Freehold....BBC this morning

tizerbelle

But don't forget that leasehold properties are nothing new and not automatically something to be scared of or something that would/should affect the house price.

My house was granted a 999 year lease in 1868. There is no clause to allow the freeholder to charge me for anything other than ground rent and the ground rent is fixed at £1.14 per year for the term of the lease. My house is of no less value in this street than others that have bought their freehold.

nicmyles

Do you understand what it means?

I'd notice the word "increasing" and ensure my understanding was crystal clear before completing the purchase.

I take your point - we all make mistakes when purchasing, and we can't be expected to understand the significance of every word (although you'd hope the solicitors would explain if asked).

But surely the fact that a place is leasehold should have you or your solicitor poring through the pack to figure out what liabilities that creates for you, if any, so you can make a reasoned decision. It's just wrong to describe it as "a trap" - although as I said above, I think it's pretty inexcusable to make new build houses leasehold.

Katiejane13uk

How wrong u r !!!

Katiejane13uk

U r totally missing the point here.

Old leaseholds were never a problem as they had a peppercorn rent associated with them

What develoeprs have done is found a loop hole in outdated legislation and exploited it to make as much profit as possible.

The issue here and with thousands of leasehold houses is that once the developer sells the freeholds onto greedy 3rd party investment company's the ability to buy your freehold back is very limited. They charge whatever they want.

If the developer in this case Bellway kept the freehold and sold it to me for the original 2-4k quoted ato the time of purchase that's no problem. But time hey don't. They sell it on without informing u !!.

Chanes

There is no need to make a house Leasehold, they should be Freehold. These new lease properties are nothing like the old lease properties with their peppercorn ground rent that never increases. The new leases seem to have been dreamed to be cash machines. And those new home buyers, caught up in the excitement of a new house trust the solicitor to stop them getting caught by something nasty.

prosaver

Shakin_Steve wrote: »

Old news to the knowledgeable folk on here, I know. But may be of interest to some:

http://www.bbc.co.uk/news/business-38827661

its like that if you buy a flat, they seem cheap till you have buy the freehold.

getmore4less

steampowered wrote: »

I think these comments are unfair and that it is actually a very easy trap to fall into. Even if you are a careful person who reads all the documents and use a solicitor.

Here is a typical ground rent clause for a 99-year lease:

"To pay to the Lessor without any deduction in addition to the said rent a proportionate part of the expenses and outgoings incurred by the Lessor in the repair maintenance renewal and the provision of services hereinafter set out the yearly sum of Ninety Pounds and value added tax (if any) for the first three years of the term hereby granted increasing thereafter by Ten Pounds per Hundred for every subsequent three year period or part thereof."

Do you understand what it means?

If you were the buyer of that leasehold property, would it have been be obvious to you that this clause would
result in ground rent payments of £3,366 per year by 2012 and over £1 million per year by 2072?

That clause would have been buried in a lease running to perhaps 30 pages.

I've taken the clause from a recent Supreme Court decision available here, which concerned a 99-year lease of property in a caravan park in Wales.

you miss the crucial start date for the 2012 2072 dates

10% every 3 years as a compound rate of 3.23% after 99 years that would be £2295(ish)

to go from £3,366 to over 1m in (72-12) 60y is a rate of 9.95

look like that was done wrong and 10% PA not every 3 years.


edit:

I see what you did you put 3 year in the text and linked to a annual increase clause.

starving_artist

I agree with getmore4less. I bought a leasehold flat 30 years. The ground rent is not peppercorn although neither is it the ridiculous levels which are now hitting the headlines. Leaseholds weren't such an issue until the value of freeholds took off and people started realising that they could exploit the relationship.

cashbackproblems

I don't think this case is an issue of solicitors not explaining this, the woman in the article knew it was leasehold when she bought and maybe didn't understand what that really meant. When looking for flats all developers were upfront about the lease and its the first thing you ask about. Plus there is no requirement for her to buy the freehold like with flats 150 years is good enough


But imo I find the types of people attracted to new builds and the "bling" (which comes with high service charges and cheap quality materials) are those kim khardasian types who don't really have much sense.

steampowered

getmore4less wrote: »

edit:

I see what you did you put 3 year in the text and linked to a annual increase clause.

I didn't change anything. I simply copied and pasted the clause from the lease which is quoted in the Supreme Court's decision.