Nationwide refuses to grant mortgages on new leasehold houses and flats in ground rent scandal

Overnight, Nationwide building society has made hundreds, and possibly thousands, of new-build flats and houses almost unsaleable – and they should be roundly applauded for doing so.

In a surprise intervention into the scandal of leasehold flats and houses sold with spiralling ground rents, the society said that from this Thursday it will stop lending against any new-build leasehold flat or house where the ground rent is more than 0.1% of the value of the property. It will also refuse loans on new flats with lease lengths of less than 125 years or new houses with less than 250 years. Developers will now be forced, if other lenders adopt the same policy, to slash the absurd ground rents or find that they simply can’t get any buyers.

Take, for example, Berkeley’s 60-acre development south of Reading called Kennet Island. Prices for the remaining leasehold flats start at £249,950, but when we rang the sales office it told us the ground rent was £350 and would increase with RPI. That’s more than 0.1% of the value of the property – which means buyers won’t now qualify for a Nationwide mortgage. Either Berkeley cuts the ground rent or finds that buyers will melt away, unable to find a loan.

Coming so soon after Taylor Wimpey said it had set aside £130m to compensate buyers caught in the ground rent trap, it’s another small victory in the battle against leasehold abuse.

Robert Stevens of Nationwide said: “As a mutual building society that looks to protect its members, we have decided to make changes to the way we value new-build properties on a leasehold basis. We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new-build houses, and to ensure that onerous leasehold terms, including ground rents, are properly considered and controlled in order to safeguard our mortgage members.

“Nationwide is taking a proactive, leading position on this issue to address a significant risk facing our members and to challenge what we believe to be poor practice in the new-build market.”

The society is one of the biggest lenders in the UK, and hopefully this will now set a benchmark for other providers to follow.

Remember, we are not talking about service charges here. When leaseholders pay a service charge, at least they get something in return – such as the maintenance of the common parts of the building. When leaseholders pay a ground rent they receive absolutely nothing in return. It is little more than a medieval tax and should have been outlawed decades if not centuries ago. An ugly industry has built up among financiers who snap up leaseholds with ground rents, because in an era of a 0.25% base rate a stream of income guaranteed to go up by RPI – or double every 10 years in some cases – is an extremely valuable commodity.

The big developers reassure unsuspecting young buyers that the 999-year lease is “almost the same as freehold”, but then they sell it on, typically for 15-20 times the ground rent. It’s a lovely little earner for the developers but spells misery for the flat dwellers.

It’s great that Nationwide has set a new benchmark, but we need to go further. There is no reason why a ground rent should be any more than a peppercorn – say £5 a year. That would kill off this grubby trade overnight. Developers who trapped buyers in ground rents that double every 10 years should be forced to buy them out in the way that Taylor Wimpey has agreed to compensate its buyers.

Amazingly, giant builders such as Persimmon are still knocking out new-build estates where houses are being sold as leasehold, for which there can be no justification. Meanwhile, apartments should only be sold on a commonhold, not leasehold, basis. The legal structure is already in place – it just needs political will to force it on the developers.”

https://www.theguardian.com/money/2017/may/06/nationwide-housebuilders-leasehold-new-builds

Bovis slow down will hit East Devon hard

“… Bovis faces the humiliation of being the only major housebuilder to report falling volumes this year as it attempts to recover from a series of blunders and a major profit warning … a 15% drop in completions … dividend cut … damaged reputation …”

Sunday Telegraph Business section

This will have a major knock on effect for East Devon, where the company is heavily involved in Axminster, Seaton and Cranbrook. Bad news, too, for the Local Plan, which similarly relies on the company to boost its numbers.

Bovis compensates buyer for 9 month completion delay on new home

Letter in Guardian:

“We reserved a Bovis home in February 2016 and exchanged on 6 June. However, after signing the contract, we were informed the completion date had been delayed from October 2016 to March 2017. This was a complete surprise as we weren’t made aware of any issues. It’s since been further delayed to May 2017.

We’ve not been given any explanation. Meanwhile, the sale of our flat completed and we are incurring large costs renting a home and paying for our furniture to be in storage. My wife has also given birth to our baby, who we’d planned to have in our new house. Bovis insists the original October completion date was realistic. At the end of January, it finally offered us £1,100 to cover storage and commuting costs, but our total costs are nearer £16,700 including the early mortgage termination fee we were forced to pay.” RJ, Watford Herts

ANSWER

“Since you wrote in, the completion date has been put back by another month. This means you will have to apply for a new mortgage as your current offer expires in late May.

Bovis has offered to let you withdraw from the contract but that would mean you have to start searching for a new home from scratch. It blames “operational issues”, but declines to explain how problems great enough to cause an eight-month delay had not been identified when you signed the contract the day before the completion date was postponed.

It has now agreed to your demand for £6,000 to help with some of your costs, but you are still in suspense, wondering whether you and your new family will have a proper home in June.”

2-year old bottles of urine found behind bath in Bovis home at Cranbrook

Mandy Greeves, 50, found three bottles of ‘urine’ stashed behind a bath panel at her house in Cranbrook, Exeter.

A resident of a new build home was horrified to discover bottles of suspected urine hidden behind a bath panel – nearly two years after she moved in.

Mandy Greeves, 50, says she is grateful now that the containers of yellow liquid have been removed by Bovis Homes , which built her property.

The ‘disgusting’ discovery came to light when Mandy called a plumber friend in to repair a tap at her house in Cranbrook new town near Exeter, Devon.

When the plumber removed the bath panel to fix the problem he discovered three plastic bottles full of a yellow liquid underneath the bath.

The bottles had been covered up by the panel.

Mandy was baffled. “I looked at them, and I thought, ‘Oh my god’. First of all I thought was it milk that had been left there? But it wasn’t.

“You could see that it was urine. I was disgusted. It was just horrible. I couldn’t believe that someone could leave something like that behind.

“I thought, do I throw it away or do I keep it? Then I thought, if I throw it away, I’ve got no evidence.”

Mandy told her friend to put the bath panel back on so that there was evidence to show Sovereign Housing which co-owns the house, and Bovis Homes.

Mandy is the house’s first occupant, and moved in to the property in July 2015.

One of the bottles is dated March 15, which, says Mandy, would tally with the house’s interior being fitted.

“I can’t understand a human being being like that,” said Mandy.

“If they want to go to the toilet, why can’t they do it in the garden? The lawn wasn’t down by then it would have just been mud.

“Why did they have to do it in a bottle and leave it and then put the bath panel back on? It might have been the builders. The guy that put the panel on. Why did he not notice it? It’s not nice.”

A Bovis Homes spokesperson said: “Our regional customer care team were not aware of this matter but now it has been brought to their attention they will contact Sovereign Housing immediately and investigate this situation further.”

http://www.mirror.co.uk/news/uk-news/homeowner-makes-disgusting-discovery-bathroom-10220768

“Competition watchdog to examine warranties for new homes”

Too late for the many people in Axminster and elsewhere in East Devon, sadly.

“The Competition and Markets Authority is examining payments between housebuilders and the providers of warranties for new homes as part of a review of NHBC, the largest warranty provider.

The CMA announced last month it was reviewing undertakings made by NHBC, the standard-setting body for new-build properties in the UK and the main warranty provider. These 22-year-old undertakings were designed to improve competition in the warranty market.

The review was announced amid concerns that NHBC is compromising its independence by paying millions of pounds to developers every year. However, the CMA said it was launching the review following a request from NHBC and that it would not consider the “wider issues” relating to the organisation. …”

https://www.theguardian.com/business/2017/apr/07/competition-authority-to-examine-warranties-for-new-homes

Bovis gets a new boss … same old merry-go-round

“Bovis Homes today snubbed a £1.2 billion takeover bid from rival Galliford Try — and lured its former chief executive to be the new boss. …

… Fitzgerald admits he is obsessed by work, though he does find time to listen to Level 42. He told the Sunday Times in 2015 that he has “never read a book”.

At Bovis he will get a basic salary of £650,000. Bonuses and incentives mean he could make up to £7 million in the first three years.”

http://www.standard.co.uk/business/bovis-fends-off-galliford-and-nabs-its-old-boss-a3507821.html

Who will help people in sub-standard new build homes?

“There are rising concerns that the rush to build new homes is causing housebuilders to cut corners. Many firms have set tough targets to cash in on huge demand.

There are rising concerns that the rush to build new homes is causing housebuilders to cut corners. Many firms have set tough targets to cash in on huge demand — and meet the Government’s pledge to build 200,000 new homes a year.

Thousands of victims of poor workmanship have formed groups on social media websites such as Facebook, including Taylor Wimpey Unhappy Customers, Avoid Persimmon Homes and Bovis Homes Victims Group.

Hundreds have posted on Snagging.org — named after the jargon builders give to the task of finishing a project — citing problems such as creaking floors, scratched windows and stained carpets.

Campaign groups want a new homes ombudsman who can step in when families are let down. Buyers should also be given a chance to inspect their new-build before being handed the keys, they say.

Paula Higgins, chief executive of HomeOwners Alliance, says: ‘You have more consumer protection when you buy a toaster.

‘The industry is tilted too far in favour of developers, and the complaints system is too confusing.’

A report by the All-Party Parliamentary Group for Excellence in the Built Environment found more than nine in ten buyers report problems to their builder.

Oliver Colvile, chairman of the parliamentary group and Conservative MP for Plymouth Sutton and Devonport, says: ‘There have been too many reports of new homes that are quite simply uninhabitable.

‘We need to ensure there is a clear process whereby developers can be held to account and are responsible for correcting any below-par workmanship as soon as possible.’

Britain’s biggest house builders nearly all reported soaring profits last month. Persimmon reported a pre-tax profit of £783 million for 2016 — a 23 per cent increase on 2015.

Barratt Developments saw a 20.7 per cent rise to £682.3 million, Bellway a 36.5 per cent rise to £492 million, Redrow a 35 per cent rise to £140 million and Taylor Wimpey a 21.5 per cent rise to £733.4 million.
Bovis reported a 3 per cent fall in profits but still made £154.7 million.
Bovis has been forced to set aside £7 million to compensate buyers who have complained about the poor quality of its homes.

In January the firm was revealed to have offered up to £3,000 to buyers who moved into their houses by December 23 as it struggled to meet targets.
Sales have been boosted by the Government’s Help to Buy scheme, which has helped 100,284 first-time buyers onto the property ladder since 2013.
All the firms reported an increase in both the number of homes built and average selling prices. …

… A spokesman for the National House Building Council says: ‘We carry out spot check inspections at key stages during construction… [but] the builder is responsible for ensuring homes conform to building regulations and our standards.’

A Taylor Wimpey spokesman says: ‘We recognise that we do sometimes get things wrong, but we are committed to resolving those issues.’
A Bovis spokesman says: ‘We are putting more resource into customer care and reviewing our processes to ensure a focus on quality.’

http://www.dailymail.co.uk/money/article-4314028/Who-help-families-forced-live-half-built-homes.html