New House Builder Scandal video

Is another possible scandal brewing in the property world, asks property expert Alex Goldstein. Developers like Taylor Wimpey, Redrow and Bellway are accused of misselling new-build homes. Buyers have bought these homes as leaseholds, with the promise of being able to buy the freehold after two years. However, unbeknownst to some of them, freeholds have been sold on to private investors before the two years are up. Is this canny business, or have buyers been misled? Listen to what Alex says on this possible new home builder scandal and make up your own mind.

New House Builder Scandal

Full transcript below:

Alex: Is there another possible scandal brewing in the property world? We are still feeling the effects of the banking and mortgage crisis from 2008, when banks were accused of mis-selling mortgages to people who couldn’t afford them and what do you know the bottom fell out of the property market. As a result, the pendulum has actually swung the other way now with banks being ultra-cautious about mortgage lending, making you jump through hoops just to prove that you can actually afford the mortgage you’re applying for. Now as it happens another scandal is now brewing in the property sector. Some big developers like Taylor Wimpey, Redrow and Bellway are all being accused of mis-selling new-build homes. Buyers have bought these homes as leaseholds with the promise of being able to buy the freehold after two years. Usually at the end of a lease, ownership of the property reverts back to the freeholder, however most people apply to extend the lease many years before it runs out. Until recently most houses were sold as freehold properties, however some of these developers have started selling the new build properties as leasehold then selling the freehold on to investors. Buyers are complaining that they were misled about the opportunity to buy the freehold after two years as unbeknown to them the free hold was sold on to private investors before the two years were up. The homeowners claim that the investors who now own their freeholds are only interested in making profits as they’ve now been subjected to ground rent hikes, additional charges, clauses and restrictions and as they don’t own the freehold their homes are then much more difficult to sell on and they feel trapped by the situation. Now let’s be absolutely clear, on the face of it the developers haven’t actually done anything illegal by selling the freehold on, however the homeowners claimed that their behaviour has been unethical, especially, and here is the key, as many of the buyers used conveyancing solicitors recommended by the developers, who they say failed to draw their attention to the potential for the freehold to be sold on early. This story is bound to get bigger so watch this space. The lesson here is if you’re thinking of buying any property is to make sure you find a very good, independent conveyancing solicitor who will highlight all the pros and cons so that you can make an informed decision and not fall prey to clauses that might come back to bite you later.