The residential property leasehold scandal – what you need to know

The residential property leasehold scandal – what you need to know

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 of the leasehold agreement have left home owners unable to make improvements to their property without being penalised.

Recent examples of how the leasehold scandal have affected individuals include:

  • 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

Can I take action?

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.

But you don’t need to wait for the law to change – if you are affected by an unfair property lease agreement, you can take action now.

Palmers’ specialist team of residential property experts have already successfully dealt with claims on behalf of homeowners who were sold these escalating ‘ten year doubling leases’ by housing developers.

How could a lease variation or a leasehold reform help me?

In many cases, we are able to renegotiate these leases – in legal terms this is known as a ‘lease variation’.

Where a landlord refuses to agree to a lease variation, it is still possible, after two years, 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).

If you are affected by a ‘doubling’ or unfavourable leasehold, it is important to seek specialist legal advice.

If you are planning to put your property up for sale, you should seek prompt advice 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 Palmers’ residential property team today.

Andrew Skinner

Consultant Solicitor & Client Care Officer

Leanne Bowman

Credit Control Manager

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