Hundreds of Homeowners Taking Legal Action in Leasehold Scandal

17th May 2019

Professional Negligence Solicitors representing several hundred people who are trapped in onerous leasehold agreements on new build properties have today welcomed The Competition and Markets Authority’s commitment to the investigation of potential mis-selling.

The move comes amidst concerns that hundreds of homeowners were not fully aware of the terms of the leaseholds that they were agreeing to.

Robert Godfrey, Partner and Head of Professional Negligence at national law firm Simpson Millar, said, “We represent several hundred people who feel they are now locked into leasehold agreements that make selling their homes tricky, or cost a fortune in ground rent payments.

“A lease is a very complex document which needs to be carefully and simply explained to clients so they can understand the issues which can arise and make an informed decision in continuing with the property purchase.”

The professional negligence cases being investigated by Simpson Millar involves legal action against conveyancers who failed to fully inform clients of the restrictions and rising costs associated with the leasehold agreements.

Robert continued, “Many of our clients feel they did not have the full extent of a lease explained to them by their conveyancers.

“We welcome the investigation, but urge The Competition and Markets Authority’s (CMA) to conduct the inquiry as soon as possible, and to take into consideration not only the financial, but also the emotional impact that this has had on victims.”

CMA, in a letter to the Housing, Communities and Local Government Committee, have said that they have acknowledged concerns raised by the committee about leasehold mis-selling.

The Housing, Communities and Local Government Committee has previously said that people have been left trapped in houses that have become unsellable and unmortgageable as ground rents increase, and that it is also concerned that some leaseholds are being sold on to third parties, who then offer to sell it to the leaseholders at a vastly increased cost.

Robert added, “We have been receiving calls from people who have bought properties only to subsequently discover they have a leasehold property with onerous ground rent clauses which start off at a high annual amount and are forecast to double every 10 years, and the number of enquiries is growing by the day.

“This issue can clearly impact the value of the property and the ability to sell it on. Indeed, in some cases, our clients have only become aware of the issue when they, or a neighbour, have tried to sell their property and the sales have fallen through.

Buying a house is the biggest single investment people make. To find out it may be a financial trap is distressing. People should not be placed in this position.

“Those now looking to pursue legal action have instructed our Professional Negligence Solicitors to investigate whether there is a claim for professional negligence against the conveyancing solicitors.

“With Brexit still on the horizon the property market is uncertain enough, and this issue is putting many of our clients who are hoping to move up or along the housing ladder, at a significant disadvantage.

“It’s already apparent that more could, and should, have been done to educate people on the long term ramifications, and to take action to knock such ludicrous clauses on the head in the first place.”

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