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Reform leasehold laws that trap homeowners, MP urges

  • 08/11/2017
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Reform leasehold laws that trap homeowners, MP urges
Leasehold laws must be overhauled to protect homeowners who are in effect trapped in their properties by rip-off freeholders and builders, according to an MP.

A new leasehold reform bill is needed so that homeowners can escape unfair agreements linked to their property, Justin Madders, MP for Ellesmere Port and Neston told Parliament this week.

He has urged Parliament to go further than the bill already proposing restrictions on new leasehold arrangements.

The Labour politician said freeholders are demanding “astronomical sums” from leaseholders who wish to buy the property’s freehold, as a Private Members Bill – dubbed the leasehold emancipation billwas presented to the House of Commons.

Madders added that freeholders and builders were treating leaseholders as a “cash cow” with clauses that double ground rent.

The proposals call for the cost of a freehold purchase to be capped at 10 times the annual ground rent payable by the leaseholder and for a compensation scheme for leaseholders who have received misleading advice and information from solicitors and sales agents.

The law should also make a provision so that the legal costs of a freeholder would no longer be pushed on to the leaseholder in leasehold property tribunal cases, according to the bill.


Leaseholders duped into buying homes

The proposal has been welcomed by enfranchisement specialist Leasehold Solutions.

Managing director Louie Burns said: “We very much welcome the policies that Mr Madders advocates in his Private Members Bill, which are all very sensible, progressive reforms to leasehold legislation that would provide a tremendous benefit to leaseholders across the country.

“It is completely unacceptable that so many leaseholders have been duped into purchasing properties which have onerous ground rent clauses attached that increase astronomically, and may even make the property unsellable and worthless in the future.

“Ultimately we believe that the cost of any compensation scheme should be borne by those developers who have pursued such underhand sales tactics in the past.”

The Conveyancing Association has also warned about other abuses of leasehold terms and has called for a major overhaul of the system.

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