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Housebuilders must halt leasehold sale of new houses, says minister


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8 hours ago, moneyfornothing said:

Normally when you buy a house, you pay for land cost + building cost + builders profit.. there should have been a substantial difference in the initial price paid to buy a house as a leasehold as the land cost is not being paid for..did this happen or are the builders having their cake and eating it too?

Someone might correct me on this but I believe that when leasehold first came in that there was a substantial difference in the initial prices. It has just been eroded over time and the single mindedness of people desire to get on the 'propertieee ladder', hence why builders now think that they can get away with offering leasehold houses! Got to be better than wasting all of that dead money on renting! innit! :P

 

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17 hours ago, renting til I die said:

Someone might correct me on this but I believe that when leasehold first came in that there was a substantial difference in the initial prices. It has just been eroded over time and the single mindedness of people desire to get on the 'propertieee ladder', hence why builders now think that they can get away with offering leasehold houses! Got to be better than wasting all of that dead money on renting! innit! :P

 

If this is how they have sold "affordable help to buy" homes I hope they are sued their pants off.. 

Edited by moneyfornothing
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4 hours ago, moneyfornothing said:

If this is how they have sold "affordable help to buy" homes I hope they are sued their pants off.. 

Indeed.  

As has been pointed out elsewhere on HPC the house value (and link to inflation) is mainly in the land and if it wasn't for the land the bricks and mortar etc would depreciate in real value with time similar to cars.

As they get older bricks and mortar should generally speaking tend to depreciate more and more which historically is the opposite to land which has tended to appreciate.

So new leasehold houses should be sold at a significant discount to the same houses that have the land freehold - as financially leasehold houses being of far inferior value .  

Edited by billybong
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^

Quote

She thought nothing of it, and says she was told she would be able to buy her freehold after two years, believing it would cost between £2,000 and £4,000.

I guess "Katie" (and her solicitor) should have realised something was up with such a relatively small apparent difference between the leasehold price she was paying for the house and the freehold price.  Buyer beware.

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Katie says because she bought the house through the government's Help To Buy scheme, she felt she could trust the process."

"The process" is funded by the taxpayer to help to sell the "government's" mates' houses.  So (along with some thieving from savers) it's taxpayer's money at risk and so far as politicians are concerned it's aka free money.  Why should they be concerned Parliamentary privilege and all.

Trusting the process in deciding the price you pay would be a mistake as it seems to be yet another pretty wicked devil take the hindmost unregulated process.  Buyer beware.

Edited by billybong
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This is not a dissimilar issue to the rent inflation formula built into some shared ownership schemes. The annual uplift of the rent due on the un-owned portion of your property goes up by typically RPI+1%. But the worst I saw was RPI+2%. Makes next to no difference early on, but as the years go by...

Combine that with being responsible for 100% of the cost of maintenance and improvements, restrictions on the valuation and sale process and hyped up initial valuations...it's a no from me.

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^ In OP's post.

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 ..In one extreme case a constituent will see the ground rent on their home rise to £11,000 a year by the middle of this century, and then to £367m a year by the end of the lease period.

So he/she is effectively an owner and simultaneously a renter.  

Buyer beware.

Edited by billybong
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  • 1 month later...

Big bit on Rad 4 today . Leasholder protesters outside Cheshire new build estate, saying their houses are unsaleable

http://www.bbc.co.uk/programmes/b08j997r

 

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With campaigners pushing against leasehold deals that lead to the doubling of ground rent in 10 years, we ask if the Government is about to offer better protection when it comes to leasehold abuse.

 

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I've found I'm in a similar situation on our 4 bed end terrace, which I bought as a repossession so you can imagine the pace that goes at.  The lease we have is 155 year lease subject to a £250 a year ground rent and a 15 year review stating that there will be an increase in accordance with the terms of the "eighth schedule of the deed".   I must admit I didn't know what that meant.  I've been going through my emails and discovered I sent the following email to my mortgage adviser at the time as they'd got the lease length wrong:

"Sorry, it is a leasehold, but with 153 years remaining at a cost of £240 a year (ground rent!).  I just mentioned it to the solicitor who didn't seem to think it'd be a major problem."

Speaking to my neighbour I've learned it goes up with RPI.   He purchased the freehold on a bigger house.  It took 2 years and 10k after the freeholder wanted 20k, it was valued at 5.5k.

It seems we were never advised on the costs or even the length of the lease properly (it was initially put down as 999 years and fixed a £50 a year).

You might say buyer beware and I never wanted a leasehold property but I when it comes to my wife and her wanting things I go blind...  

My wife and I were long time renters.  In the time renting we've had 2 landlords sell a few months after moving in and 1 letting agent steal our entire deposit (around £800 we never saw again).  

The second time a landlord sold up was just after my wife got pregnant.  We'd been previously assured that the house was the landlord's daughter's inheritance and he wouldn't be selling any time soon.  

In the final house we rented the downstairs floor was rotting away (you could bounce on it!) and the hole in the wall between the conservatory and the house was literally blowing a gale inside.  
 

To top it off we've made the mistake of putting a conservatory on, without permission.  I never realised how much of a problem this could be.  Our neighbours have been charged for the privilege of converting the garage!  I've written to my MP but I'm not really sure what my best options are.  At least it doesn't double every 10 years :S

 

Edited by lampkin
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The 89 year old father of a guy I work with is currently being hounded by a collection agency for supposedly unpaid ground rent etc dating back 40 years. Apparently companies are buying up bundles of freeholds and using backsteet solicitors to chase unpaid rents and discrepancies, private parking company style. The actual house he lived in collapsed into a sewer in the 1970's, the council compulsory purchased and he didn't manage to retrieve his possessions before it was pulled down. All that remains is a patch of grass. Not that the new owners know or care about that, they want to know why a house hasn't been maintained on the plot in all that time, why ground rent unpaid etc. Barstewards! 

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21 hours ago, Andy T said:

The 89 year old father of a guy I work with is currently being hounded by a collection agency for supposedly unpaid ground rent etc dating back 40 years. Apparently companies are buying up bundles of freeholds and using backsteet solicitors to chase unpaid rents and discrepancies, private parking company style. The actual house he lived in collapsed into a sewer in the 1970's, the council compulsory purchased and he didn't manage to retrieve his possessions before it was pulled down. All that remains is a patch of grass. Not that the new owners know or care about that, they want to know why a house hasn't been maintained on the plot in all that time, why ground rent unpaid etc. Barstewards! 

While 'buyer beware' etc., and personally, I trust nobody to be decent in a financial transaction any more, it appears that ever more inventive ways are being found for financial extortion in the UK for matters of day to day life, extortion that unsurprisingly, surprises or shocks innocent people. It's called taking advantage and the perps are sniggering all the way to the bank, literally. Chaos. The remedy seems retrospective action or compensation; trading standards are currently, looking closely at parking companies for example. Far better would be to not allow it to happen in the fist place.

Newbuild leaseholds by the major builders, where the leaseholds are bundled up and sold on, seems to me to be no more than another extortion scam.

Edited by LiveinHope
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21 hours ago, Andy T said:

The 89 year old father of a guy I work with is currently being hounded by a collection agency for supposedly unpaid ground rent etc dating back 40 years. Apparently companies are buying up bundles of freeholds and using backsteet solicitors to chase unpaid rents and discrepancies, private parking company style. The actual house he lived in collapsed into a sewer in the 1970's, the council compulsory purchased and he didn't manage to retrieve his possessions before it was pulled down. All that remains is a patch of grass. Not that the new owners know or care about that, they want to know why a house hasn't been maintained on the plot in all that time, why ground rent unpaid etc. Barstewards! 

Historically if you don't pay ground rent for 12 years & it was not demanded, you could apply for the freehold.

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11 minutes ago, richc said:

stop wasting your time here!!!

THE ELITE WILL NEVER ALLOW A CRASH IN HOUSE PRICES.

(Is you time really that worthless that you spend it posting nonsense on here?)

 

Were there no elites in Northern Ireland ?

http://www.lancaster.ac.uk/lums/economics/research/housing/regional-markets/northern-ireland/

Real house price index

northernireland_rhpi.png

Edited by LiveinHope
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50 minutes ago, richc said:

stop wasting your time here!!!

THE ELITE WILL NEVER ALLOW A CRASH IN HOUSE PRICES.

(Is you time really that worthless that you spend it posting nonsense on here?)

while posting I renewed the back lines on 20 lobster pots, that'll keep me in crabs and lobsters until next year - while I'm waiting for an HPC

Edited by LiveinHope
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  • 2 weeks later...

Cameron's brother-in-law and the toxic leasehold scandal: His family has owned some of Britain's great houses. How bitterly ironic he's being accused of preying on struggling homeowners 

33F4BAA900000578-0-image-m-16_1491613295

It's a safe bet that the William Waldorf Astor IV and his wife Lohralee, a former model, are untroubled by the property worries that keep most British thirtysomething parents awake at night.

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  • 1 month later...

5 months ago we went to see a new house sold by one of these developers.

The price was slightly higher than average for the area (470k), but the house looked good (the garden was really small and the parking spot was a bit far, but the house itself was...close to "perfect"). I ended up passing on it, the main reason being that it was being sold as "leasehold" and had a service charge of 250/month. No idea of what the ground rent was, but the service charge made me say "f*** that". I decided to buy elsewhere and freehold only. 

I can't imagine what the people who bought those houses were thinking...but most of them were already sold.

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  • 4 months later...

This isn't going away ..

Ellesmere Port leasehold campaigners stage protest in Manchester

Activist Katie Kendrick led demonstration to increase awareness of the pitfalls of leaseholds to first time buyers

http://www.chesterchronicle.co.uk/news/chester-cheshire-news/ellesmere-port-leasehold-campaigners-stage-13741581

Campaigners from Ellesmere Port's National Leasehold Campaign who highlighted problems at a demonstration in Manchester

 

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  • 2 weeks later...

  Service charges: government to tackle rip-offs that ‘harm’ leaseholders

Ministers plan crackdown and seek evidence on problems from extortionate costs to unscrupulous agents

https://www.theguardian.com/money/2017/oct/21/rent-leasehold-fees-service-charges-control-government

Quote

On Wednesday it announced plans for a crackdown on property agents in both the leasehold and private rented sectors.

The Department for Communities and Local Government is seeking views on what measures it should take.

It says: “Consumers often have very little control over the services they receive, and limited ability to challenge agents when not of the quality they expect or deserve. Tenants and leaseholders can be exploited and subject to exorbitant charges.”

Service charges are the fees most leaseholders pay to cover their share of maintaining their building, and are frequently the subject of controversy: only last month, Guardian Money reported on the case of Mary-Anne Thompson, a nurse, who has seen the annual service charge on her London flat increase from about £500 to more than £7,600. She claimed the £640 a month she had been asked to pay for her three-bed flat above a shop in Brixton was “extortionate”.

Our article said that “cases such as this suggest ministers also need to look at whether flat dwellers should have more rights to challenge unreasonable service charges”. So perhaps the government read our report.

Back in 2011, consumer organisation Which? claimed leaseholders were losing out to the tune of £700m a year because of “excessive fees and hidden costs” contained within service charges. Last December, Labour MP Jim Fitzpatrick said that, given the sector was now a lot bigger, that figure may be as much as £1.4bn...

 

Edited by Saving For a Space Ship
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On 03/02/2017 at 12:58 PM, Wayward said:

okay interesting but I have never seen shared freeholds for flats in southern England...lots of questions in my mind about how this would work.  With a leasehold we have one party with the superior interest but with shared freehold are all the 'owners' supposed to act as a democracy?...I can foresee disagreements arising...not quite like a hippy commune but you get the idea.

I wouldn't expect a discount for a flat being leasehold (unless short lease) because all other flats are leasehold so all are comparable.  With houses most are freehold and so I would expect a discount for a leasehold house v freehold, for compensation for the inferior interest and onerous leasehold obligations- most obviously rent...you would need to calculate the NPV of the rent obligation and add some...

I think these leasehold houses are a scam, a contrived income generator that poorly advised buyers (tenants) are falling into.  It would only work in a sellers market, the house builders are trying their luck and getting away with it..it seems (for now).

I've seen several shared-FH flats in London, but usually they're purpose built Vict/Edw. maisonettes, just 2 in the building, not in bigger blocks.   There are a lot of these in many areas of SW London.  If LH ground rent usually pretty  low, if not peppercorn. 

Although there is a large, fairly high rise private block, 60s/70s, near us (Kingston) where they all own a share of the FH. 

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  • 2 months later...

 Property market braces for shockwaves from landmark leasehold case

Appeal court ruling could halve the cost of extending leases or buying freeholds for 2.1m households in England and Wales

https://www.theguardian.com/money/2018/jan/14/property-market-braces-for-shockwaves-from-landmark-leasehold-case

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