In June, outside the Housing 2017 conference at Manchester Central, there were loads of people protesting about the leasehold scandal being perpetuated by huge developers like Keepmoat, Countryside, Taylor Wimpey and Bellway Homes.
Every single one of the campaigners had their own personal story of how they had been 'ripped off' and 'lied to' about the leaseholds on their new build properties.
The scandal is this. When people are buying new houses, instead of selling them as 'freehold' in which the house owner actually owns the land, developers are selling them as 'leasehold' in which they keep ownership of the land. In too many cases, the freehold is then being sold on to offshore companies which are cashing in.
So, if someone wants to buy the freehold for their house, these third parties can charge anything – and they do...
"We all live in leasehold houses and flats and we were told by developers we could buy our freehold just after two years" Katie Kendrick, founder of the National Leaseholder Campaign, told the Salford Star at the demo "But before it gets to two years they sell the freehold on to third party investors who are based often in the Cayman Islands or Guernsey, and the price to buy your freehold back then rockets...
"Mine was £3,700 but the price went up to £13,000" she explained "Other people here, their freehold could have been bought for £5,000 but it's now £44,000. Once they sell your freehold on, it's a can of worms and you are just a never ending cash point – the permission fees also increase. So my house was built by Bellway and they wanted £300 for permission to build a conservatory but the new freeholder wants £2,600 just to say 'Yes'.
"A lot of us have bought under the Government's Help To Buy scheme, which further misleads as you think you've been 'helped to buy' when actually it should be called 'Buy To Rent' because you're never buying it until you buy the freehold" she added.
Another person at the demo was Jane Alexander, of Huyton in Liverpool, who bought a Keepmoat new build property...
"We were told that two years in, we could buy the freehold but 15 months in they've sold it on to a private company, so we've got onerous clauses in ours stating that we've got to get permission to do anything, and that could be anything from putting a curtain rail up or putting carpets in" she explained
"We bought our house as a retirement property and only got a short mortgage" she added "Now it's probably deemed unsellable because people won't touch them. To buy the freehold from Keepmoat would have been £3,500 or £3,750 now they've sold it on it could be anything...The whole thing stinks."
Indeed, it's wafted all the way to Parliament where Katie Kendrick's own MP, Justin Madders, had called leasehold the 'PPI of the housing industry'. There is also a legal battle looming to take on conveyance solicitors, many of whom are recommended by the developers, for not pointing out the lethal small print, which has included, not only permissions and third party leasehold investors, but doubling ground rents.
Even the Government has now had enough, with Communities Secretary, Sajid Javid, today announcing a 'crackdown on unfair leasehold practices'...
"It's clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents" he says "Enough is enough. These practices are unjust, unnecessary and need to stop. Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future."
Other measures, which are now subject to an eight week consultation, include: setting ground rents to zero levels; closing legal loopholes to protect consumers; changing the rules on Help to Buy equity loans so that the scheme can only be used to support new build houses on acceptable terms.
Here in Salford, Christine Davies got involved in the National Leaseholder Campaign when her daughter was looking to buy a new build property on Barratt Homes' Scholars Green development on the site of the former Walkden High School.
She says it was incredibly difficult to find out any information... "Initially we were being told it was freehold, then they admitted the houses were leasehold. We were also told that after two years my daughter could buy the freehold but, in fact, because Barratt don't own the freehold they can't sell it. Salford City Council retain the freehold.
"So Barratt are effectively a leaseholder with Salford Council, and they then sub-let to potential purchasers" she adds "If someone wanted the freehold they would first have to negotiate with Barratt, which might have sold on its interest to foreign investors, and then negotiate with Salford to buy the freehold. But Salford doesn't want to sell the freehold because of what it calls 'fragmentation' of the estate. The people who buy those houses are locked into a situation that they've never understood."
Indeed, Christine says she found out that Barratt had paid £2million to the Council for a 250 year lease on the land – but is only offering leases of 150 or 155 years to house buyers. Does this matter? Apparently it's crucial...
"No mortgage company would lend money for a lease less than 80 years, so if there's less than 80 years on your lease you will never be able to sell it" she explains "You will have to renegotiate the lease after seventy years, which is within someone's lifetime, and that means having to pay solicitors and valuers, and they can charge whatever they want, and can change all the clauses in the lease; they could put ground rent up, anything. And you've got to agree otherwise you can't sell your house."
Christine finds it odd that local MP, Barbara Keeley, sits on the all Parliamentary group on leasehold reform – while Salford Council is perpetuating what she calls "dubious practices".
"My daughter is a single person on a low income, limited to what she can buy, and one of these houses would have been ideal" she says "But she's certainly not going to buy a property with only a 150 year lease, with no chance of buying the freehold, and with increasing ground rent, and management fees for services on the estate. She's been priced out. It's scandalous."
Barratt have already been given a good deal on its development by Salford Council. When the company got planning permission for the 94 houses on Scholars Green last year, according to the Council's own figures, it should have been paying £1.035million in various planning fees plus providing 10% affordable housing.
Instead, because of what they call 'viability' (profit) issues, Barratt is paying just £441,000, which includes 10% 'affordable housing' – although the houses aren't social rent, or even so-called 'affordable rent' (80% of market value) but the much cheaper (for developers) 'intermediate houses'.
The Council has inserted a 'clawback' clause, whereby if profits do turn out to be huge the city can claim some money back off Barratt...
...But the planning fee scandal, the leasehold scandal and all the other scandals highlighted just show how the developers are cashing in every which way – to the point where even the Tory Government, usually friend to developers, looks like it's going to take action...
'Enough is enough' indeed...
"It's a great announcement today, a big step in the right direction" says Katie Kendrick "but the campaign remains and we want redress for the thousands already stuck..."
To find out more about the scandal see the excellent National Leasehold campaign Facebook group (you have to ask to join) – click here
To read more about Salford's planning fees scandal – see previous Salford Star article – click here and for a huge Salford Planning Scandal piece in the print issue 10 – click here