Grounds to query a leasehold sale

IF you are thinking of buying a leasehold home and it is a house – not a flat – read on and think twice.

When a house is sold as leasehold, the ground it is built on stays “owned” by the freeholder.

So in addition to paying for the leasehold property, the home buyer also has to give an annual ground rent to the freeholder.

No problem if the ground rent is a small amount for decades.

But what if that changes. This is what leaseholders need to know. THE PITFALLS

1. tenancy the freeholder can seek a possession order. Then neither the leaseholder nor the mortgage lender can simply pay the arrears to rectify the issue.

If it is not an assured tenancy and the freeholder pursues you for unpaid ground rent, you can stop the action just by bringing the arrears up to date. THE LEGAL POSITION

There is no law against unfair ground rents or unfair terms in relation to freeholder consents.

Still, the law protects buyers from being misled at the point of purchase. The Consumer Protection from Unfair Trading Regulations 2008 says estate agents and sellers must provide ‘full disclosure’ of material information.

This means making sure that the buyer is fully aware of what the terms are in relation to ground rents and freeholder consents and what these will cost at the point of purchase and beyond. Buyers who feel that they did not receive such disclosure may have a claim. THE FUTURE

The Government has indicated it will set all new ground rents at a notional sum – although legislation on this has yet to appear.