Mis-sold Leasehold Claims
When buying a property, if you purchased the leasehold, as opposed to freehold interest, you need to check the terms of the lease. Your lease may contain clauses which allow the ground rent to double every 5 or 10 years. If you were not advised of this by your conveyancing solicitor, then you may be entitled to compensation.
What is a Leasehold?
- If you purchased the leasehold interest in your property, you own the house subject to a ‘lease’.
- In essence, the land on which your property is built on is owned by another person, and they then lease that land to you for a period of time for a fee. That period of time is normally for 999 years or so
- This is the opposite to someone who owns the property outright, including the land it is built on, which would be freehold
- The fee paid every year on leasehold properties is known as ground rent
- If the property is leasehold, you also need to obtain the freeholder’s permission in order to make any changes to the property
Problems with Leasehold Properties
- Many purchasers find that they are unable to sell their properties as some lenders will not grant mortgages on homes which have excessive ground rent clauses;
- Historically, the ground rents applicable to a leasehold interest were nominal at best (say £1.00 a year). However, with more and more new developments springing up developers saw an opportunity to profit. They often set ground rents at anywhere between £200 - £400 per annum with a clause that allowed them to double this every 5 or 10 years;
- Average ground rents are estimated at £371 per year for new-build homes;
- Developers charge significant sums for homeowners to alter the original property, to, say, add a conservatory to their property etc.;
- The freehold owner can and will sell their freehold interest to another company who will increase the cost of it to make a profit.
What’s next for leasehold property owners
The Government has proposed a ban on the sale of leasehold houses in the future and/or a ban on ground rents. This, however, will not help those individuals who have already bought a leasehold property.
The Government also wants to see more compensation to help purchasers who have been affected by this scandal.
If, therefore, you have been affected, please contact us to see how we can help.