New home buyers are being warned to check leasehold agreements carefully as they may contain pitfalls which could trip up the unwary.
One property owner, who purchased her new build home with a lease agreement, has described her shock at discovering the freehold had been sold on to an investment company without her knowledge.
Katie Kendrick from Ellesmere Port, Cheshire, told the BBC’s Victoria Derbyshire programme how the purchase of her £214,000 four-bedroom, new-build property had turned out to be the “biggest mistake I’ve ever made.”
Despite the fact that Ms Kendrick was aware her property was sold on a leasehold basis she claims the sales representative had reassured her that because of the long, 150-year lease it was ‘as good as freehold’ and that, in any case, she would be entitled to buy the freehold after two years.
Believing that the freehold would cost only between £2,000 and £4,000, Ms Kendrick went ahead with the property purchase but, 18 months later, a letter from the property developer informed her that the freehold had been sold on to an investment company and that it would, in fact, cost her £13,000 to purchase her freehold.
Ms Kendrick told the BBC: "At the moment I feel completely blind and in a corner and don’t know which way to turn."
Another resident who lives on the same estate as Ms Kendrick has claimed she was originally offered her freehold for £2,600 but declined as, at the time, she was not in a financial position to purchase it. Two years later, she enquired about taking up the freehold offer, to be told that the freehold had been sold to an investment company and the cost had increased to £32,000.
Nicola Tubbs, an Associate Executive and conveyancing expert with Palmers said: “Unfortunately for property owners like Ms Kendrick, there is nothing illegal in property developers selling on the freehold in this way as although the ‘right of first refusal’ applies to flats, the same rule does not apply to houses.
“House-buying is one of the most stressful purchases people make so they last thing you need is the additional headache of finding out that your freehold is going to cost far more than you originally expected.
“As a leaseholder you are legally entitled to buy your freehold after two years and if neither side can agree a price, a tribunal will decide how much you should pay.”
For support on all aspects of conveyancing and advice on the purchase of freeholds, please contact us.