The plight of leasehold new build home owners has been well documented and earlier this year the government moved to ban such arrangements going forward.
But if anything, this episode highlighted the conflicts in the home-buying chain that means a customer’s welfare is not always at the heart of the process – even though it should be.
The number of leasehold houses in England is significantly higher than previously estimated, according to the Department for Communities and Local Government. It estimated in September that there were 1.4 million leasehold houses in England in 2015-16, compared with the previous estimate of 1.2 million in 2014-15, following a change in methodology to include socially rented properties.
For those trapped in leasehold houses, there is a long road to travel. The government has said it will consider what it can do to help the hundreds of thousands of existing leaseholders who face “onerous” annual payments.
While some lenders have stepped back from the market, finger pointing has already begun. But regardless of where the blame for this episode lies, the entire development in new build highlights a paradox. It’s unlikely that in any other walk of life you would buy or undertake such a large financial commitment with unknown or very onerous foreseeable liability.
The question is what causes people to throw caution to the wind or at least ignore their better instincts. Home buying is for most people an emotive business and combined with the inexperience of first-time buying, it’s easy to see how many can end up on the wrong side of a bad deal.
Notwithstanding all the advice out there, or perhaps in ignorance of this counsel, first-time buyers do exactly this every day of the week. While many are correctly advised of these facts by their conveyancer it seems clear the lack of supply again has enticed people to sacrifice the mid-term financial downside for the immediate ability to get a house.
A lack of supply has once again led to consumer detriment, which is why it is so important we endeavour to address this national housing crisis. By re-adjusting the odds in favour of buyers, we can mitigate their purchase risks.
Source: Mortgage Finance Gazette