Home builders face MPs questions on leasehold

Representatives from the country’s biggest housebuilders have faced a grilling from MPs as part of the inquiry into leasehold reform.

The Housing Communities and Local Government Committee took evidence from developers, freeholders and managing agents for more than two hours on Monday evening.

Taylor Wimpey group operations director Jennie Daly, Persimmon group managing director David Jenkinson, and Bellway chief executive Jason Honeyman took questions from MPs.

The committee had already heard evidence from leaseholders of escalating ground rents, opaque service charges and dispute mechanisms that fail to provide a level playing field.

The session examined the key issues that have led to calls for reform of the leasehold system from the perspective of major firms who build and maintain residential properties in the UK.

When quizzed by the panel about onerous ground rents, Jenkinson said there was no definition of what an “onerous ground rent” was but in his view it was one that “materially affected the customer’s ability to sell their home”.

He denied being aware of any Persimmon leases where that was the case despite the National Leasehold Campaign group claiming to have evidence of many sales falling through as a result of Persimmon lease terms.

Honeyman also denied Bellway had any onerous leases. “Our standard lease had reviews based on RPI which is acceptable to all the main leases. We don’t have any onerous leases,” he said.

Daly admitted that Taylor Wimpey’s leases with ground rent doubling every 10 years – widely seen as the worst leases – didn’t meet the company’s “normal high standards of customer care”.

When asked by chair Clive Betts MP why leases had escalating ground rent at all, given that nothing was done in return for ground rent payments, none of the housebuilders’ representatives could explain why ground rents were necessary or why they should increase at intervals.

Bob Blackman MP forced Bellway chief executive Jason Honeyman to admit that freeholds for Bellway’s leasehold homes were routinely sold to investment companies without the leaseholders’ knowledge.

When Blackman described the practice as a “scandal”, Honeyman said it’s how Bellway have “always operated as a business”, admitting the company sold off “baskets of freeholds to an investor without asking the customer if they would like to buy it again.”

All three developer representatives claimed solicitors had a duty to act in customers’ best interests and blamed conveyancers for not pointing out lease terms to buyers. Jenkinson also pointed the finger at mortgage brokers, saying they should have taken ground rent liabilities into affordability calculations and pointed out implications to buyers.

Recommended

lifetime lease purchase

CA calls for criminal action where leasehold purchasers have been misled

The Conveyancing Association is calling for criminal action to be taken against sales agents who mislead purchasers about a property’s tenure. The proposal is part of the CA’s response to the Ministry for Housing, Communities and Local Government consultation on reforms to the leasehold system. The trade body points out that under the Consumer Protection […]

2

Cover feature: Clamping down on leasehold

As ministers launch another consultation into leasehold abuse, Emma Lunn asks if enough is being done to support those struggling under onerous ground rents. Leasehold has repeatedly hit the headlines over the past couple of years, not just in the trade press but national newspapers too. Issues with this type of property ownership have led […]

Government to “clamp down” on leasehold mis-selling

Secretary of state for housing, communities and local government James Brokenshire has written to the Competition and Markets Authority and the Solicitors Regulation Authority in an effort to tackle issues with the leasehold market. Official figures point to approximately 100,000 tenants trapped in “exploitative and unfair” leasehold arrangements, with home owners suffering a ‘Double Clause’ […]

Technology-Tablet-Computer-Tech-500x320.jpg

OMS integrates with Kensington Mortgages

One Mortgage System, which offers a single-input enquiry to completion processing platform for brokers, has integrated with Kensington Mortgages to bolster specialist lending options for users. The integration means OMS users can benefit from direct access to Kensington’s specialist lending portfolio via a full two-way integration which allows brokers to carry out a full decision […]

Stop letting targets get in the way of delivery

The positivity at RESI was pleasing to see, with lots of encouraging discussion about the private rented sector (PRS), the possibility (or hope) of stamp duty cuts on the way in the Autumn Statement and the general prospects of residential property in this post-Brexit vote world. However, that positivity was often tinged with some negativity […]

Newsletter

News and expert analysis straight to your inbox

Sign up