“Major housebuilders such as Taylor Wimpey and Persimmon may be forced to spend millions compensating home buyers locked into unfair leasehold contracts, following a warning by housing minister Gavin Barwell.
Amid accusations in the House of Commons of “the PPI scandal of the property sector”, Barwell ordered developers to halt future sales of leasehold houses or face government action next year.
He also told developers to come up with solutions for householders already stuck in homes where soaring ground rents have made their property virtually unsaleable.
“There is a widespread problem here that needs addressing. These practices are not illegal but it seems to be one of those cases where there is a gulf between the letter of the law and our sense of what is right.
“The secretary of state and I are clear that it is not just a matter of stopping this practice going forward, but it is also about addressing hard working people who believe they have bought their home but actually they are in a position where they may find they are unable to sell that home down the line.”
A series of reports in Guardian Money has revealed how developers have been selling detached and semi-detached houses as leasehold, with clauses which allow the ground rent to double every 10 years. The freeholds are then sold on to private companies which extract the ground rent, charge high fees if a homeowner wishes to make alterations, and refuse to sell the freehold except for a huge premium.
Homebuyers have been left with houses they cannot sell as lenders will no longer offer mortgages against them because of the ground rent clauses. …”
East Devon Watch 