Following on from the help to buy scheme in Leeds, many builders started selling houses on a leasehold basis when traditionally homes had always been sold on a freehold basis. Over time this became a hotly debated topic, of which the Government eventually felt the need to step in.
Some of the country’s home builders had fingers pointed at them for putting profits before their social conscience. Whilst they were aware that they needed to build homes for families, they also have to answer to the shareholders.
Land Banking
The media has been very vocal about the fact that there have been situations with land banking. Land banking is a property investment scheme that involves buying vast amounts of undeveloped land with a view to selling the land when it has been approved for development and is more profitable.
Thanks to consolidation, some builders have inherited land into their companies which is on a leasehold basis. Many debate that they should offer both leasehold and freehold properties for sale, so that buyers have the ability to choose the route they’d like to go down.
What About the People?
Many people felt that the market had been heading too far into the territory of leasehold, especially when it became public knowledge just how much profit the builders were making from their leases.
Things drastically changed, when the Chief Executive of one of the UK’s most noteworthy Builders received a bonus of over £100,000,000. At that particular time, this was one of the most significant premiums paid in the history of a corporation.
Some Leasehold Homeowners were shocked when they found themselves being quoted thousands of pounds in fees, even if it was only something like seeking permission to make small alterations to their homes.
These high end fees were being charged by their Leasehold Management Companies. Some of the annual ground rents were set to double every decade and owners could see that selling their home in the future once these increases have kicked in would be a very difficult process to undertake.
In Parliament
After homeowners notified their MP’s and the subject being heavily debated in Parliament, the Government agreed that if you were buying a house (flats or apartments excluded), then it is entirely reasonable that you should own the freehold.
What can you do?
If you happen to find yourself in this situation, owning a leasehold houses and you weren’t aware, then you absolutely should have been made aware.
If you feel that the Solicitor acting for you did not give you a more thorough and complete analysis of what the lease you signed entailed, you should re-contact them immediately to investigate why this was the case. You can contact the freeholder at any time if you are interested in buying the freehold from them.
Service Charges
The costs of the service charges may very well go up. Sometimes the residents in the area can group together to form an association, which can give them the collective freedom to choose a different service provider. If you are considering buying a leasehold property, take advice from your Solicitor regarding the lease.
It’s so very easy to get carried away with the excitement of purchasing a home, but you also need to realise it’s a significant investment decision and something that you need to think about very carefully.
If you would like advice regarding something like this, please do Get in Touch and we’ll see how we may be able to help you.
Date Last Edited: February 19, 2024
