What’s All The Fuss About Leasehold Houses?
The big property story of July has definitely been the Government’s intervention into new build houses being sold on a leasehold basis rather than freehold so in this article I will try and explain what’s been happening.
WHY HAVE BUILDERS BEEN DOING THIS?
Some of the land the major builders have inherited into their organisations over the years has been on a leasehold basis and they argue that they offer both freehold and leasehold properties so that customers can make a choice. This is fair enough but this has scaled up to such a massive level and they are making so much profit from these leases (amongst other things) that the Chief Exec of the major UK House Builders was awarded a bonus earlier this year of over £100m, one of the biggest bonuses paid in corporate history.
WHY HAVE THE GOVERNMENT HAD TO GET INVOLVED?
Homeowners have alerted their MP’s to the fact that when they have tried to gain permission to make alterations to their houses they are being quoted £1000’s in fees by the leasehold management companies. The annual ground rents double every 10 years and project a few decades down the line the costs would be massive and would put prospective buyers off. The Government feel that generally speaking if you are buying a house (not an apartment) that it’s reasonable you should own the freehold.
WHY WEREN’T WE INFORMED BEFORE?
You should have been. If you have bought a leasehold house you will have enlisted the services of a Solicitor, possibly one recommended by the Builder. If you feel that you weren’t given the full facts about the lease you signed you should re-contact them immediately for an explanation.
CAN I STILL BUY THE FREEHOLD?
Yes you can apply to buy the freehold, you should contact the freeholder to obtain the price.
IS THIS A NATIONWIDE PROBLEM?
Actually this appears to be more localised with the North of England more affected than other parts of the UK. The Leasehold Knowledge Partnership estimate that around 100,000 homeowners are affected.
WHAT ABOUT SERVICE CHARGES?
That’s another story! When local authorities grant permission for Builders to build new homes they don’t always agree to adopt the roads and common areas. This means that some of the maintenance tasks (e.g. having the grass cut down the street) need to be outsourced. The homeowners then contribute a monthly amount towards this on top of their council tax.
You might find the next news story is the increasing costs of these service charges. If you carry out an online search for reviews of some of these service companies they appear to have a reputation for hiking up costs. This could apply to you if you have bought a new build property even if it is freehold.
WHAT ARE THE GOVERNMENT GOING TO DO ABOUT THIS?
The Government is proposing to cut ground rents to zero and ban future sales of houses on a leasehold basis. Of course that doesn’t help the customers who have already signed up to these properties and there is talk of compensation programmes being set up.
Mortgage Advice in Lincoln – Lincolnmoneyman.com