New homeowner scandal hits freehold properties

graham-ireland.jpg

Home buyers are being warned of a fresh scam in which rogue developers are replacing extortionate leasehold charges with equally onerous restrictions on new build freehold properties.

The red alert comes from Graham Ireland at Lancashire law firm WHN Solicitors, who believes freehold laws are being abused by developers to replace revenue streams that dried up earlier this year.

This followed the government’s abolition of leasehold ownership for new-build homes to prevent developers from unfairly boosting profits by forcing up ground rent.

As a result, all new-build houses must now be sold as freehold. However, unscrupulous developers are now focusing their profiteering activities on people who have bought a new build with a freehold – in part because they enjoy much less legal protection than leaseholders.

Graham, head of conveyancing at WHN Solicitors, said: “Previously, the main difference between buying a new house leasehold and freehold was that if you owned it leasehold you needed to pay the ground rent, and if you owned the freehold you did not.

“It is more difficult to enforce freehold covenants than leasehold covenants, so another huge part of this scandal is that some developers are now putting the same covenants that were originally in their leasehold contracts into freehold contracts too.

“The upshot is that people are buying freehold and then, further down the line, finding they must get permission from the developer, or management company to extend their property, or for other home improvements. Also, service charges for green spaces and car parking –common on new housing schemes – can be arbitrary and unreasonable, potentially costing homeowners thousands of pounds.”

There are additional issues when people come to sell their properties, because buyers understandably want to see what service or maintenance charges have been paid, and what they’ll have to pay in the future.

Graham explained: “Some management companies are asking for fees of £300 just to supply a basic information pack that provides contractual details to potential buyers. This effectively gives sellers no choice but to pay this fee themselves if they want to sell their house.”

New home buyers are being advised by Graham to make sure their conveyancing solicitors check all the covenants that come with a freehold house before pressing ahead with any purchase. These covenants can be found in the document which transfers the property to the buyer on completion.

Graham said: “People can then try to negotiate for some of these covenants to be taken out of the transfer document through their solicitor. Th problem here is that the developers may not agree.”

A cross-party group of 30 MPs had tabled a bill to address the issues, but the measure fell by the wayside when Parliament was dissolved for the general election in December.

Previously, a parliamentary briefing paper that was published in August announced plans to reform freehold laws within a year. However, Graham is not optimistic about the prospects for speedy action.

He added: “It is reasonable to expect that people buying new freehold properties should have the same protection against exorbitant charges as people buying new leasehold properties. The problem is that legislative change is a slow process at the best of times, and reforming freehold contracts is unlikely to be at the top of the agenda when MPs return to parliament after the election.”

Enjoyed this? Read more from Woodcocks Haworth & Nuttall Solicitors

Latest news

1

Northstone secures full planning permission for 50 new homes in Edenfield Edenfield housing development

Northstone secures full planning permission for 50 new homes in Edenfield

29 Apr 2025

2

Ring Stones Maintenance and Construction celebrates completion of Dovestone Gardens Dovestone Gardens launch

Ring Stones Maintenance and Construction celebrates completion of Dovestone Gardens

29 Apr 2025

3

PHX Training welcomes new business leader to drive learner success Louise Kirby

PHX Training welcomes new business leader to drive learner success

29 Apr 2025

4

Lidl to invest half a billion pounds in its expansion as it eyes sites in Lancashire Lidl

Lidl to invest half a billion pounds in its expansion as it eyes sites in Lancashire

29 Apr 2025

5

Inspired board reject takeover bid from major shareholder inspired-500x500.png

Inspired board reject takeover bid from major shareholder

29 Apr 2025

Pc Prestonmacan Gif980x120 March
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200px 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

Planning for the future + navigating Inheritance Tax changes
Planning for the future + navigating Inheritance Tax changes for website.png.png
LBV Hub Seminars
01 May 2025 - 01 May 2025

Planning for the future + navigating Inheritance Tax changes

Stanley House Hotel, Mellor, Blackburn, BB2 7NP, Blackburn, BB2 7NP

08:00 - 10:30

Advantage: AI – A Workshop for Business Leaders – May 2
EV-land-2025-05B.png.png
LBV Hub Seminars
02 May 2025 - 02 May 2025

Advantage: AI – A Workshop for Business Leaders – May 2

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

A night at the races
1.png.png
LBV Hub Dinners / Balls
02 May 2025 - 02 May 2025

A night at the races

Morecambe FC, Morecambe, LA4 4TB

19:00 - 23:59

Research and Knowledge Exchange Showcase
13421_research_knowledge_exchange_2025_600x300.jpg.jpg
LBV Hub Awards
07 May 2025 - 08 May 2025

Research and Knowledge Exchange Showcase

University of Central Lancashire , Preston, PR1 2HE

09:00 - 17:00

Innovating business solutions through PhD Partnerships
30478 Skills Bootcamp open day setting.jpg.jpg
LBV Hub Networking
07 May 2025 - 07 May 2025

Innovating business solutions through PhD Partnerships

University of Central Lancashire, Preston , PR1 2HE

14:30 - 15:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more Lbv121 Online Graphic
Subscribe now

Weekly news bulletin