Leasehold buyers express confusion over freehold ownership

Leasehold buyers have come forward to voice their confusion over who their freehold really belongs to.

Having purchased properties from various developers, many are actually unaware as to who owns the freehold land that their home stands on. For certain leasehold owners, this confusion is in addition to the onerous ground rent clauses, resulting in their rent doubling event ten years.

This is the unfortunate case for Joanne and Mark Derbyshire, a couple who were among those who contacted Guardian Money, having purchased a home from Taylor Wimpey in 2010. The only way of escaping the escalating ground rent was to buy the freehold from the developer, but the couple discovered that Taylor Wimpey had been sold in 2012 to a third-party company known as Adriatic Land 2. Earlier this year, the freehold was again transferred –  this time to Adriatic Land 1.

In addition to the freehold moving between different companies, the lack of consistency has been seen far closer to home. Neighbours of the Darbyshire’s have claimed that their freehold had been sold to Abacus Land Ltd, a completely different company which only increases the level of confusion among residents.

Expressing the extent of their uncertainty, the couple stated: “You have no idea who owns the land under your feet. Your dream house is traded from one offshore company to another for tax reasons, or who knows what else?”

As well as confusion, the transfer of freehold between companies has also impacted the cost of making changes to properties. Experiencing this first hand was one individual from Ellesmere Port,  who found the cost of obtaining consent for a small extension to have leapt after her freehold had been bought by another company. Instead of the initial £300 sum that developer Bellway had requested, the cost of consent rose to £2,440 when Adriatic Land 4 became the freehold owners. This is completely separate from planning permission which must be obtained from the local authority.

Commenting on the ordeal, the buyer stated: “The most disgusting thing is the developers like Bellway think they are doing nothing wrong selling the freeholds on and state that our T&Cs don’t change. Yes, the lease terms don’t change, but for a permission fee to increase from £300 to £2,440 in a matter of months is disgraceful and it should absolutely be pointed out to new homeowners, up front, that this might happen if they don’t buy the freeholds.”

The substantial difference in prices also applied to the cost of the freehold; whilst Bellway had initially given a figure of £3,750, Adriatic quoted the much larger sum of £13,000. It was eventually acquired for £7,680 following a legal battle.

In a response to the Guardian, Adriatic’s agent HomeGround responded to a number questions put forward, stating:

“Housebuilders periodically sell off large portfolios of freehold properties and they usually do so within a company structure rather than as individual freeholds.

“Buying groups of freeholds in companies is an easier and more efficient way of buying these property assets. It does not alter the ability of leaseholders to buy their freeholds. When there is a change of name of the company, or a change of landlord within the same group, the leaseholder is informed as is required under the legislation.

“The HomeGround team is made up of law graduates who are all overseen by a fully qualified property solicitor. The cost of the work they carry out compares very favourably with any fees charged by any firm of solicitors, even those outside of London. It is easily forgotten that these are often variations to leases and are property transactions. These must be done in accordance with the legislation and need to be carefully and properly considered.

“HomeGround’s fees are also regularly benchmarked against other companies providing similar services. In addition to ensuring the fees are transparent, reasonable and justifiable, HomeGround’s aim is to be in the lower quartile of fees charged by market peers.”

An MP for one of the affected areas is unhappy with the lack of transparency with residential leasehold ownership in this constituency. Justin Madders, the MP for Ellesmere Port & Neston stated that he planned to gain some clarity on leasehold practices, given that it is “far from clear whether all the ultimate beneficiaries are UK taxpayers, nor why there are so many names that keep cropping up.”

Today's Conveyancer