ABS preparing to launch group negligence action against conveyancers

Burns: “useless clauses” inserted into leases

An alternative business structure is preparing to launch a group negligence action against conveyancers working for the developers and purchasers of ‘help to buy’ leasehold housing.

Louie Burns, managing partner and co-owner of Leasehold Law, said the total damages claimed could potentially top £500m.

Mr Burns said the group action would be based on the failure of conveyancing solicitors to warn buyers of “very onerous ground rent terms” in the leases to their new homes.

He gave as an example a ground rent of £290 on the lease for a house worth around £100,000, which would double every decade for the remaining term of the 999-year lease.

He said another example was a charge of £300 per room for replacing the carpets, or £120 for a license to put up a new kitchen blind.

“Leaseholders have been asked for several thousands of pounds for permission to do DIY work,” he went on. “One of them was asked for £5,000 for permission to put up a conservatory at the back of their house even though it didn’t need planning permission”.

Mr Burns said “useless clauses” were inserted into leases, simply to build the freeholds up as an asset class which could be sold off.

He said that 57 of the first 80 cases involved the same freeholder, which had bought the freeholds from a developer. He said a further 600 clients were waiting for their conveyancing files to be sent to them by their solicitors.

Leasehold Law is part of a group of three companies. Mr Burns co-owns both Leasehold Law and Leasehold Valuers, a firm of chartered surveyors, with two other individuals.

He is also managing director of Leasehold Solutions, a specialist project management company which he does not own. All three companies are based in Croydon.

Mr Burns said Leasehold Law became an ABS in 2015, and currently employed three solicitors, with a fourth being recruited.

He said the buyers involved in the negligence actions were sold help to buy packages, where they were offered thousands of pounds of cashback if they completed within 28 days and used the solicitors recommended by the developer.

“Some of the leaseholders are being quoted prices of £40,000 to buy the freehold of their houses because of the ground rent. Their houses are often worth only around £100,000.”

Mr Burns said the property buyers came from across the country, with particular “hot spots” in the North West, and in the cities of Manchester, Liverpool and Newcastle.

Away from the negligence actions, Mr Burns claimed Leasehold Law was working on more leasehold and freehold extensions than other law firm – around 5,000 of them, mainly within the M25.


    Readers Comments

  • Michael Robinson says:

    If the client was told about the rent review clause and the other charges and decides to proceed then there is no negligence.
    Any conveyance who receives a request for transfer of a file needs to understand what documents they are obliged to provide and those that they need not provide. I would suggest that each/any request is referred immediately to PII insurers and advice taken from the PII insurer’s legal advisers.
    It would be sensible to peruse any “red flag” files and satisfy oneself that all relevant advice had been given to the client.
    Finally, I hope this all ends in tears for the ABS stirring up this maelstrom.

  • Manda Cull says:

    PPI, Holiday Sickness what next??? Blame culture how about going after the greedy landowners who are
    the ones who are profiting here, the solicitors are not to blame and also the government has allowed this to happen do they not also have some responsibility???
    Solicitors are people too with families to provide for it’s disgusting.

  • Karen says:

    I think you will find when you have read the full facts that a lot of these young buyers were fed into the offices of these solicitors on the recommendation of the developers! That goes against their code of practice surely, as they then have a conflict of interest!

    A lot of these young buyers were only given a copy of their full lease AFTER completion!

    There has been so much scull duggery going on in both these industries their reputions are tarnished forever.
    Yes, I do believe the Government under George Osborne and David Cameron knew exactly what they were drawing up for our young people. They encouraged it with carrots of a deposit from the Government, allowing these young buyers (mainly 1st time buyers with no experience of purchasing a property) to believe that it must all be above board and legal if it was Government backed!
    All these new build properties on these schemes are vastly over priced and there is no ‘true’ discount at all.

    This they are now finding out when they want to sell!

    It has been targeted at mostly Northern towns and cities with no experience of Leasehold property.

    When you get developers who are advertising a Freehold house with a 999 year lease attached to it, what do you think young inexperienced buyers believe they are buying!

    It is an absolute #leaseholdscandal

  • NewHomeExpert says:

    It is to be hoped that the housebuilders’ nominated/recommended solicitors have their clear conflict of interest demonstarted by this class action.

    It is high time that the Law Society prohibited the use of builder preferred/nominated solicitors entirely, and government made it illegal for housebuilders to incentivise buyers with cash payments, free legal fees etc to use their preferred firm of solicitors.

    Government has a responsibility to act and perhaps a high profile court case will make this more likely.

    No doubt many in the legal profession will have an alternative opinion!

  • Alan Lee says:

    I was sold a family property and was not advised about the payments going g up and was never explained in anyway

  • Andrew Middleton says:

    We need the help of a Jeremy Corbyn Labour government on May 8th GE

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