The next property scandal

Northlakes

We all leave the complexities of house purchase conveyancing to a solicitor.
However read this and start worrying!
https://www.theguardian.com/money/2016/nov/19/new-build-ground-rent-scandal-legal-battles-solicitors-negligence

Davesnave

Northlakes wrote: »

We all leave the complexities of house purchase conveyancing to a solicitor.

Your catch-all opening line gives the wrong impression for a forum such as this.

Along with millions of others, I read my title documentation and I check that what's on the plan tallies with the situation on the ground. It's not right to start by assuming it's all too complex. While it's hard, and sometimes impossible to be sure about without clarification, this is exactly what face-to-face meetings with the solicitor should be there for.

Also, there are matters which only an intending purchaser can query at the conveyancing stage, simply because the solicitor doesn't usually have first hand knowledge of the site. Things alter by informal agreement or negligence between sales and these may cause problems if not identified and addressed.

Having said that, the article you quote is very pertinent and problems arising from escalating leasehold rents have featured here recently.

csgohan4

maybe buyer beware and apply due diligence.


You still read the registry title and any queries inform your conveyancer if not already done so. That's what your paying them for.

HouseBuyer77

I think part of the issue here is housebuilders encouraging people to use their recommended solicitors to speed things up.

As the contracts etc will be broadly the same between properties, presumably one of the time saving measures employed is having a proper solicitor review it all once and then give some paralegals a pack with the relevant details. It's at this point that details about escalating ground rent get lost (or possibly intentionally kept out as the solicitors having decided it looks fine, no doubt not wanting to kick up a fuss less they loose lucrative contracts from developer firms).

May be legislation that prevents such cozy developer / EA/ solicitor agreements is what's needed here.

csgohan4

HouseBuyer77 wrote: »

I think part of the issue here is housebuilders encouraging people to use their recommended solicitors to speed things up.

As the contracts etc will be broadly the same between properties, presumably one of the time saving measures employed is having a proper solicitor review it all once and then give some paralegals a pack with the relevant details. It's at this point that details about escalating ground rent get lost (or possibly intentionally kept out as the solicitors having decided it looks fine, no doubt not wanting to kick up a fuss less they loose lucrative contracts from developer firms).

May be legislation that prevents such cozy developer / EA/ solicitor agreements is what's needed here.

That's why people are advised on here NEVER use EA services, they only have their pockets in mind not your interests

AnotherJoe

Northlakes wrote: »

We all leave the complexities of house purchase conveyancing to a solicitor.
However read this and start worrying!
https://www.theguardian.com/money/2016/nov/19/new-build-ground-rent-scandal-legal-battles-solicitors-negligence

There was a similar story in the Telegraph yesterday about this as well, so perhaps a groundswell is building. There is also something similar and just as hidden I've seen discussed in here recently , where people buy new build houses and they are either similar leasehold, or they are freehold but have a maintenance contract for things like clipping grass verges and the like, with no controls whatsoever on the costs of these, which can therefore also rise Ina similar manner to the ground rents in the story you quoted.

The other issue not mentioned in the story is how this can be resolved because getting compensation from an solicitor does not in any way alter the basic issue that over a reasonable timeframe the ground rents become ridiculous. Not to mention the compensation paid by the solicitors ultimately increases the costs of house buying for everyone.

The only hope is perhaps what's happened to transferring final benefit pensions, its so liable to pay out compensation that few will touch it, they won't even advise against as that's till advice, they just won't deal with them.

Perhaps solicitors will not only be advising their clients not to purchase properties with inbuilt geometric rises, they will refuse to deal with them since inevitably if they recommend against and the purchaser goes ahead against that advice , they will probably still get compensation at some point down the line anyway

csgohan4

AnotherJoe wrote: »

There was a similar story in the Telegraph yesterday about this as well, so perhaps a groundswell is building. There is also something similar and just as hidden I've seen discussed in here recently , where people buy new build houses and they are either similar leasehold, or they are freehold but have a maintenance contract for things like clipping grass verges and the like, with no controls whatsoever on the costs of these, which can therefore also rise Ina similar manner to the ground rents in the story you quoted.

The other issue not mentioned in the story is how this can be resolved because getting compensation from an solicitor does not in any way alter the basic issue that over a reasonable timeframe the ground rents become ridiculous. Not to mention the compensation paid by the solicitors ultimately increases the costs of house buying for everyone.

The only hope is perhaps what's happened to transferring final benefit pensions, its so liable to pay out compensation that few will touch it, they won't even advise against as that's till advice, they just won't deal with them.

Perhaps solicitors will not only be advising their clients not to purchase properties with inbuilt geometric rises, they will refuse to deal with them since inevitably if they recommend against and the purchaser goes ahead against that advice , they will probably still get compensation at some point down the line anyway

Ultimately if the demand for these type of properties wane, the developers will think twice before putting in these clauses

moneyistooshorttomention

I think it would be a good idea if people put up the names of solicitor firms/conveyancing firms that have pulled that stunt on them - ie "overlooking" or overlooking to tell them about any such clauses.

That way a database could be compiled of these dud firms (the solicitor/conveyancer ones that is) and buyers would know to be wary of using them.

It's not just firms that have been recommended by an "interested party" that will pull that stunt. Other firms will do it too - through sheer incompetence.

marksoton

It all comes down to the same thing.

READ your own lease terms.
DON'T use EA/developer in house services

I suspect in many new build cases the purchaser is so excited/blinded by the shiny new home they're more interested in the extras list than the purchasing details.....

moneyistooshorttomention

I don't think people are going to do that by and large mark....

They might if it's a flat (because it's the norm for them to be leasehold) - but have it go straight past their nose with a house (because it's the norm for them to be freehold). Anyway - it is what we all pay solicitors for (ie to read the paperwork for us and alert us to anything we need to know). Otherwise we might as well save ourselves the money and buy a "how to buy a house" book and do the work ourselves.

AnotherJoe

marksoton wrote: »

It all comes down to the same thing.

READ your own lease terms.
DON'T use EA/developer in house services

I suspect in many new build cases the purchaser is so excited/blinded by the shiny new home they're more interested in the extras list than the purchasing details.....

Unfortunately I'm sure you're correct, most new build buyers will probably spend hours poring over the list of extras and agonising over whether vanilla or cornflower white is worth the extra £250 but spend no time at all, literally none, looking at the contract. And to a certain extent you can understand that, after all they are paying a professional hundreds of pounds to do that for them, however misguided that opinion may be.