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Leasehold ownership – things are changing

Reasons to choose Wilson Browne

Typically, when you think of a leasehold property you would consider this to be a flat or apartment. This is not always the case – houses can be leasehold too!

This may be for good reason if the property is shared ownership for example. However, there has been much controversy as to why a house would be sold as a leasehold at all, particularly when there is no obvious reason to do so. Is it merely an attempt to sell it twice?

Finally some good news from James Brokenshire, MP, in a speech in June 2019 that in future all new-build houses will be sold as freehold to tackle unfair leasehold practices. This follows the Government’s consultation, in October 2018, on the implementation of reforms to leasehold.

This will be supported by Homes England who have been instructed to renegotiate Help to Buy Contracts to ensure new leasehold houses are not sold, unless in exceptional circumstances.

Unfortunately, for many people these proposed changes are of little comfort as they come too late. As a result, many people who have purchased a leasehold house feel that they have been mis-sold their property and do not fully understand the implications.

Leasehold houses are not the only issue, the topic of escalating ground rents has caused many home owners distress, with many mortgage lenders considering whether or not they will lend in certain circumstances. A recent case highlighted the reality, the provisions in the lease meant the service charge by 2072 would be £554,000 per year! This of course leaves some homeowners in a difficult situation if they wish to sell or re-mortgage their home.

Going forward, James Brokenshire has also indicated that ground rents for all new leases will be zero which is again welcome news.

As the sale and purchase of a leasehold property inevitably involves more paperwork, crucial information needs to be obtained from the landlord or their managing agents in order to proceed with the transaction. Significant delays and extortionate costs for providing information have continued to blight the conveyancing process. It is planned by the Government to limit freeholders and managing agents to 15 working days to turn this paperwork around. In addition to this, a maximum fee of £200 to provide leaseholders with the crucial information they need to sell their home will be imposed.

Even prior to these announcements many developers have already moved away from the sale of new-build leasehold houses giving real hope that things are changing. Not only this, but some are also helpfully offering existing owners the opportunity to acquire the freehold to their property and assisting with amendments to rent review clauses so as not to cause issues in the future.

Leasehold ownership continues to have an important place in the property market: for example take a block of flats – it is necessary for these to be leasehold to incorporate adequate provisions for shared rights and maintenance, etc.

If you are intending to purchase a leasehold property, ensure from the outset you are fully aware of the potential costs and any restrictions that come with it.

Read the reports and paperwork sent to you by your conveyancer in detail, and be sure to ask questions if anything is unclear. There is slightly more paperwork to look at when purchasing a leasehold property, but do make sure you read all of it before you commit and ask questions, your conveyancer will not mind clarifying points for you.

For further help and advice contact one of our six expert residential conveyancing teams.

Jenny Woodruff


Jenny Woodruff


Jenny is a Partner and head of the Residential Conveyancing Team. She has extensive knowledge of the conveyancing process, including: dealing with freehold and leasehold sales & purchases; new build purchases; remortgages; transfers of equity; shared ownership; help to buy transactions & general property advice.