Commons debate, July 11 2019
The haphazard, unscrutinised – and not financially disadvantageous to them – tinkering with ground rents fiddles by developers has made it worse for those trapped by toxic leases.
This is the view of Consevative MP Fiona Bruce (Congleton) when she told the Commons:
“The fact that buyers are now being offered much better terms by developers, often on the same developments, has exacerbated their problems and left them in difficulties. They simply will not be able to sell their homes.”
She cited the example of Alison and David Rowlands, of Sandbach, who bought a Taylor Wimpey house in July 2011, with doubling ground rents starting at £289.
They were advised by Taylor Wimpey that they could buy the freehold for £5,000, but it was sold to ground rent speculators in December 2013, who now want £30,000.
The house cost £229,995 but will pay out £1,837,850 in ground rent to parasitical investors in the freehold during its 250-year lease.
“[this is] the equivalent of buying their house eight times over. They say that they feel victimised and vulnerable, and, of course, they are not alone in this situation. Government need to act as a matter of justice to help these people.
“… I have met Mr and Mrs Rowlands on a number of occasions. They are very genuine people—a young family seeking to settle their situation in life and become secure—and yet there they are living in their home and, as they say, feeling victimised and vulnerable.
“As far as Mrs Rowlands is concerned, this has had a very serious detrimental effect on her health.”
Related posts:
Brokenshire demanding action for 100,000 trapped in toxic leasehold homes five months ago
Guardian reports misery of leasehold home owners trapped by John Lewis Partnership Pension Trust – and the Mail, Sun, Mirror and Lad Bible (any we have missed?)
Taylor Wimpey’s snake oil ground rent review scheme makes toxic leases even worse: in my case, £25m worse!
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
No help for leaseholders trapped in unsellable homes, says government
Government is hiding behind Law Commission and CMA, says Tory MP Bob Blackman
Good point made by Fiona Bruce. To give an example someone might want to investigate is
Acton Gardens (W3) regeneration partnership between Countryside and L & Q housing association (charity)
is a great example. L & Q are now in receipt of ground rents. The old ground rents double every 15 years and the new properties for sale are marketed at increasing by RPI. So housing associations do not act very charitably and are as money grabbing as any private developer.
Why does the government still do nothing to stop these rip offs
If we owe the Chinese Government say £1 trillion (ie Million millions) presumably according to the logic being put out by Fiona Bruce we should offer them a bond that will pay £1000 per annum for the next billion years .
This is the sort of ludicrous scaremongering put out by those who have no idea about the concept of the time value of money. And has the effect of undermining the real issues that need to be addressed
Stephen you misunderstand the point and ignored my example where L&Q are charging two different ground rents for identical flats.
In fact the new builds now being sold in Acton Gardens regeneration site are more expensive but have lower RPI ground rents than the cheaper older flats with doubling ground rents. These facts destroy your arguments for ground rent and highlight the moral dishonesty of a system hell bent on extracting as much cash from homeowners as possible.
Where on earth does China come in to your argument. Your arguments get more ludicrous by the day.
Fiona Bruce states
The house cost £229,995 but will pay out £1,837,850 in ground rent to parasitical investors in the freehold during its 250-year lease.
This is scaremongering and to illustrate this I showed the absurdity by illustrating it with the an example of the debt we owe the Chinese
Whatever the ground rent terms are they form part of the overall consideration the developer is looking for on the deal. Purchasers need to reflect on what that obligation is and factor it into their offer. If I want a ground rent of £5000 linked to the RPI I will not be able to sell the flat unless as a developer I lower the price of the flat by around £135k.
If a purchaser agrees to that rent of £5k and pays £135k less for the property he has not bought a bad deal neither has it got a bargin. But it is wholly reasonable to expect that purchaser to pay the £5k rent as it was part and parcel of the deal
What has happened is that when the rent is a few hundred a year, nobody thinks about about and knowing that people do not think about it some developers have slipped in clauses which mean that obligation to pay the rent is more significant than it appears.
My proposal has always been that the Net Present Value of the Rent should be clearly shown next to the premium paid for the lease and the interest rate used in the calculation of the NPV to be set by the Government . In that way the purchaser can appreciate the cost of the obligation of paying that rent going forward
The point you are missing is the fact that it does not matter what the net present value is not clearly shown . What should be clearly shown and fully explained is that these people who thought they were buying a home did not realise they were only leasing it and the developers have exploited this by duping the buyers/victims into this by getting them to use their selected solicitors so wether things were clearly out makes no difference if you do not understand this legal jargon and this is what the majority of these people think is the reason they are paying for the solicitor to decipher. The fact that the solicitor is in on the scam with the developer is the reason why it isn’t made clear !
“The house cost £229,995 but will pay out £1,837,850 in ground rent to parasitical investors in the freehold during its 250-year lease”
The statement includes figures i.e. cold hard facts.
I cannot fathom how you can claim facts are scaremongering – that’s nonsensical.
Nickki,
In defence of him, Stephen does not misunderstand your point?
He is merely defending the indefensible!
It’s time these leeches realised that they need to be customer focussed and buy back the freeholds they sold on without telling their ‘customers’. I’m so annoyed at how they have taken everyone for a ride and at the moment gotten away with it. The CMA has got the evidence and they should be able to see from that that the developers are mis-selling properties and need to be held accountable.
Not sure what Stephen is smoking but it must be illegal…..
What happened to – like a house, buy a house, own a house and sell a house because of its quality – without all the complex man made ‘deals’ that simply generate income streams to developers and not much more.
Stephen focuses on a single particular quote in the text, but completely misses the point of the article and the leasehold scandal in general Far from scaremongering, the leasehold sector is infested with so many players miss-selling and profiteering on an unbelievable scale. Thankfully many of the scams have been exposed and are now under scrutiny by the CMA.
Stephen, you don’t seem to have grasped the fact that it is dodgy to trick purchasers and it is simply wrong morally to invest in people’s homes.