‘I bought my flat 40 years ago – and was bullied into selling it at the same price’
Leasehold
On a leafy English park sits a Grade II-listed estate full of luxury flats with high-reaching ceilings, spacious living rooms and long sash windows through which countryside light pours in.
But on closer inspection, these flats come with a huge catch in the lease small print – they can only be sold to the freeholder for the price leaseholders paid for them – wiping out any gains on house prices in recent decades.
Residents on this estate, who wish to remain anonymous, say they have been “bullied” and “blackmailed” by the freeholder into giving up their leases and becoming his tenants only to be served with eviction notices.
Many are in their 80s, 90s, and one gentleman is over 100 years old.
Two years ago, the freeholder gave leaseholders an ultimatum – pay around £70,000 more per year in service charges for “essential works”, or sell their flats back to him for the price at which they bought them and become tenants for two years before being evicted.
Some agreed out of fear of such a large bill, and have now been evicted. One professor in his nineties sold his home for the same price he paid for it over 40 years ago.
Others have refused to sell their leases back, and still live in the estate today – much to the freeholder’s dismay, who is allegedly trying to sell the estate to pay multi-million-pound family tax bills.
It has since transpired, according to a letter sent by the freeholder’s lawyer and seen by The Telegraph, that the way he presented “essential works” to residents did not follow the law.
Since 1997, Section 20 of the Landlord & Tenant Act has stated that a landlord – who is also the freeholder in this case – would need to show the tenant three quotes before they can put through a service charge increase of £500 or more.
Not only did the freeholder fail to organise a consultation for leaseholders, he also failed to provide any independent quotes to justify the figures he was demanding.
Upon learning this, Trading Standards told residents it did not have any powers under the Fraud Act 2006 and that they should speak to the police if they think they have been defrauded. Unfortunately, service charge disputes are considered a civil matter.
A son of one of the residents, who has lived there for decades, recalled: “He [the freeholder] said as ‘an act of kindness’ he would waive all these charges if we surrender dad’s lease to him. None of this sounded right, but my suspicions were raised even more when he added that no legal paperwork was required – only a letter from my dad confirming the transfer of ownership.
“This, he told me, would have to be completed in the next five days whilst the offer was open. I know of four long-term elderly residents who were called by the landlord with the same ‘this is a limited time act of kindness’ proposal. Three of the four residents agreed to surrender their leases for fear of losing their life savings.”
When the family declined to accept the offer and asked to see surveyors’ reports, everything went quiet for a while. Until they got an email saying the works may cost triple the original amount quoted, jumping from £500,000 across the estate to £1.5m.
Another offer to give up the lease was attached, but the family said no again. Then they received a letter saying the service charge on the flat was jumping by 100pc.
The family is now challenging the £1.5m figure, and have spent the past year trying to apply for a lease extension.
Another resident, in his eighties, has lived on the estate for four years. He and his wife also challenged the service charges.
He said: “Luckily, we saw through him [the freeholder]. Other renters have been given the heave ho, one is 90, another 84, another 86.
“My wife and I feel like we dodged a bullet, even though we could do without the stress and strain of all of this.
“The landlord has tried to take our garage away, on a separate lease. Luckily, the paperwork he submitted was defective.”
One former resident, who left the estate a few years ago, told The Telegraph they surrendered their lease because it was becoming too expensive to live there – despite putting £20,000 into renovating it.
“We worked out that we could rent a nice apartment on the ground floor with a patio for the same price in Europe.”
Initially, the agent had told them when they bought the lease that the outgoings per month were £1,000, but after three months of living there, they received an £11,000 bill “for extras”. The next year the service charge went up to £1,300 a month, and another “extra” £2,100 bill was incurred not long after that. And so it went on.
The Telegraph approached the freeholder, as well as his lawyer, for comment but both declined to engage with this paper.
‘We’ve seen this again and again’
The Government has said the Leasehold and Freehold Reform Bill, which received royal assent last month, will go some way to helping residents hold their freeholders to account.
It forces freeholders to issue bills in a standardised, scrupulous format, and to belong to a redress scheme so leaseholders can challenge them.
Sebastian O’Kelly, of campaign group the Leasehold Knowledge Partnership, said he has seen homeowners discover horrors in their leases “time and time again”.
He added: “Not one solicitor said properties would be unsellable with a 10-year doubling ground rent clause, and look where that got people. Those solicitors were recommended by the developers – they were just their stooge.
“Some of the worst clauses are introduced when a lease is extended. Employ a lawyer you can actually speak to and trust. They should be looking after your back.
“One lawyer we know found the exit fees on a retirement property were unconscionable and saved their client from buying it. That’s legal advice worth £1,000.”
Exit fees on retirement properties can be as high as 28pc of the purchase price.
Vikki Herbert, partner at law firm Thackray Williams, said she often sees the rule “pay a percentage of the purchase price to the freeholder on a sale” in leases.
Ms Herbert added: “There should not ever be a hidden clause. The lease must be available before you exchange contracts to purchase a property and you should have had the opportunity to read it.
“If that has not happened then something in the conveyancing process has gone wrong. I have read reports of people not having seen their lease until after they have completed, or not even knowing that they have entered into a lease, this is not right and should not be happening.
“A lease is a legal document between a freeholder and a leaseholder and it can contain almost anything both parties agree to.”
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