Lupton Fawcett leads the way with Leasehold Homeowner Support
Lupton Fawcett, the Leeds, Sheffield and York-based commercial law firm, has welcomed moves by the Government to reconsider the selling of leaseholds on new build homes – a practice that is seeing thousands of homeowners burdened with ever-increasing ground rents.
Sarah Sargent, an associate solicitor at Lupton Fawcett, said: “This is a very real problem facing many owners of new build properties offered and sold as leaseholds rather than freeholds – a distinction that often isn’t explained by the seller and can end up leaving buyers facing soaring costs the longer they own the home.”
She went on to highlight two key issues.
- Leaseholds being sold en-masse to investors following the completion of a new build development, who then seek to generate a significant return on their investment by either hiking up the ground rent or offering the lease to the homeowner at a vastly inflated price
- Buyers purchasing properties with onerous leasehold provisions, which means they are contractually bound to foot the cost of rising ground rents
“Despite what a lot of the housebuilders say, this is a countrywide problem at a time when more new homes are being built than ever before,” continued Sarah.
“People in the UK are brought up dreaming of owning their own home, so to be backed into a corner where this dream can suddenly be turned into a financial nightmare, from which there appears to be no obvious escape, is a kick in the teeth for many aspiring homeowners.”
Lupton Fawcett has also drawn attention to the fact that two mainstream lenders have now stated they will not lend against homes with onerous leasehold provisions. A position that will impact not only on sales, but could leave owners chained to their homes and stuck with costs that will simply go on rising.
In one recent case, Lupton Fawcett saw a sale fall through because the onerous leasehold provision meant ground rents would double at every review. The result of this was that the homeowner was left with a home they could neither sell nor re-mortgage on the existing leasehold basis
“Banning the sale of new leasehold properties is a major step in the right direction, not just from a homeowner’s perspective, but from that of the housing markets,” concluded Sarah. “It seems obvious, but the more onerous leasehold provisions there are, the fewer homes will sell.”
“It should be noted that not all leasehold properties are a problem area. Flats can only be sold as leasehold and many leasehold houses have been created with perfectly acceptable leases. The key is to seek advice from firms such as Lupton Fawcett who have expertise in this area.”
Lupton Fawcett advises those concerned about leasehold issues, whether related to their own current homes or properties they are thinking of buying, to clarify their situation by contacting its specialist property team.