BIG READ: ‘Lies’ and ‘deceit’ faced by residents caught up in leasehold scandal

Leasehold ownership, most commonly found in flats, means purchasing a property for the duration of a usually long-term lease rather than owning it outright.

Mike Carroll, who lives on Steinbeck Grange in Chapelford, is among those affected by the leasehold scandal on what residents say is a collective issue.

They believe they were mis-sold their property by David Wilson Homes (DWH).

Mr Carroll says, when deposits were placed, there was never any mention of a property management company and residents were placed ‘under duress’ to utilise one of the conveyancing firms put forward by DWH.

Residents say the sales manager stated that if they didn’t utilise one of the said firms that they would lose out on the home and not complete the sale in time.

They stated that this is the case with many buyers, adding that even those that had instructed their own conveyancing firms were ‘paid off and made to utilise’ a DWH recommended firm.

Mr Carroll is locked into a 125-year lease and raised concerns over there being no consistency on the development, with the terms of leases varying from 125 to 999 years, and several properties actually being freehold.

Residents, including Mike Carroll, pictured at the official opening of David Wilson Homes' Dakota Park development in 2012

He is being charged management fees for communal areas on the estate, which he believes are unfair and unjustifiable, given that there is ‘nothing to manage’ and all latest phases identical to Steinbeck Grange are exempt from any management contract.

Mr Carroll confirmed he has spoken to the 47 Steinbeck Grange residents, who have completed surveys about the issue.

More than half of the residents on the development wrote to DWH’s managing director about the matter, however, they claim their concerns have been ‘diluted with lies’ from DWH and are angry the developer is ‘not looking at this as the collective scandal that it actually is’.

Mr Carroll, who moved into his home in December 2008, said: “Residents said they knew nothing about the management fees and were told to use solicitors put forward by DWH.

“I have been jumping through hoops trying to get the issue resolved and I have been trying to do it amicably.

“I was mis-sold and then, as a result, have been getting charged for management fees which were not required and the services were not even being provided.

“They have deceived people. More needs to be done to stop the nightmare that people in the town are living with at the hands of this developer’s fraudulent practices.

“They cannot continue to get away with this, the evidence is overwhelming.

“It has ruined my life and the lives of other residents who have all been strategically deceived.

“I offered to use my own conveyance firm and was advised if I did I wouldn’t get my dream home and a lot of people were told the same.

“If I utilised my own conveyancing firm, I wouldn’t be in this property now. I was deceived.”

Mr Carroll emphasised that he believes the way he, and many others, have been sold their homes is wrong.

DWH has released a statement on the matter.

A spokesperson said: “The sale of houses on a leasehold basis has been common practice in the north west for many years.

“All of Barratt and David Wilson’s leases are designed and intended to be clear and transparent, and all customers were made aware of the leasehold nature of the properties prior to sale.

“We aim to provide all relevant information to our customers at point of sale and via solicitors during the buying process.”

But Mr Carroll has disputed the statement and says it is not correct.

Former Labour Warrington South MP Faisal Rashid, who lost his seat in the general election in December, had repeatedly raised leasehold-related matters on behalf of residents while he was in the role.

Faisal Rashid

He launched an attack on DWH in October.

At the time, he said many Warrington South residents have found themselves trapped in onerous leasehold agreements, adding that Steinbeck Grange in Chapelford is ‘one example of this injustice’ by the developer.

But DWH hit back and said the terms of leases ‘are not at all onerous’.

In November, Warrington Borough Council passed a motion at the Town Hall aiming to support residents caught up in the leasehold scandal.

The motion, which was proposed by leader Cllr Russ Bowden, noted that the Labour-run authority reaffirms its commitment to support those who have been affected.

Town Hall

Cllr Bowden has since written to elected leaders and leaders of north west councils to seek support for an agreed regional position on leaseholds, in partnership with the National Leasehold Campaign.

He labelled the situation facing many residents as ‘horrific’ and says the biggest question is whether those affected are going to get ‘fair recompense’.

It has also been confirmed that council chiefs will meet with developers as the authority bids to get them to commit to abandon leasehold sales.

“It was a real privilege to work with the National Leasehold Campaign and to meet with residents,” said Cllr Bowden.

“I’ve had a very positive response from other leaders in the north west because what we want to do is share resources, share experience and take a collective stand against this.

“It’s really about sharing resources and saying we are not going to put up with this anymore.

“I think one of the things people do get confused about is why does the council allow these things.

“Actually, the tenure and some of these conditions are not material planning matters.

Cllr Russ Bowden

“I think we need to have a proper and positive engagement with home-builders and set out our expectations and, hopefully, make this a thing of the past.

“It’s a bit of a feudal practice really.

“What should be a proud moment for families, in terms of buying their first home, setting up a family etc, has obviously turned sour.”

But residents have received a major boost after the Competition and Markets Authority (CMA) announced it is set to launch enforcement action after finding troubling evidence of potential mis-selling and unfair contract terms in the leasehold housing sector.

The non-ministerial Government department works to promote competition for the benefit of consumers, within and outside the UK.

As part of a probe into the industry, the CMA is concerned that leasehold homeowners have been unfairly treated and prospective buyers misled by housing developers.

These concerns include homeowners having to pay escalating ground rents, people being misled about the cost of converting their leasehold to freehold ownership, people not being told upfront that a property is leasehold and what that means and people being charged excessive and disproportionate fees for things like the routine maintenance of a building’s shared spaces or making home improvements.

Andrea Coscelli, the CMA’s chief executive, said: “We have found worrying evidence that people who buy leasehold properties are being misled and taken advantage of.

“Buying a home is one of the most important and expensive investments you can make and once you’re living there you want to feel secure and happy.

“But for thousands of leasehold homeowners, this is not the case.

“We’ll be looking carefully at the problems we’ve found, which include escalating ground rents and misleading information, and will be taking our own enforcement action directly in the sector shortly.”

The CMA is now completing all the necessary legal work to launch direct enforcement action against companies it believes have broken consumer protection law.

This could result in firms signing legal commitments to change how they do business.

If they fail to make the required changes, the CMA could take action through the courts to make them comply with the law.

The evidence found by the CMA also supports the case for changes to the law in this area.

It will continue to work with the Government on its reform plans for the leasehold market, including supporting the move to ban the sale of new leasehold houses and reduce ground rents for new leases to zero.

Warrington North MP Charlotte Nichols has welcomed confirmation of enforcement action over potential mis-selling in the leasehold housing sector but says it is ‘too little too late’.

MP Charlotte Nichols

The Labour politician said she remains extremely concerned by the impact that unfair leasehold practices have had on her constituents, many of whom have contacted her over the issue.

She said: “I welcome the motion passed by the Labour-run Warrington Borough Council to support residents affected by the leasehold scandal, working in conjunction with councils across the north west to adopt a regional policy on ending this scandal and working to return freeholds to the householders.

“But it’s clear this is a national issue. In Westminster, I have spoken out on unfair leasehold practices, including spiralling ground rents, in the chamber and joined the All-Party Parliamentary Group on Leasehold and Commonhold Reform to work across parties for parliamentary action to support affected constituents.

“The latest announcement by the CMA that they will be launching enforcement action following evidence of potential mis-selling in the sector is welcome, but frankly is too little too late, and we need much more robust action from the Government to end these practices once and for all.

“Too many freeholders see leasehold as a license to print money. It is time for a ban on leasehold as a tenure.”

The CMA views ground rents in modern leasehold housing as legally and commercially unnecessary based on the evidence provided.

It estimates there are 13,000 leases with ground rents doubling more frequently than 20 years and 10,000 which double every 10 years.

There are at least 57,000 homes where ground rents exceed the threshold for assured tenancy.

The estimated value of ground rents is estimated to be £10 billion.

Tory Warrington South MP Andy Carter described the report by the CMA as a ‘first step victory’ for leasehold homeowners.

MP Andy Carter

He added: “Since coming to Parliament I’ve raised the issue of leasehold mis-selling with the secretary of state.

“I’ve heard directly from homeowners in a number of areas in Warrington, including Chaise Meadow in Lymm and Steinbeck Grange in Chapelford, who have very legitimate concerns.

“The Government was right to ask the CMA to investigate these issues independently and their report, which was published last week, sets out a significant examples where purchasers were not told the house was leasehold, purchasers were given misleading statements on the purchase price and were also told ground rates would not increase.

“Most worrying is the ineffective checks and balances which should have protected homeowners just weren’t there.

“Ministers have set out sensible plans to reform this sector but we now also need to see very speedy enforcement action against those companies who carried out shoddy sales practices and compensation for homeowners who were both mislead and let down by companies when making what for many is the biggest purchase any of us make in our lifetime.”