FORMBY MP Bill Esterson slammed the “legalised extortion” of ever-increasing leasehold ground rents and vowed to step in to help residents who feel trapped by their newbuild homes.
Residents on the Bellway-built estate Orchid Meadow in Formby say they are concerned about their leasehold agreements and a lack of clarity over when and if, and for how much, they will be able to buy the freehold for their properties.
Mr Esterson says the residents deserve protection from potentially unscruplulous and opaque ground management companies who can increase ground rent charges yearly and “hold residents to ransom” over purchasing the freehold. He is also concerned about residents being charged fees just to ask the ground management company if they can make improvements to their properties.
Mr Esterson said: “This is an issue we have seen across the country with newbuild properties and I believe it is an issue the government should intervene on.
“New properties in the past would largely be sold freehold but now it seems to be becoming more and more common to sell properties leasehold with ground rents that may start off low but get larger and larger as the years go by. Purchasers are promised an opportunity to buy the freehold but are then quoted an extortionate amount. They are being held to ransom.
“If they want to make changes such as building a conservatory, they have to pay the ground management company £108 just to ask permission. How can this be regarded as reasonable and fair?
“My colleague John Healey who is the shadow Minister for Housing has called this “legalised extortion” and Labour promised to abolish this practice if we won the last election. Residents deserve protection from this sort of racket.
“A Labour Government would end the routine use of leasehold ownership in new housing developments.”
Resident Ruth Wheelhouse, of Edison Close, Formby, said she doesn’t think she was made fully aware of the implications of the leasehold when she bought the property. She accused the companies involved of “immoral practices”, saying: “To many of us owning a leasehold property was new and the implications not really understood completely. Many of us used the solicitor recommended by Bellway.They should have explained the implications leasehold properties had in more detail. To make certain changes to your house you have to pay £108 to HomeGround (who now own the freehold) just to ask the question.
“I trusted the solicitors’ judgment.
“We have a right to buy the freehold after two years but uncertainty about the cost is leading many on the estate to try to buy it before the two years is up. The worry is that if we don’t we will be priced out of buying our freehold altogether. Other people in the country have experienced this problem.
“It's the general feeling that we have been misled by Bellway as they have acted in a unfair manner and abused their position as all this was not made clear from the beginning.
“All the companies are using immoral practices to ultimately make more profit.”
An All-Party Parliamentary group looking at leasehold was recently set up in Westminster and its members have vowed to “reduce opportunities for exploitation” and “publicise the scandalous behaviour of professions involved in the leasehold sector.”
Local authorities have no power to stop developers selling properties leasehold and they cannot withhold planning permission for this reason, and with thousands of new properties set to be built across Formby and the wider Sefton Central area over the next 15 years, Mr Esterson is demanding greater protection for buyers.
Mr Esterson added: “I have written to the Communities Secretary Sajid Javid to ask what his department is doing to help people stuck in this situation and to ask what the Government is doing to protect future homebuyers. What is the Government more interested in: boosting the profits of ground management companies or protecting homeowners from exploitation?”