Fat cats who got the cream by flogging your freehold
AT A recent select committee, housing developers accepted that leasehold arrangements offered no benefit to house owners.
Taylor Wimpey was the biggest seller of toxic leasehold contracts. The firm, which reported record profits in 2016, partly thanks to the taxpayer-funded Help To Buy scheme, started using the leases for new houses in 2007. It sold around 10,000 with ground rents that doubled every ten years.
Jennie Daly, group operations director for Taylor Wimpey, was asked by the committee of MPs if householders were getting ‘anything’ in return for paying the developer ground rent. She replied: ‘We believe that they are unnecessary for leasehold houses in the majority of circumstances.’
Major developer Bellway Homes has built around 10,000 homes per year in the UK. Boss Jason Honeyman said his firm sold around 4,000 homes on leases over a five-to-six year period. MP Bob Blackman asked why customers were not offered the chance to buy the freeholds before an investment firm. He said: ‘You are selling the freehold out from under them without their knowledge.’ Mr Honeyman replied: ‘Yes, we are.’
Richard Silva, an executive director for Long Harbour, which has assets totalling £1.3 billion, including 160,000 residential freeholds, admitted the company owned 4,165 ‘onerous leases’ — those on which the rent doubles more frequently than 20 years. He said the company was offering those leaseholders the chance to convert to a lease on which the ground rent increases in line with the RPI rate of inflation, currently 3.5 pc. Long Harbour bosses include the half-brother of Samantha Cameron, William Waldorf Astor, 39, as chief executive. He is heir to 17th century Oxfordshire stately pile, Ginge Manor.
Grounds Rent Income Fund holds 17,000 residential leaseholds, 16 pc of which have doubling ground rents. One of the directors, Simon Wombwell, 57, has seen the value of his own freehold home in St Albans increase six times since he bought it. It is now worth more than £1.5 m.
Another residential freehold baron, James Tuttiet, did not appear at the committee. His firm, E&J Estates, has acquired tens of thousands of freeholds from housebuilders including Taylor Wimpey.