In recent years a growing leasehold scandal has emerged, particularly involving new-build properties.
In many cases, the terms of the leases have meant that ground rents have either been spiralling out of control, or clauses in the small print have left home owners unable to make improvements to their property without being penalised.
Following a report into the practice by a cross-party group of MPs, there are now calls for legislation to be tightened to halt the practice.
Housing, Communities and Local Government Committee Chair, Clive Betts MP said: “In too many cases, leasehold has acted primarily as means of providing a steady income for developers, freeholders or managing agents.
“In the worst cases, people have been left trapped in unsellable and unmortgageable homes, needing permission or having to pay high fees for even minor cosmetic changes.”
Recent cases of the leasehold scandal have included:
- A homeowner being charged £1,500 by a leaseholder, to allow them to make a small alteration to their home
- A family house that is now unsaleable because the ground rent is expected to hit £10,000 a year by 2060
- A homeowner who was told buying the lease would cost £2,000 but the final bill came to £40,000
Nicola Tubbs, a Supervising Partner with Palmers who heads our residential property department, said: “We are becoming aware of a number of claims on behalf of homeowners who were sold these spiralling ‘ten year doubling’ leases by housing developers.
“If you are affected, it is important to know that you can take action and there are a number of options open to you.
“One solution is to request a variation of the lease to change the Ground Rent provisions. If the landlord refuses, it is still possible after two years ownership, to serve a legal notice – known as a section 42 Notice, under the Leasehold Reform Housing & Urban Development Act 1993 (as amended by subsequent Acts). Upon satisfactory completion of the procedure set out within the Act, this will add 90 years to the remaining Lease term (unexpired) and reduce the ground rent to a peppercorn annual rent (if demanded).
“Anyone affected by doubling or unfavourable leaseholds should seek specialist legal advice. This is particularly crucial if you are planning to put your property up for sale as it can take several months to complete the legal process of changing the terms of the leasehold agreement.”
For help and advice on doubling leaseholds and how to apply for a variation on a lease, please contact us.