Plight of leaseholders sparks shake-up call from MPs

Bodies piled up in ‘stampede’

THE property leasehold system has left families trapped in their homes and unable to sell as banks refuse to offer mortgages to would-be buyers due to short leases or high ground rents, according to a committee of MPs.

Leaseholders in new-builds have also been treated as a source of steady profit, with the balance of power weighted too heavily against them, the Housing, Communities and Local Government Committee said.

The Competition and Markets Authority should probe mis-selling claims and make recommendations for any appropriate compensation, according to the committee.

Developers have denied that sales teams deliberately misled leaseholders with partial sales information and false promises of purchasing their freeholds at an agreed price.

The committee’s report said: “It is clear that many of the leaseholders we heard from were not aware of the differences between freehold and leasehold at the point of purchase. In particular the additional obligations and costs that come with a leasehold property.”

Committee chairman Clive Betts said: “In the worst cases, people have been left trapped in unsellable and unmortgageable homes, needing permission or having to pay high fees for even the most minor of cosmetic changes.”

Existing ground rents should be limited to 0.1% of the present value of a property, up to a maximum £250 per year, it said. There were 4.2 million leaseholds in England in 2015-16.