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Rip-off lease reforms 'don't go far enough'

By Sally Lockwood, North of England Correspondent
When people buy their own homes they believe they will own their house - but for many leasehold homeowners, the true owner of their home is a faceless company which can sell on their stake without their knowledge or consent. 
Jo Derbyshire bought her home near Bolton, Greater Manchester, eight years ago. She was aware she was buying a leasehold and knew the ground rent of €300 year would double every 10 years.The mother-of-two planned to buy the freehold, priced at €5,000, as soon as she had the money. But a year later the property developer sold it to an offshore investment company which repriced it at €50,000.She says: "It's a huge amount of stress and worry and I don't really know if I'm a homeowner anymore."When I first bought this house with the leasehold, my understanding was that I owned the house but I didn't own the land. Whereas I've found out that legally I'm effectively just a tenant and I'm paying a huge mortgage for the privilege of having the right to live in this property for the terms of the lease but I don't actually feel like I own it."
Rip-off lease reforms 'don't go far enough'

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Ms Derbyshire is now stuck with a doubling ground rent which will cost almost €10,000 a year after 50 years of ownership. This sort of practice has been labelled the PPI of the housing industry.While Scotland has abolished leaseholds, there are more than 4 million people like Ms Derbyshire in England, trapped in lease agreements and worried about their home ownership. Around 100,000 homebuyers are thought to be in contracts with spiralling ground rents, paying around €4bn in service charges.The Government says it is "unacceptable for homebuyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms".
And the Ministry of Housing, Communities and Local Government has announced new measures "to cut out these unfair and abusive practices".
Rip-off lease reforms 'don't go far enough'

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Among the Government's new proposals is a ban on the sale of new properties as leaseholds, but that doesn't help the thousands of people trapped in existing rip-off leases like Ms Derbyshire. And many are calling on the Government to do more, sooner.Sebastian O'Kelly of the Leasehold Knowledge Partnership says: "My appeal is to the MPs on the Communities Select Committee to call in these housebuilders, the chief executives who are on ridiculous remuneration packages, one getting a bonus of €120m for example, and call in the chief executives of the ground rent funds."So far as we can identify them of course, the ones based offshore might be a bit more tricky, but call them in and give them the Phillip Green treatment. These people hold the destiny of millions of people's lives in their hands and they've seriously disadvantaged them with these rip-off leases."
Rip-off lease reforms 'don't go far enough'

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For Ms Derbyshire she has little option but to stay in the house she's bought, feeling like a tenant, campaigning for change.
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"It's a real David and Goliath fight where we've got all these developers who are making, let's face it, obscene profits from building houses and selling freeholds against us hardworking families and we're trying as hard as we can to make change happen," she says.The Government's leasehold reforms are expected to come into force in 2019.
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