North West.
The BBC reported that Bannister Preston “could not comment directly as the issue is the subject of civil claims which it would rigorously defend”.
Cohen Filippini Solicitors said that the buyers “were alerted to the ground rent terms”. It added that they were “not uncommon and are offset by house price growth”.
However, Paul Fay told the programme: “They [the solicitors] did not advise us of any negative implications in the lease.”
The programme featured solicitor Gary Rycroft stating that the buyers may wish to take the matter to the Legal Ombudsman.
An alternative course might be a legal action of professional negligence.
The programme wrongly said leasehold house owners down their building but do not own the land the land on which it stands.
That is the origin of ground rents, but long abandoned in leases.
In fact, leasehold house owners don’t own the building either. They own a tenancy, ie time.
This is why they are charged if they want to put on a new porch or front door, or conservatory in an ever expanding list of imaginative consent fees.
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Views of Tory MP Crispin Blunt: Government should ‘nullify’ ground rents. End ‘feudal’ leasehold. Bring in commonhold. And stop developers’ and solicitors’ ‘unconscionable’ cheating of the naïve
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A complaint should be made to the SRA ( Solicitors Regulation Authority ) so that they can order all solicitors to stop handling transfers of Leasehold Houses with ground rent doubling every 10 years. .
If the buyer were to use an independent Sol, then these vile terms should be removed from the Lease entirely. The Lender should have picked up on this too. The Council of Mortgage Lenders (CML) relies on the competency of the Lender so as to ensure that the Property is a viable source with which to raise the loan on. Clearly this point is not satisfied. The other point is that unless the Lender can raise a Charge over the subject Property, then how can they lend in the 1st instance? This is another contentious issue as to who has the Priority Charge, especially when the Freehold Title is cunningly flogged off, without sight seen as to an offer of the same to the Lessee. Have I missed something here?
Watching Rip Off Britain shows why leasehold scandals continue.
With all their BBC researchers, they could not grasp the issue except in simplistic terms, and hardly touched on the resale of freeholds (mentioned in passing?). All the fault of solicitors, apparently?
I also fear there is grave danger afoot.
Whereas I understand a simple hook campaign such as “doubling ground rents every ten years are evil”, this misses the overall picture including lease devaluation over time.
My bet is government will feel it has sorted things for a generation simply by addressing the doubling ground rents scandal.
The ‘fairer’ alternative to 10 year doubling has emerged to be RPI indexing. Why? Given leases devalue so much?
My 1984 lease has 3 modest GR increments of £40, £60 and £80. Ironically, to meet the Nationwide’s latest revision to .1% of original value, GR should have started at £20 based on the 1984 purchase price stated on the lease’s front. But given present centre of gravity around ground rents, even leaseholders would argue I have a lease that is unfair to the poor freeholder’s rights to a ‘fair return’.
That is how huge scandals can move the goal posts for all related scandals.
I know I must consider myself very fortunate to have such a lease, despite my home devaluing around my ears from its peak (and far below the so-called relativity graphs based on recent sales of identical neighbours).
If the GR had started at £20 per Nationwide, annual RPI since 1984 would have reached £58 a year, almost identical to the current GR increment despite starting at £40. So Nationwide has clever bean counters.
If £40 had doubled every ten years to 2014 the GR would be £160.
And I’ll bet a jam sandwich of your choice that everybody would shout £160 is unfair to the freeholder.
If £40 had instead been RPI indexed annually to 2014 the GR would be £116 (RPI factor of 2.915).
£160 or £116, let alone the £60 as is, would be shouted to be “unfair on the freeholder!”
Why?
£160 or £116 may SEEM peanuts given the current GR crisis, but £116 would almost double my existing GR which never started at .1% of the original value in the first place. And my lease has crashed in value by at least 40% of maximum, not 15% per Savills graphs.
What I’d like to know is why leases in 1984 were happily set with 33 year increments starting at, in my case, 0.2% of valuation given prices at that time. All of a sudden, annual RPI indexing is the only fair measure of calculating GR?
Ground rents have, like all things in modern times shifted cleverly to an abstract argument about ‘fair return on investment’, not about housing. People bandy figures like £250 or £500 a year being a “reasonable” GR return, but leases sell in dark satanic mill areas as well as Prime Central London. Everything is relative. And we are talking about housing, not the stock market.
If freeholders are entitled to RPI-protected ground rents, why can leaseholders not be entitled to maintain the value of their lease? Given you can’t force buyers to pay the same for a decreasing term, this would at least mean leases have to be indexed in term length alongside any indexing of ground rent?
Or GR be indexed to allow for the devaluation of the lease?
We are surely in danger of being blinded by the doubling GR scandal into accepting that RPI indexing is fairer than the GRs applied only 30 years ago!
As it happens, RPI indexing in the last 30 years would have doubled GRs every ten years anyway (2.997 factor in 30 years), and that excludes the seventies’ disaster inflation-wise.
Do not be blinded by one scandal into not seeing the wood for the trees regarding the Ground Rents scandal.
Excellent post paddy. Very informative. I just cannot understand why you do not take management away from your rubbish Agent and manage the property yourself?? You are clearly very well informed..Seems such a shame .In my experience once you set the company in motion it run like a Aston Martin. Go on paddy give it a go!!
The simple reason that your GR rises in increments of 33 Yrs is a large clue. The Law of Property Act 1925 – that’s why. It covers GR ranging from 99 Yrs (yours) to 999 Yrs. The entire Act ensures that you own not rent. Have a read of this and you’ll be pleasantly surprised as to the level of cover, including explanations of the same.
The change that came about as to ignoring these old Leases is that you did buy the bricks & mortar and not just solely a term of time. This latter fact is what is often overlooked today by those professing to be Conveyancers. The knowledge is profoundly missing from the training. Further to this, the major changes then began life at the LVT as to cases being brought by nefarious Managing Agents who over time morphed into Ground Rent Grazers – no scruples.
Any Clauses/Covenants in favour of the Lessee would be removed via the LVT, followed by Deeds of Variation, but not in the true sense.
The angle being wait for a Lessee to sell. Very dirty angle here, in that the seller is told to sign here, if they want to sell with the buyer not realising the implication in that the Deed of Variation has not been drafted by an actual Sol, but in the name of a Ltd Co. The angle being Implied Consent. This has to be two-way traffic as to a Benefit not a one-way street. A new Lease should also be drafted – it’s not. Therefore the original Lease stands.
The term Lease has changed today too, insofar that it no longer appears to be a Contract Made by Deed Under Seal – Formal Lease.
Today there is now a Lease Agreement – totally wrong! The acting Sol for the Lessee has failed in their Duty of Care via a Dereliction of Duty as to not picking up on this and again forcing through the relevant changes under a new Lease.
The CML at this point should also have been notified, however it appears that they alongwith a number of Lenders have literally sleep walked in to this, and only now are waking up to the scam via Leasehold Houses.
Oh dear. Three doubling increments of course would not be a factor of 3. No wonder I bought a lease with my brain. Sorry.
Dearie me Paddy- Is that why you are being shafted by your managing agent….C’mon get it together.,..
Lets have a campaign – for Houses,and Flats alike – and smack bang in the middle of the election campaign – for all those affected by leasehold abuse, whether it be through the sale of leasehold houses or the freehold sale of flat portfolios – write to the solicitors who were/are responsible at the point of sale in each case and inform they are held responsible (including for compensation ) and they should immediately put their own Protection Indemnity Insurers on notice of this new situation..
By the way, it is totally irrelevant where a company purporting to be the freeholder is registered-0ffshore or otherwise. The statutory rights of leaseholders in England are enforceable in England by English Law and nowhere else.
And, there is a mandatory requirement for all public officials to uphold the law unfailingly and at all times.
I’ve set up the national leasehold campaign facebook group. We have 4200 members. Lots going on.
Totally agree, however one wonders whether or not you’ve had the wondrous opportunity to visit the LVT/FTPT?
Yes the legislation is in place, however it has/will be ignored.
There are too many cases laws telling the same story. Ignore the Lease, or change the Lease, do not disclose interconnections, abuse both consumer legislation and /or corporate law (company law) so as to ensure the Xmas Party is well funded.
The next angle will be the “Unsound mind” Clause being exploited by those who baulk. You’d have to be mad to not fight back!