Off the back of Help to Buy Scheme in Middlesbrough, many builders started selling houses on a leasehold basis when traditionally homes had always been freehold. Over time this became a debatable topic at which the Government felt the need to step in.
Some of the country’s housebuilders got pointed the finger of putting profits before their social conscience while they are aware that they need to build homes for families they also have shareholders to answer.
The media had made it publicly known that there was a situation with land banking.
Land banking is a real estate investment scheme that involves buying large blocks of undeveloped land with a view to selling the land at a profit when it has been approved for development
Thanks to consolidation, some builders have inherited land into their organisations which is on a leasehold basis.
It’s a debatable topic that they offer both leasehold and freehold properties for sale so that buyers can make an informed choice.
Many people had felt that the market had swayed much too far towards leasehold when it came to light how much profit the Builders had been making off the back of the leases.
Things came to a head when the Chief Executive of one of the UK’s most prominent Builders received a bonus of over £100m. At the time, this was one of the most substantial bonuses paid in corporate history.
Some Leasehold Homeowners were shocked when they were being quoted thousands of pounds in fees when they sought permission to make alterations to their homes. The fees were being charged by their Leasehold Management Companies.
Some of the annual ground rents were to double every ten years and owners could see that selling their home in the future once these increases have kicked in would be more difficult.
After notifying their MP’s and getting the subject debated in Parliament, the Government agreed that if you were buying a house (not a flat or apartment), then it is reasonable that you should own the freehold.
If you are in the situation of owning one of these houses and you didn’t realise if it was leasehold, then you should have been made aware. If you feel that the Solicitor acting for you did not give you the full facts about the lease you signed, you should re-contact them immediately to investigate why.
You can contact the freeholder at any time if you are interested in buying the freehold from them.
In addition to leaseholds, there is the issue of service charges.
When Councils grant permission for Housebuilders to build on the land, they don’t always agree to adopt the common areas (such as grass verges) and roads.
That means that the upkeep of these areas needs to be outsourced, usually to a private company. The owners in the area then make a financial contribution to this maintenance work on top of their council tax. By the way, this can happen whether the house is leasehold or freehold.
The costs of the service charges can go up, which infuriates homeowners who are affected. Sometimes the residents in the area get together to form an association which might allow them to choose a different service provider.
If you are considering buying a leasehold property, take advice from your Solicitor regarding the lease. It’s straightforward to get carried away with the excitement of purchasing a home, but you also need to realise it’s a significant investment decision that you need to think about carefully.