Leasehold: A Life Sentence?, the latest report from Propertymark, has revealed the extent of the leasehold scandal which has left thousands of Brits feeling financially trapped in their homes.
According to the report, leasehold house owners are paying £319 in ground rent costs every year, totalling £447m, with one in ten revealing that the cost affects their quality of life.
NAEA Propertymark surveyed more than 1,000 people who only bought the leasehold on their house, to explore the extent of the scandal which has left thousands of Brits facing escalating ground rent, extortionate fees for making cosmetic alterations like changing their front door, and unable to sell their homes.
A burden that keeps getting worse
36% of leasehold house owners say they wouldn’t be able to afford to live in their home if their ground rent was to increase, and six per cent already feel like they can’t afford it because of the cost.
However, 10% have seen their ground rent rise since moving in, typically after just seven years. Of those, 19% didn’t understand the detail in their contract about how much it would go up by and 46% said if they had known it was going to increase, they might not have purchased the property.
Mark Hayward, Chief Executive, NAEA Propertymark said: “Buying a home is one of the biggest financial and emotional investments we make in our lifetime, and once we’ve completed and moved in, we should be able to enjoy the property. But unfortunately for those buying leasehold houses, the financial burdens continue with ground rent payments to the freehold every year. Even though many leasehold contracts include a ‘ten-year ground-rent freeze’, most developers sell the freehold onto a third party within a few years of completion and those terms go out the window, meaning homeowners are faced with unexpected and escalating costs.
It’s positive to see action being taken, with the recent announcement that the CMA will be investigating the mis-selling of leasehold properties, as for too long, housebuilders and developers have not been transparent enough about what it actually means to buy a leasehold property. Buying a property is a huge undertaking and it should be an exciting time, but for thousands of homeowners, it’s led to financial difficulty as they’ve become trapped in confusing contracts with freeholders.”
Wanda Goldwag, Interim Chair, Leasehold Advisory Service said: “Large escalations in ground rent only serve the commercial interests of developers and investors, and the Government intends on limiting ground rent on new properties in the future. In the meantime, some developers and investors have recognised the unfairness of ground rent increases in leases and established schemes to assist leaseholders.
If you are unsure about your ground rent and whether it increases, please get in touch with us at LEASE. We can review the lease and establish if there is an escalating ground rent and whether your freeholder is a signatory to the pledge unveiled by the Communities Secretary, James Brokenshire MP, on 28th March, to assist existing leaseholders trapped in onerous deals.”