Leasehold houses still causing problems for thousands of buyers

 

While leasehold flats are par for the course in the UK and rarely throw up issues, leasehold houses are a much more contentious issue and they’re continuing to cause headaches…

As many as 94% of people who bought a leasehold house now regret doing so, according to figures from a new survey carried out by NAEA (National Association of Estate Agents) Propertymark to highlight the extent to which the recent leasehold scandal has affected homeowners in the UK.

While the government announced in December that it would ban the sale of “unjustified” new leasehold houses, and prevent property developers from using government funding schemes if they were involved in selling such properties, there are still many homeowners trapped in leasehold houses with restrictive and often unfair terms.

What’s the problem with leasehold houses?

One of the biggest issues that came to light about these properties was the increasing ground rents – sometimes set at £200-£400 a year but with the prospect of doubling every 10 years, making the homes extremely difficult to sell on. According to NAEA Propertymark’s survey, almost half (48%) of people said they were unaware of the escalating ground rent before they bought the property.

Another major problem is the amount that freeholders are able to charge for leaseholders to make changes to their homes, which figures suggest has already affected 10% of leasehold house owners. Examples cited in the survey include being charged a fee of £1,597 to gain permission to add an extension or conservatory, £1,472 to install new bathroom units and £1,348 for structural changes.

Although the homes are often sold with a 999-year lease, and sometimes described as “practically freehold”, in fact the restrictions placed on them often mean this isn’t the case. The survey reports that around 70% of those who regret buying a leasehold house are worried they won’t be able to sell it, while around 60% of those selling right now say they are struggling because the property isn’t freehold.

Most houses are still sold as freehold

Mark Hayward, chief executive of NAEA Propertymark, said: “In most instances, the freehold is sold onto a third party within a few years of the initial sale. This means the terms in the contracts homeowners have signed will change, and any negotiations are made more difficult.”

Even though the government is working to prevent home buyers being “exploited through unfair and abusive practices within the leasehold system”, nothing has yet been put in place to help existing owners of such houses.

However, a Home Builders Federation (HBF) spokesperson said: “The vast majority of new-build houses are sold on a freehold basis, but it can be necessary on occasion to sell new houses with leases. As such, leasehold is a well-established and secure tenure with which to own a home.

“In all transactions, builders strive to provide prospective purchasers, their solicitors and their mortgage lenders with all relevant information.”

“Purchasers are always advised to engage their own legal advice during the purchase of a home.”

NAEA Propertymark proposes that buyers of new-build homes should have access to an ombudsman scheme if they feel they have been unfairly treated, and freeholders should be required to sign up to a redress scheme. It also believes that homeowners should get first refusal when the freehold is being sold – at present, “right of first refusal” applies only to flats, not houses, so developers can sell the freehold on without having to inform the leaseholder.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

German-style tenancies to benefit millennials who will never own homes

Leasehold houses still causing problems for thousands of buyers

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.