Hundreds of thousands of buyers ripped off by property companies stuffing them with ridiculous ground rent deals
The PPI scandal of property world has been exposed and the clock is now ticking for unscrupulous building firms who stick buyers with toxic leasehold contracts.
Hundreds of thousands of people bought their homes in good faith, only to find out that the leasehold on their property has been sold to some faceless offshore firm in a tax haven and their home is now unsellable - and their ground rent was going through the roof.
It's even emerged that big companies, like Taylor Wimpey, have urged would-be buyers to use their recommended solicitors to handle the sales process...the solicitors neglected to inform the buyer that they were signing a contract that could leave in a nightmarish financial pickle later down the line.
Just take the case of Jo Darbyshire, who bought her family home in Bolton for £400,000 from taylor Wimpey in 2010.
She was told she could buy the leasehold for £5,000 before it doubled in a year's time.
But just 11 months later, without any consultation with Jo or her family, Taylor Wimpey sold the leasehold to an investment firm on the Channel Islands and they would now want £30,000 for the leasehold.
She told A Spokesman Said: "There was nothing in any information given to allow a lay person to know there would be financial implications
"We used a solicitor that was recommended by Taylor Wimpey, I just fell for it."
Now the House of Commons housing committee has published a report saying there is no excuse for big firms helping the estimated 100,000 victims of the scandal.
Its report accuses big housing firms of exploiting buyers with leasehold contracts that impose crippling ground rents and ‘excessive’ fees on everything from building conservatories to changing carpets.
In some cases, these can run into hundreds of thousands of pounds and make it impossible to sell the homes.
There are calls for a full-blown inquiry into the sale of leasehold properties after widespread claims that many families were victims of mis-selling, with some calling it ‘the PPI of the housing industry’.
Committee Chairman Clive Betts said: "Developers abused their market dominance and exploited consumers, using a model that did not fully explain what was involved in leasehold properties. The weight of evidence we have received from people who bought their properties and feel they have been wrongly advised or misled is overwhelming.
"It is simply not enough to deal only with future leasehold sales. Families sold inappropriate leases with unfair conditions urgently need help from the Government."
Sebastian O’Kelly, from campaign group Leasehold Knowledge Partnership, said: "This report amounts to a demolition of the leasehold system. It is devastating about how developers have taken their customers – and us, the wider taxpayers – for a ride by squirrelling in an investment asset in the homes of ordinary families.
"It is clear MPs think developer-recommended solicitors have been little more than stooges – dumping their supposed clients in onerous lease terms. Some – the doubling of ground rents – have made these properties unsellable.’
And last night Housing Secretary James Brokenshire said: "I have repeatedly made clear my ambition to end those exploitative and unfair arrangements that have no place in a modern housing market.
"That’s why I’ve announced plans to fundamentally reform the leasehold system. I have called on the Competition Markets Authority to investigate alleged abuses and market failure as a matter of urgency and have been clear that I will consider further action, including legislation, if necessary."
Jo greeted the committee's report and wants to see the fat cat property moguls held to account for putting so much stress and financial misery onto unsuspecting families who simply wanted to get on the property ladder.
She said: "I think it’s a damning indictment of leasehold scandal in England and Wales, it’s time for action from the government. It requires a proper investigation. We will continue to campaign for it."
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