Nationwide has £54m stake in leasehold deals

Bosses hit out at rip-off ground rents, but . . .

BRITAIN’S biggest building society is making more than £50m a year from leasehold properties – despite attacking housebuilders who sell them.

Thousands of buyers are being forced to pay exorbitant ground rent fees on these type of homes.

The practice – which has been highlighted in a Mail campaign – sees some families hit with rents that double every decade, making the property almost impossible to sell.

Others have ultra- short leases, while the freeholds are sold onto investors who demand huge fees if occupiers want to buy them back.

Last month, Nationwide became the first major lender to refuse to offer mortgages on properties with ‘onerous’ leasehold terms. It has imposed strict caps on the amount developers can charge, and will stipulate a minimum lease term of 125 years for flats and 250 years for houses.

However, its own staff-pension fund invests in leases itself. The final salary scheme, which closed to new staff in 2007, has a portfolio of ground rents worth £54m.

Nationwide said that none of the property investments made in its pension fund was the type of punitive deals it is clamping down on.

Chief product officer Chris Rhodes yesterday said he hoped its decision would shame others into doing the same. ‘We don’t believe customers truly understood what they were buying,’ he said. ‘ Builders were taking large amounts of value that was hidden from the customers when they were buying. We would hope that the rest of the industry follows us, because it’s in the interests of the home buyers,’ he said.

Nationwide, the UK’s largest building society, reported a 17pc fall in profits to £1.1bn in the year to April 4, blaming the Bank of England’s decision to slash interest rates to a record low of 0.25pc.

This hurts banks and mutuals by forcing them to cut their own rates so it is harder to earn a profit on the money they lend to their customers.

Yesterday chief executive Joe Garner warned that growing inflation which outstripped wage growth was ‘likely to squeeze household budgets’.

‘In the housing market, if the economy slows as we expect, there will be a cooling effect in the form of lower sales and house price growth,’ he said.

Nationwide revealed that gross mortgage lending was up 3pc to £33.7bn, and that a record 795,000 current accounts were opened in the year, up 35pc.

The building society set aside £136m to compensate victims of PPI mis-selling and other banking mistakes.