Thousands of new and first time buyers have seen their dream of owning their own home turn into a nightmare. Unbeknownst to many of the people who snapped up houses from new developments, incremental increases in ground rent charges every decade will see some homeowners having to pay thousands of pounds per year.
These new homes start with reasonable ground rent charges of around £200 per year but are set to double every decade; this means in 50 years’ time, some homeowners will be paying £6,400 per year. Had they been made aware of this at the time, the vast majority of homebuyers say they would not have gone ahead with the purchase.
In light of this, mortgage lenders are now adjusting their lending criteria and many of the homes already sold run the risk of becoming mortgageable. This leaves thousands of people with unsellable homes that may even go into negative equity.
Concerns have also been raised at what homeowners feel was deliberate ambiguity and deception on the part of the property developers and their recommend conveyancing solicitors. Pushy sales staff and aggressive completion dates meant that people were unable to adequately scrutinise the terms and conditions. Upon completion, many of the property developers went on to sell the freehold to obscure third party companies.
An All Party Parliamentary Group on Leasehold Reform has been created and so far has over 80 participants.
Kate Osamor, MP for Edmonton said:
"I have heard many stories from first-time buyers who have worked incredibly hard to buy their first home and did so in good faith. Unfortunately, their plans for the future have been thrown into complete turmoil. It should come as no surprise that leasehold has become the no1 issue for UK homeowners.
“The annual doubling of ground rents will not only lead to financial hardship for families but will also make the resale of their home incredibly difficult, with many lenders now wising up to the issue. The concerns raised about aggressive sales techniques and a lack of transparency and scrutiny are deeply troubling.
” I remain concerned that properties are currently being treated as a marketable commodity over the heads of owner-occupiers and I believe that we need urgent action to stop the exploitation of hard-working homeowners.”