After being approach by a number of concerned residents, and finding that Aberconwy had the highest proportion of new-build leasehold house transactions in Wales in 2016, yesterday, the Welsh Conservative Shadow Cabinet Secretary for Local Government called in the Senedd for the Welsh Government to ban the sale of new-build leasehold houses in Wales.

Janet said:

“That 77% of new build houses sold here in Aberconwy in 2016 were leasehold is a serious concern.

“A number of residents have been exploited. Indeed, people bought property not knowing that they actually had a leasehold, with some then being offered the freehold of the property, not including the land, at the tune of £3,000!

“It is completely unnecessary and unjust for new-build houses to be leasehold, and more so, for buyers to be lumbered with unfair agreements and spiralling ground rents.

“I know the discontent of my constituents, but am equally unsurprised to have found that 57% of leaseholders in England and Wales agreed that they regretted buying a leasehold property.

“It is time that Rebecca Evans AM, Minister for Housing and Regeneration, followed the lead of the Conservative Government in Westminster, by taking measures to ban the sale of new-build leasehold properties, cut down on the abuses of leasehold, and ensure better protection for home-buyers”.

Video

Janet Finch-Saunders AM - Leasehold Contracts in Wales debate - Senedd

Table

Number and percentage of leasehold and freehold property transactions by Assembly Constituency, 2016

Notes

National Leasehold Survey 2016

Tackling unfair practices in the leasehold market

What next for leasehold reform in Wales?

Plenary transcript (available at: http://record.assembly.wales/Plenary/4902) 

Janet Finch-Saunders AM

I'm delighted to support this debate. Land Registry figures show that leaseholds made up 43 per cent of all new-build registrations in England and Wales in 2015, compared to just 22 per cent in 1996. We know that Wales has around 200,000 leasehold homes, with specific hotspots where there are significant levels of new builds being sold under leasehold contracts. Indeed, in 2016, in my own constituency of Aberconwy, we had the highest proportion of new-build leasehold house transactions as a proportion of all new-build house sales at 77 per cent, accounting for 48—that's 48—of the 62 new-build houses sold in 2016. Furthermore, 11.5 per cent—again, now the highest in Wales—of all houses sold in Aberconwy in 2016 were leasehold, alongside 27 per cent of all property transactions. So, it's actually the fourth highest. 

Now, of course, leasehold ownership can sense when it's used for individual flats in larger developments. However, we have concern that far too many new houses are now being built and sold in this way, often without a clear explanation of the implications and costs for the buyer. And I have to tell you that it was quite a scandal when it emerged in Aberconwy. There was a newspaper story and people were approaching me. They did not know that they actually had a leasehold on their property, and some of them were offered to buy them at £3,000, but even then they were only buying the freehold on their property; the land wasn't included in the actual transaction. So, there are several facets to this. 

This potential exploitation—and that's what it is—can see home buyers lumbered with unfair agreements and spiralling ground rents. I know if I was buying property, I would want to know that if I was buying it I owned the land that it stood on, I owned the property and that it was freehold—it was mine. To actually go into a transaction, go through the legal process, go through all the local searches and everything, and then to find out years later in some instances that you don't own the—[Interruption.] Yes.

David Rees AM

Thank you for taking the intervention. Do you therefore agree that it's incumbent upon the solicitors who are acting, usually nominated by a developer, to actually ensure that the purchaser is fully aware of the consequences of leasehold? 

Janet Finch-Saunders AM

And you've just said it there now: the solicitors often are, if you like—. People are encouraged when buying a property to use a particular solicitor, so it sees our own local solicitors in the area out of the equation, if they are a large developer. And I think it is incumbent in any legal transaction, in conveyancing of any kind—I do believe that it should be that people do not go in where they are blindsided with not knowing that they're not buying the actual freehold. 

The potential exploitation sees home buyers lumbered with unfair agreements and spiralling ground rents. Direct Line for Business research in 2016 suggested that the average annual ground rent was £371 for new builds and £327 for older properties. And as I say, when it comes to buying the leasehold, these people were given a very short window of time in which to buy their freehold, and once that time went they were warned that they could escalate. What a worry that is to someone when they've bought what they believe to be their own home. 

These practices are unjust, unnecessary and need to stop, and I was really thrilled when the Secretary of State for Housing, Communities and Local Government, Sajid Javid, previously announced new measures to put a stop to unfair practices, and at that time I did actually approach our late colleague, Carl Sargeant AM. And I know that he was very keen and he said he would come back to me. Sadly, he has been unable to. But he was definitely going to look into this and bring about some kind of solution. 

Recent figures from the Leasehold Advisory Service show that 57 per cent of UK leaseholders generally regret purchasing a property in that way, and therefore these moves by the Conservative Government in Westminster to ban the sale of new-build leasehold properties, cut down on abuses of leasehold and ensure better protection for renters and home buyers are very welcome. So, all I would say is: let's go forward and let's do the same here in Wales. Our people when buying property, our Welsh householders, deserve every protection that is available across the UK. Thank you.