Articles From the Team
Leasehold Reforms - not before time
The looming changes in the law surrounding leasehold properties and ground rent will come as a breath of fresh for many home buyers and those caught in developer hell with spiralling costs.
The main proposals include removing help-to-buy equity loan support on new-build houses sold as leasehold, ground rents in new leases would be limited to start and remain at 'peppercorn' level and leaseholders would be excluded from possession orders over ground rent arrears.
Historically all houses were sold as freehold with buyers having complete control over their property, these days with leasehold, a buyer is effectively a tenant in a long term rental with the inability to do very much without seeking consent from the freeholder. It’s estimated that around 100,000 homebuyers are trapped in contracts with spiralling ground rents. Not only has ground rent doubled every ten years, homeowners are subject to charges of up to £2,500 just to obtain planning permission from the freeholder to build a conservatory amongst other things.
Perhaps the worst issue of all is the difficulty in selling the property. They are becoming unmortgageable and unsaleable. Homeowners are caught between a company levying heavy charges for home improvements to the ridiculous price to of buying the leasehold outright.
So what’s the possible impact on the law in all of this? It seems certain that professional negligence claims with rise. Developer’s solicitors who failed to warn of soaring ground rents and the escalation of costs could face multiple legal actions. Taylor Wimpey has offered £130m to in the way of compensation to buyers trapped in the new-build scandal dependant upon certain ‘criteria’.
I for one, have seen close friends affected by the spiralling costs of ground rent, the reforms are long overdue. Whilst the future looks rosy for a leasehold ban, it is still unclear for those trapped in leasehold hell.
For more information contact BCL Legal or call 0161 819 7475.