The Conveyancing Association (CA), the leading trade body for the conveyancing industry, has today (5th July 2021) urged consumers to contact their conveyancers if they bought a leasehold house between 2000 and October 2015.
This call follows the initial success of an industry campaign to deliver a fairer system and outcomes for those who have bought leasehold houses over the past two decades.
Last month, the Competition and Markets Authority (CMA) investigation into the sale of leasehold houses resulted in two firms, Aviva and Persimmon, formally committing to making changes for the benefit of leaseholders.
The commitment has been welcomed by the CA, after Aviva agreed to remove from leasehold contracts certain clauses which were doubling the ground rent payable, while Persimmon offered leasehold house owners the option to buy the freehold of their property for £2,000 or less, and make repayments to those who have already purchased their freeholds.
In the CMA ruling, Persimmon also committed to a number of other measures including:
- No further leasehold houses being sold, and if they have to be leasehold, then only at a peppercorn ground rent; leasehold flats will also be sold with a peppercorn ground rent.
- Leasehold terms must be 999 years.
- For long leases granted after 2015 they will sell the freehold to the leaseholder for £2,000 with no costs other than the leaseholder’s conveyancer costs
- For long leases granted between 1st January 2000 and the 1st October 2015, where the freehold is still owned by Persimmon they will sell for £2k; if they don’t own it then they will help the leaseholder acquire it from whoever does.
- If a leaseholder bought their freehold for more than £2k they will refund to the £2k.
- Those who bought freeholds can’t have rentcharges or permission fees, and enforcement under S.121 of the LPA will be taken out via a deed of variation.
- All owners must be notified within 90 days and satisfy any claim made up to 31st December 2026.
The CMA investigation received evidence from a CA home buyer experience survey which proved that less than 4% of home movers were given the required information under the Consumer Protection from Unfair Trading Regulations (CPRs).
The Association also anticipates there will be further rulings made and other developers and investment groups will also need to take similar action. The CA is therefore urging those consumers who might be affected to contact their conveyancer to check their situation and whether they are able to claim with CPRs having been breached.
Beth Rudolf, Director of Delivery at the Conveyancing Association, commented:
“The CA is very supportive of the initiative taken by Persimmon and Aviva to undertake to resolve the issues created by their lease terms and would encourage other developers to follow suit.
“The leasehold mis-selling scandal has blighted leasehold houses but can be easily resolved by enabling leaseholders to buy their freehold for a reasonable sum and ensuring the resulting freehold title is not of the ‘fleecehold’ variety, as some have ended up with, whereby they were subject to large permission fees for a change of blinds or carrying out works at the property or rentcharges which if unpaid, whether demanded or not, would result in a long lease being created.
“We know the CMA has evidence of four other developers who created issues through doubling ground rents and other onerous lease terms and would encourage them to take the stance that Persimmon and Aviva have in trying to put the issues right for their customers. This is not just about leasehold houses but also on flats where rent doubling is in place, which will surpass the Housing Act prescribed limits, creating issues with the owner’s ability to get a mortgage.
“While we are delighted to see such big players as Persimmon and Aviva committing to tidy up the issues, overall many of the commitments in the undertakings are ratification of the announcements already made by the Government on their plans for leasehold.
“What the leaseholders and property industry really needs is a Leasehold & Commonhold Reform Act sorting out the issues that continue to impact homeowners. Until this becomes legislation the homeowner does not know if their landlord and Lease Administrator or rentcharge owner will exploit the freehold of their home to make profit when their economic interest in the property should have come to an end when they first sold it to the consumer.”