Are The Problems With Leasehold Houses Fixed Now?

The media has been full lately of the proposed changes to the law banning new houses being sold as leasehold and ground rents being reduced to £0 so you could be forgiven for thinking that the problem has gone away

It has not. Here’s why:

1. The law still needs to be changed. It is a government proposal at the moment but until a new law is passed, nothing changes. Parliament is about to go on their summer break and when they return, we could be facing a no-deal Brexit. This statute is not going to be on the top of the list for new laws.

2. This will only apply to new homes sold after the legislation is passed. It is not proposed that it will deal with existing leases. This will further devalue existing leasehold houses and make it more difficult to sell an existing leasehold house.

3. Developers are structuring sites so that they get the same ability to impose costs and fees whilst still selling the freehold. We have seen sites where the developer is retaining ownership of parts of the development (playgrounds, grassed areas and even roads). This means that the house owners still have to sign up service charge provisions and no sale is allowed unless the new owner accepts this liability and signs up too. This system is open to even more abuse and is even worse than the previous leasehold position for home-owners. Under this scheme, service charge charges are largely unregulated and there are no routes to get the restrictions removed from the title of the properties affected. Accepting this when you buy a new home could seriously harm the value of your home.

What does this mean for you?

It means that it is more important than ever to use a specialist property lawyer who understands the potential problems and takes the time to read the title fully and report to you on it in clear terms so you know what you are buying.

If you accept these new restrictions on your new home you may only be able to sell the property in the future for a lot less than neighbouring properties on other developments that do not have these service charge costs. You will still also need to pay the costs of the developer, or the company that they have sold the right to the service charge on to, to produce the appropriate paperwork to get the consent required to transfer the property to someone else.

The new proposals will not protect existing home owners. They do nothing to help the thousands of people who need to buy their freehold houses or extend their leases on their flats. Do not rely on a proposed change in the law. Vote with your feet and do not accept a leasehold title for a house or a freehold with service charge provisions. Invest in a quality property lawyer who can check the position carefully for you. I would suggest that you do not use the lawyer that the developer recommends as they are often recommended as they pay a referral fee back to the developer.

At Toomey Legal we offer fixed fee honest advice. We will not sugar coat it. You may not buy a property after talking to us, but if you do, you can be happy that it is what you thought it was. You may not find out the truth of what you have bought for twenty years (the average time we live in a home) but you may have years of worry before that. For your own peace of mind, talk to us beforehand and do not expect everything to be fine because other people have accepted it. The residents of Cramlington, in their leasehold homes bought twenty years ago, can tell you how that has worked out for them.