A group of 500 newbuild property owners have instructed a leading law firm to seek compensation over their mis-sold leasehold apartments and houses which are within dozens of developments across the UK.
FS Legal claims its clients were not advised properly about the terms of their ground rents and that, although they were told that their ground rents would increase, they weren’t informed about the consequences of the rises.
The Manchester and Birmingham based legal firm says that if the current action is successful it will open the flood doors to the 100,000 house leaseholders said to be hidebound by poor advice about their leaseholds.
NAEA Propertymark recently revealed that a third of these were now struggling to sell their homes and two thirds thought they were mis-sold their properties.
The NAEA also says that 65% of these leaseholds bought their homes via the builders’ recommended solicitor.
Hundreds of conveyancing firms have now been sent pre-action notifications by FS Legal, which has told The Negotiator that: “A hefty proportion of the clients we’re representing used the conveyancers that their developer or builder recommended to them”.
FS Legal also says that because their clients were poorly informed, few realised until it was too late that their increasing ground rents would make it difficult for them to either later acquire the freehold or extend their lease.
The conveyancing firms involved will now have to decide whether to contest what is in effect a class action against them or accept that they “have not provided advice to the standard they should have done”, FS legal says.