When builders started responding to the need for greater quantities
of housing stock, their developments were largely welcomed by first time
buyers, growing families and retirees alike.
New-build properties boasting modern finishing touches, made all the
more affordable via schemes such as Help to Buy, were quickly snapped
up. However, as the detail around their leasehold status became more
apparent, their appeal started to lessen.
Licensed Conveyancer, Lucy Beaumont explains what homeowners of leasehold homes need to be aware of, and how in some circumstances, they can mitigate potential financial penalties at a later stage.
“Whilst there has been a real focus on leasehold houses in recent years,
the concept of being a leaseholder on your home is not a new one. They
are, however, traditionally associated with flats and so when a house
is sold as leasehold, the buyer essentially buys the home but the ground
it is built on remains in the hands of the freeholder. They’re
effectively a tenant with a very long-term rental and they’re required
to pay an annual “ground rent” to the freeholder. Additionally, the
home ‘owner’ will have to ask the freeholder for consent if they want to
make any changes to the property, such as building a conservatory or
changing the windows.
“Whilst on face value this is a small price to pay for those desperate
to get on the property ladder, the detail behind the ground rents
associated with many new-build homes has rung alarm bells in recent
years. Whereas historically, the owner of a leasehold property might
reasonably expect to pay a ‘peppercorn’ ground rent, sometimes as low as
just £1 per year, the landscape has changed drastically and it’s now
not uncommon for developers to not only charge higher ground rents, but
also insert clauses into leasehold contracts to double those rents every
“What started off as an affordable home, quickly became anything but and
many purchasers have found their homes harder to sell due to the likely
financial cost in the future. Added to that, some mortgage lenders
have proved increasingly reluctant to provide loans against such homes
“Purchasing the freehold, whilst an option, is often financially
prohibitive to many homeowners caught in this trap, but there is now
some light at the end of the tunnel.
“National house builder, Taylor Wimpey, has led the charge on righting
the wrongs of this scandal and has put aside £130million in funds to
support homeowners in switching to less onerous leasehold contracts
whereby increases in ground rent are linked to inflation rather than
arbitrarily steep increases.
“The developer, which will contact affected purchasers, has indicated
it’s willing to cover up to £750 in legal expenses and indeed, we’ve
started to be contacted in this respect.
“Anyone who has purchased a leasehold Taylor Wimpey home and who
believes that they should be eligible for this support to get the
contract amended, should first contact Taylor Wimpey to check their
status and then get in touch with the conveyancing team here at FBC
Manby Bowdler who can act on their behalf and ensure a swift resolution
to this issue."