There have been positive developments recently for thousands of leaseholders who are trapped in unaffordable mortgage products. Our Solicitor Richard Collins explains more.Following the report by the Financial Conduct Authority (FCA) last month, which examined what more lenders could do to help "mortgage prisoners," 59 lending institutions (making ...
Beware of 999 year leasehold properties - our Head of Residential Property, Paul Berry explains more.
There is a growing trend among developers to sell homes as leasehold when they previously would have been freehold. Buyers are given reassuringly long 999 year leases, but later find that buying the freehold is prohibitively expensive.
For example, Taylor Wimpey sold a leasehold property to a purchaser in 2011 for £122,000, who have since sold the freehold to E&J Estates. The leasehold homeowner now finds that to purchase the freehold will cost £40,000 - one third of the house’s original value.
The problem arises from the escalation in ground rent in the small print of long leases. Initially they look affordable - for example, just £295 a year. The trouble is that the lease says the ground rent will double every 10 years. This provides a very valuable income to the freeholder.
Government figures indicate 6,000 new houses were sold with long leases in the last year alone. Persimmon, Taylor Wimpey and Bellway are now regularly selling estate houses as leasehold.
This current trend emphasises the need for buyers to be advised carefully by their lawyers when purchasing long leaseholds of houses and/or flats.
This article was written by Paul Berry, Head of our Residential Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of January 2017.