UYERS of leasehold properties appear to get a bad deal. Unhappy purchasers including Which? members report facing escalating costs, with “ground rent” sometimes doubling every 10 years, and potentially finding homes unsellable as some banks refuse to lend on leasehold properties.
This concern is backed by a recent property owners survey from Home Owners Alliance which found 50% see the current leaseholdfreehold system (including service charges and ground rent) as a very serious or serious problem, up from 42% in 2016.
The Government is promising to reform leasehold – but that might not help current owners.
The worst difficulties are found in some recent new build houses sold as leasehold instead of the more customary freehold in England and Wales. The system is different in Scotland.
Leasehold starts out a little cheaper but unlike freeholders who own the land on which their home is built, leaseholders have to pay annual “ground rent” to the freeholder. Leasehold has usually applied to flats where no one resident owns the land and where there are service charges for areas owned in common such as the entrance and stairwells. At the end of the lease, the property reverts to the freeholder.
The 999 year leases sound long. But small print clauses say the ground rent can