Selling your home leasehold freehold nightmare

I've never heard of selling a house but buying the leasehold never knew you could even do that.

I am assuming your buyers want you to buy the freehold in order to include it in your sale to them? How long ago did you buy? The situation regarding the lease should have been fully explained to you by the solicitor you used when you bought.

The Act of (I think) 1967 states that a leaseholder can purchase the freehold (by compulsory purchase if necessary) and any headlease. Your solicitor should be able to advise as to the cost. I think the cost of the freehold used to be worked out at 3 times the leasehold rent but that will probably have changed by now.

DD has a house on a 999 year lease, with with 979 years to run and a fixed ground rent of under £100, as does almost everyone owning a pre-1950 house in her town. The houses sell like hot cakes and have doubled in price in the last five years. Owners can buy the freehold, but I understand few have bothered.

My apologies I misread your post .

Our DD1 owned a flat and discovered it was leasehold with not many years to run.
She should really have been warned by our solicitor when she bought it. Maybe she was but didn't understand the implications.
Luckily she was able to buy the freehold before she decided to sell. No complications and not too expensive.

There have been some changes to the laws on leasehold, including 'old' leases. I read recently that the National Trust are in the process of increasing their leasehold costs by swingeing amounts, in some cases as high as £15k per year. Also within the last few years developers have been charging very high leasehold costs on new houses. It has particularly affected many first time buyers who weren't aware of the costs until they had exchanged contracts. According to a recent BBC1 News it can affect the selling price of a property by as much as £100k. Clearly this is a growing problem and I know that there has been a request for the government to investigate.

It is is noticeable that developers went over to the leasehold system almost entirely in areas where house prices were low so their profit margin was low as well. There are relatively few new leasehold estates in the south east, most are in the north west. The terms of their leases are iniquitous, with large and rapidly growing leasehold charges.

However most flats are leasehold and many houses and almost all except these new developments do not have these large escalating leasehold charges

Three and a half years ago we sold a flat.
We had to renew the 99 year lease at a cost of £8,000.
There was 80 years left on the lease and we were told that a buyer would find it difficult to raise a mortgage with only 80 years left.
This whole lease business really infuriates me.

This really is a scandal. It is bad enough having leases on flats but this new rip-off whereby new houses are being sold leasehold is just terrible.

It is affecting more and more people and a new way of grabbing money from leaseholders is being used - developers are selling on the leaseholds of whole developments to investment companies who then massively increase costs to leaseholders, including charging exorbitant amounts for people to buy the freehold - sometimes £40,000 or more.

There has been growing criticism that nothing was being done to stop what is plainly just a money-making exercise - and an exorbitant one at that. The government has said it will be taking action to stop this - let's hope its effective action that completely puts a stop to this sort of money-grabbing.

This article from 2009 is outspoken in its criticism of the whole leasehold system. Apparently it is rare in other countries.

www.theguardian.com/money/2009/jun/14/abolish-existing-leasehold-laws

Nanandnotgrandma I should also say I'm sorry that you have had all this worry. I assume your solicitor is dealing with this issue - it all sounds very complicated.

I hope things soon get sorted out for you.

Leasehold in itself is a perfectly acceptable form of land possession, but like anything else it can be open to abuse.

Developers have recently begun using it as a form of increasing income. The current misuse of the system should be stopped but we shouldn't throw the baby out with the bath water and end a form of property ownership that has been effective for enturies.

We are selling FiL's flat and have been trying to extend the 60 year lease since February. The freeholders, their agent and their solicitor are the biggest shysters I have ever come across. So frustrating to have already paid several thousands in fees and we still don't have the new lease!

I don't think it is "a perfectly acceptable form of land possession".

Here are some extracts from the first article in the link I provided:

"Leasehold tenure is not really home ownership. It merely confers the right on the leaseholder to live in a property for a prescribed number of years, rendering the lease a depreciating asset whose value dwindles to virtually nothing at the end of its term.

Few countries outside England and Wales retain residential leasehold tenure, since all other countries have developed more modern systems of tenure for flat ownership.

"A lease is an extraordinarily one-sided contract, in which the leasehold interest pays for everything - from the full cost of the original development of the building, through to its day-to-day maintenance. By contrast, the freeholder, or lessor, pays none of these costs, yet at the end of the lease takes back full ownership.

"Another system of tenure for flat owners - commonhold - was introduced five years ago [this system is used in other countries]. However, it will never replace leasehold since developers will always find it less lucrative.

"Unscrupulous landlords have invested in freeholds in these areas, charging thousands of pounds simply to grant approval for building modifications carried out by the leaseholder.

"The weak legal position is exacerbated by the fact that the sector is entirely unregulated and few leaseholders have access to an ombudsman scheme.

"Commonhold, and the other forms of tenure developed elsewhere, offer the benefit of freehold for those living in flats. Feudal systems of property tenure should have no place in modern Britain."

The other article in the link argues for the retention of the leasehold system, saying that there have been many changes which give leaseholders far more rights. But, as the other article argues "The raft of measures to give rights to leaseholders have achieved little more than add to cost and complexity."

Well, if like DD you have a 995 year lease with 979 years to run, it is as good as freehold.

I pretty sure that an Act was passed many decades ago that means that the freeholder cannot refuse to sell you the freehold or an extension to your lease at a reasonable price with an Appeals Tribunal.

Many expensive houses in London and the like are sold with short leases. It works out cheaper than renting the same property and gives the leaseholder more control over what they do to the house during their occupation, subject to planning lawa.

I am not saying leaseholds are all good. We have seen the system go bad recently, but there are places and circumstanes where a leasehold tenure has advantages. All I am saying is do not throw out the baby with the bath water.

Leaseholders have to pay ground rent, service charges/management fees, and there are frequent complaints that very little maintenance is actually carried out. On top of that, if a leaseholder wants to carry out alterations or extensions, they sometimes have to pay a fee in order to get the permission of the person or company who owns the freehold - this has been reported to be increasingly common in new developments.

The following is from an article in the Guardian. www.theguardian.com/money/blog/2016/oct/22/leasehold-property-ground-rent-no-ethical-basis

"....... Meanwhile, the buyer of the apartment, who has probably used their life savings for the deposit and is handing over nearly half their income to the mortgage company, doesn’t really own the property. Legally, it can be forfeited if ground rent is not paid, although thankfully that happens rarely. Far more common is the repulsive squeeze put on homebuyers whose leases are less than 80 years – and there’s two million of them in Britain – to pay absurd amounts to extend them, or see their property become unsaleable. The winners, especially in London, are generally the aristocratic estates to whom these unearned incomes flow.

"The rest of the world (including Scotland) has forms of commonhold: flat owners know they own the flat, fractions of the corridors and roof and land, and are responsible for it. Australia rejected leasehold in the 1960s, as have other parts of empire saddled with this legacy of colonial rule."

An article in the Financial Times in July 2016 also gave this information:

"Research by the insurers Direct Line for Business shows the average service charge in England and Wales is now £1,863 a year. A third of management companies have raised service charges in the past two years. For new-build properties, service charges average £2,777 a year.

..." Ground rent is separate from the service charge. In the past, it used to be a token amount. Now it averages £327 a year for older properties and £371 for new-builds.

As the previous article indicated, to dispute any of the terms can be an extremely complex and costly business as the Financial Times points out:

"In England and Wales, leaseholders can face huge legal bills or even forfeit their homes if they challenge what they see as exploitative property management. Mr O’Kelly estimates that up to 50 people a year forfeit their properties.
www.ft.com/content/8148fc96-501f-11e6-8172-e39ecd3b86fc

I tried explaining the lease 'system' to some foreigners once, they looked at me as if I was speaking Klingon

Eloethan DD's house is leasehold. She pays under £100 a year in ground rent and that is that. None of the other things you mention apply in her case nor in the case of the majority of home owners in her town who have leasehold properties.

The problem with leasehold is very much a problem of properties built in the last 10 years. Older properties like DD's, with leases of over 900 years, and there are many such, are very unlikely to have these problems.

Message deleted by Gransnet. Here's a link to our Talk Guidelines.

jatinder888 don't know if you noticed this thread is from 2017. And nothing since.

Leasehold of some kind for flats or apartments are unavoidable but for individual homes should be banned. Not really a problem for 999yr leases and a fixed ground rent, but 99 yr leases with a flexible ground rent is causing a lot of problems.

Last years we were looking a house for my son, one in particular was built 5 yrs ago, it was being sold at the original price and the owner was having to buy the freehold to get a sale. She was not happy.

This happened a lot years ago. I remember buying our first house back in the 70’s - we made sure it was freehold and free as it was described then. It seemed incredible to me that you could buy a house and yet not own the land it stood on. At least you now have the right to buy.

The latest with a lot of new builds is having to pay a yearly service charge which the builder then sells on and the charge is substantially increased, in some cases making it very difficult to sell at a later date.

Message deleted by Gransnet. Here's a link to our Talk Guidelines.

My motto, never ever buy a leasehold property, my mum did, unfortunately and the leases were sold to a London property company, guess what,everything went up, and as she was in a block of flats the costs were terrible, Never mind about the National Trust now, this was twenty years ago. Leaseholding should be banned.