Leaseholders with 15-year doubling clauses say housebuilder’s offer will not benefit them
Individuals who bought leasehold properties from Countryside Homes with “doubling” ground rent have reacted with anger to the news they are not to benefit from a rescue package announced by the firm last week.
Last week Countryside announced that customers in properties it sold on four developments where the lease terms specified that annual ground rent payments should double every 10 years would be given the chance to buy back the freeholds or get the lease terms changed.
However, chief executive Ian Sutcliffe told Building that those that had bought properties where the ground rent doubled over longer periods, such as 15 years, would not be offered help because the contracts were not considered onerous.
The news follows growing concern over the practice of selling homes under leasehold contract, which the government has now promised to ban, and which led housebuilder Taylor Wimpey to write off £130m to help affected customers.
Darren Devonport, who bought a leasehold home from Countryside at the Norris Green Village development in 2012 with a 15-year doubling lease, said: “This is properly disheartening. It’s frustrating and upsetting and means we’re still going to incur significant cost.”
While Countryside is understood to be planning to offer freeholds to some customers for between £3,000 and 4,000, Devonport says the current freeholder for his property has asked for £8,500 to buy it back. In addition, while Sutcliffe said the decision not to help those with 15-year doubling leases was taken after consultation with mortgage lenders, Devonport said his mortgage provider had now indicated to him it was “spooked” by the lease terms and wouldn’t lend again.
“This Countryside offer makes the situation worse, it’s rubbing our faces in it,” Devonport said.
Christine Davies, whose daughter bought a leasehold house from Countryside at the Copper Wells development with a 15-year doubling lease, said the firm should offer everyone affected the freehold to their home. “Countryside needs to be able to say it’s addressing this problem because of the campaign about it, but it’s not. It’s all smoke and mirrors. It’s ploy to make it look like it’s doing something,” she said.
Sutcliffe said last week that decision had been taken because the difference between rent doubling every 15 years and one rising in line with inflation was very marginal, and it wasn’t clear that those customers would be worse off. Sutcliffe said: “We’ve been speaking to lenders on this and we won’t leave people hung out to dry.”
This is despite the fact rent doubling every 15 years implies an inflation rate of 4.7%, more than double the bank of England inflation rate target of 2%, and higher than it has been since 1991. While trade body UK Finance said individual “lenders may take different views of what constitutes onerous terms”, mortgage lender Nationwide has publicly stated it will not lend against leases with ground rent doubling every 15 years.
The controversy follows criticisms of Taylor Wimpey’s bail-out plan, which only helps those who bought from Taylor Wimpey directly, and doesn’t give buyers a chance to buy their freeholds. Countryside’s offer of help to its worst affected customers was welcomed by leasehold campaigner Sir Peter Bottomley MP, who told Building last week that Countryside “deserves praise for having gone further than Taylor Wimpey in recognising the problem and trying to unwind it.”