Misrepresentation. Claim back costs?

Jansenrovers

Hi all, I'm after some advice in relation to a possible misrepresentation claim.

We live in a house owned by a housing association under a rent to buy scheme (we pay lower than market rates to enable us to save up enough deposit to buy the property). Early this year, we started to make enquiries about the property, including whether it was freehold or leasehold. We were informed it was freehold, and on the back of this and other responses to our queries, we agreed to buy the house at the valuation price and instructed solicitors, etc.

6 months down the line, as the HA is pushing for us to exchange, it suddenly comes out that the property is leasehold (bit frustrated our solicitor didn't notice this before us, but that's another story!). We immediately query this, as we still had the correspondence confirming it was freehold. We were then told that the initial correspondence was incorrect and the property is leasehold.

We pull out of the purchase as we don't want to own a leasehold property (it was a new build when we moved in, so for us there is no reason why a leasehold is required). I contacted the HA to ask them to reimburse us for the costs we have incurred to date, as we would not have incurred them had we been given the correct information upfront. I stated that I believed that the property had been misrepresented to us.

However the HA are refusing to reimburse us. They are arguing that because we have been living there for a number of years, we have benefitted from lower rent. I acknowledge this, but that was the scheme we were on, and we were trying to buy the house, it was only because they changed the goalposts (some of the other properties on the estate pare freehold) that we had to pull out.

I'd appreciate any advice/thoughts on the matter. The stubborn part of me feels I should pursue it, as I feel they are responsible for it.

Thanks

Cakeguts

Find out what happens to the leasehold when you buy the property. Sometimes they are leasehold until you buy and then they are sold to you as freehold. It is to do with the fact that you are paying rent on the property.

Jansenrovers

Unfortunately not. Apparently the leasehold is owned by a third party (the council), and they "aren't open to selling any leaseholds at the present time".

Jansenrovers

Still_Dave wrote: »

What law would you be planning to use to force someone to give you money who doesn’t want to? Have they breached a contract with you, for example?

Where do you get the idea from that misrepresentation gives you the right to compensation?

The Misrepresentation Act 1967. Although, as I'm not an expert, that's why I'm asking for advice!

davidmcn

What are the terms of the leasehold? If it's an ultra long lease with minimal rent, then the market value is going to be pretty much the same as freehold, all other things being equal.

AdrianC

The vendor misinformed the EA.
Your solicitor did his job, and ascertained the accurate position.
As a result of that, you decided to walk away from the purchase prior to contracts being exchanged.

So what contractual breach has caused you an enforceable loss?

You have no contract with the EA, and none with the vendor. Your only contract is with the solicitor. Perhaps they should have ascertained the situation earlier - but, equally, a quick look on the LR website would have told you, too. So did you also fail to mitigate your losses, given that the tenure of the property was so important to you?

Jansenrovers

AdrianC wrote: »

The vendor misinformed the EA.
Your solicitor did his job, and ascertained the accurate position.
As a result of that, you decided to walk away from the purchase prior to contracts being exchanged.

So what contractual breach has caused you an enforceable loss?

You have no contract with the EA, and none with the vendor. Your only contract is with the solicitor. Perhaps they should have ascertained the situation earlier - but, equally, a quick look on the LR website would have told you, too. So did you also fail to mitigate your losses, given that the tenure of the property was so important to you?

There isn't an EA, we are dealing directly with the vendor (the housing association).

How could we have mitigated our losses more? We asked the pertinent question before we incurred any costs.

AdrianC

Jansenrovers wrote: »

There isn't an EA, we are dealing directly with the vendor (the housing association).

Sorry, my bad. An HA property under RtB is almost certain to be sold leasehold.

How could we have mitigated our losses more? We asked the pertinent question before we incurred any costs.

https://www.gov.uk/get-information-about-property-and-land/search-the-register

diggingdude

What position are you in once you factor in the reduced rent

babyblade41

3.00 would have given you the answer even before you started the buying process, so realistically it is your due diligence which was lacking.

As above you haven't entered into contract so zero compensation

cattie

TBH I really don't understand why you pulled out of the purchase due to finding the house was leasehold? You chose not to continue with the buying process, you didn't have to & it's unreasonable to expect any kind of reimbursment for costs. You've benefited from a lower than market rent over the years, so you've saved money from that.

You would have been given the chance to buy the freehold interest at some future point had you only been patient.

There is nothing wrong in owning a leasehold property, hundreds of thousands of owned properties are held on a leasehold basis. I've owned both leasehold & freehold & the biggest gains I've made when selling have actually been the leasehold properties surprisingly enough.