A recent survey from NAEA Propertymark has found that many of the people who bought a leasehold house in the past 10 years were not fully aware of the terms they were entering into.
Many now face high fees and charges and have been left feeling they were mis-sold or poorly advised. Leasehold home owners are typically charged ground rent, which can increase exponentially year on year.
When it came to completing the purchase, 65 per cent used the solicitor their house builder recommended, who failed to tell 15 per cent that they weren’t buying the freehold – they had to find it in the contract themselves. As a result, two thirds (62 per cent) feel like they were mis-sold, while the majority (94 per cent) regret buying a leasehold.
In some leasehold agreements, the freehold stipulates that homeowners must seek permission to make cosmetic alterations, with one in ten (10 per cent) having faced a charge for doing so. On average, freeholders charged homeowners £1,422 to enquire about installing double glazing, £887 to change the kitchen units, and £689 to replace the flooring. Some even faced charges for changing the blinds (£526), and installing a new front door (£410).
Many leasehold owners have also noted how difficult it can be to later sell the house. A third of those currently trying to move said they were struggling to attract a buyer because they did not own the freehold, whilst a quarter said house-hunters who were interested were put off when they found out it was a leasehold home.
Mark Hayward, chief executive of NAEA (National Association of Estate Agents) Propertymark, said: "In most instances, the freehold is sold onto a third party within a few years of the initial sale. This means the terms in the contracts homeowners have signed will change, and any negotiations are made more difficult."
Lawyer Tina Patel, an associate in the Consumer Law team at Leigh Day, echoed the concerns raised in the report: “It is important that in any sale, but particularly one as life changing as the purchase of a house, that the buyer is fully aware of the terms of the contract they are entering into and that they are properly explained.
“It is clear from this report that many buyers feel the terms were not properly explained and now face uncertain futures especially over the increasing costs of ground rent or the feasibility of selling their homes.
“Steps have already been taken by the government on leasehold agreements, but these do not go far enough, and we encourage the government to take further consideration of the matter to ensure there is total transparency in the home buying process for all buyers.”
* Read the report Leasehold: A Life Sentence? here
* NAEA Propertymark http://www.naea.co.uk/
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