Leasehold CMA action - Wallace Estate Ltd

SteeleyScott

Hi all,

I noticed there have been some recent changes forcing freeholders to amend and ease some terms in their contracts,  :-  CMA action frees leaseholders from costly contract terms - GOV.UK (www.gov.uk

This is particularly important to me as i've been struggling to sell a property for the past few months due to a ground rent that annually exceeded the £250. To reduce this, I wanted to do a deed of variation with the freeholder which is Wallace Estate Agents, and managed by SIMARC on their behalf. But so far have failed to get a reply.

Im wondering in light of the changes we're starting to see whether i'd be now throwing money away by trying to do a deed of variation or enfranchisement? I was only doing this to help the property sell. If they're hand is forced to amend terms which makes it sellable, I suppose it'd be silly for me to pay for this.

What I don't know however is whether they've already been forced, have yet to be approached, or will be approached at all as their name isn't mentioned in the above article.

Has anyone got a leasehold with Wallace Estates and can inform on their experience / current standing of the situation with them?

thanks so much

S

K_S

@steeleyscott It'll depend on the exact ground rent clauses in the lease but generally speaking, there are lenders who will accept an indemnity policy for leases where the ground rent exceeds £250 (£1,000 in London) or will exceed that amount during the term of the mortgage.

But if you have had more than one buyer fall through with different lenders, then it could be down to the specifics.

This thread might explain this a bit further https://forums.moneysavingexpert.com/discussion/6323274/buyer-already-has-mortgage-offer-worried-about-ground-rent

With regard to the CMA action, it looks like as of now it's only for some leasehold properties with doubling rent clauses originally sold by Taylor Wimpey, Barratt and/or currently having the freeholders Abacus Land and Adriatic Land.

So at least at the moment, unless your property was built by Taylor Wimpey or Barratt, I doubt it applies to your case. 

eddddy

Did you buy your property from Wallace Estates? I doubt you did, in which case, it's nothing to do with them.

Assuming you bought your property from the developer, it's a matter of whether your contract with the developer had "unfair terms" - as defined in consumer protection legislation.

The suggestion in the article you link to is that developers, including Taylor Wimpey, used unfair contract terms when selling their properties. (But it seems it hasn't been proven in court.)

If you didn't buy from the developer - i.e. you bought the property 'second-hand' from a private individual - they are not bound by consumer protection legislation. So in theory, you're less likely to have any recourse - but perhaps the CMA expects developers to address 'second-hand' properties as well.

SteeleyScott

thanks K_S - Yes i've read it already.

The buyer has had 2 lenders reject to give a mortgage on the property already. The conversation didn't get a chance to go so far as accepting or even discussing the option of an indemnity policy, simply that when the property was valued each time, the feedback the buyer constantly got back each time was Mortgage Rejected, Reason: Ground rent. 

From doing the research back then I realised its due to the figure being north of £250 and resulting in a short term assured agreement which I can fully understand why a lender wouldnt want to do this. Though as said above I didn't see how we could even have a conversation about imdemnity policies when the mortgage is being rejected at such an early stage....  The lenders from memory were TSB/NationWide  who In my experience have usually been more relaxed than some of the others.

So my next port of call was to either purchase the freehold or deed of variation with a view of the rent changing to be sub £250 per annum. But as said above ive not had a reply.

But in the article i read and linked above it did make me wonder whether I should even bother pursuing this.... its clearly an issue thats blocking alot of property sales so if freeholders are being forced to make their terms more agreeable for mortgage lenders then whats the point in me paying money for deed of vari or leasehold purchase?

Thats why I want to know if anyone knows that the current situation is with this? and does anyone know whether Wallace Estates have already been approached in regards to this yet or not?

SteeleyScott

eddddy said:

Did you buy your property from Wallace Estates? I doubt you did, in which case, it's nothing to do with them.

I did not, I bought it from the previous residents. Though the section in the article about rolling back ground rents to what they were at the time of purchase piqued my interest. As in my case, the original developer was Barratt Homes, though the freeholder is now Wallace Estates... so I presume the entire development of leaseholds was sold by Barratt to Wallace at some point. Which did make me wonder whether the CMA would address 2nd hand properties and the groundrents of those that have made the properties difficult to get a mortgage on, the wording of it made me think it was including 2nd hand too, though that may well be wishful.

My understanding is that this is causing alot of issues in sale of properties more in the North of the country. Unmortgageable properties meaning a huge reduction in stamp duty. So wouldv'e hoped they're trying to alleviate that as much as possible, first hand, second hand, whatever hand. 

eddddy

SteeleyScott said:

I did not, I bought it from the previous residents. Though the section in the article about rolling back ground rents to what they were at the time of purchase piqued my interest. As in my case, the original developer was Barratt Homes, though the freeholder is now Wallace Estates... so I presume the entire development of leaseholds was sold by Barratt to Wallace at some point. Which did make me wonder whether the CMA would address 2nd hand properties and the groundrents of those that have made the properties difficult to get a mortgage on, the wording of it made me think it was including 2nd hand too, though that may well be wishful.

My understanding is that this is causing alot of issues in sale of properties more in the North of the country. Unmortgageable properties meaning a huge reduction in stamp duty. So wouldv'e hoped they're trying to alleviate that as much as possible, first hand, second hand, whatever hand. 

It's a tricky question - changing the leases of 'second-hand owners' could result in huge unfairness to some 'first-hand owners'.


There may be 'first-hand owners' who've had to sell their properties cheaply to cash-buyers, because they're unmortgageable due to doubling ground rents. (Maybe the 'first-hand owners had to take a £50k or more hit.)

If the leases are now changed for the 'second-hand owners' - the 'first-hand owners' have still lost their £50k. and the 'second- hand' owners get an undeserved windfall, because the houses are now mortgageable and worth a lot more. 

 

SteeleyScott

https://www.leaseholdknowledge.com/reverse-ferret-taylor-wimpey-now-agrees-to-pay-out-to-re-sale-buyers-of-its-rip-off-ground-rent-leasehold-properties/?fbclid=IwAR2VcRWFT0m9dKz-bSWnJA5vWqmw2gvdLvHQsuzQhGA5jTEWw0SLDJGWz6g

Did any of you see this?