Homeowners given light at end of ‘leasehold trap’ tunnel
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.
Conveyancing Executive, Christopher Hodgson 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 ten years.
“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 too.
“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.”
For more information, please contact Chris on 01743 266279 or firstname.lastname@example.org.
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