The leasehold scandal has affected thousands of families across the UK who are trapped in unsaleable properties. NAEA Propertymark carried out research into over 1,000 leasehold homeowners who purchased their properties in the last 10 years. They published their findings in a report which highlighted many of the issues leaseholders are having and the areas which have caused them the most concern.
NAEA Propertymark leasehold properties report
Of the leaseholders surveyed, it was found that 94% regretted buying a leasehold property and 93% said they would not buy another leasehold property.
The main three issues leaseholders were worried about were:
- Feeling that they were mis-sold
- Escalating ground rents and unexpected fees
- Fear that they would be unable to sell their property in the future
Feeling they were mis-sold
The research found that 57% of the leaseholders surveyed did not know what it meant to purchase a leasehold until they had already purchased the property.
Some buyers said that they were assured they would have the same rights and responsibilities as a freeholder or have all the freedoms associated with being a freeholder.
Many said they were not informed that the developer could sell on the freehold.
The research also found that people who dealt directly with the developer or used the solicitor recommended by the builder expressed lower levels of understanding than people who used an estate agent and their own solicitor.
Escalating ground rents and unexpected fees
NAEA Propertymark found that the biggest cause of dissatisfaction among leaseholders was ground rent.
On average, leaseholders have seen a 5% annual increase in ground rent. These leaseholders paid an average of £277 per year when they moved in and are currently paying £319, an increase of 15%. Most of them have only been in their properties for three or four years.
Many were not aware that their ground rent could double and are worried about the implications of this. 45% of leaseholders said that they were unaware of the escalating ground rent and 46% said they may not have purchased their property if they knew that their ground rent was going to increase.
36% said that they will not be able to afford their ground rent if it increases any further.
Fear of re-selling their property
The research found that 70% of those who regretted buying a leasehold are worried that they will not be able to sell their homes. Of those selling their properties right now, 60% said they were struggling because the property was a leasehold and not a freehold with some stating that this was putting off potential buyers.
The Government has recently confirmed their plans to abolish the selling of new houses as leasehold properties and to reduce ground rents on new leases to £0. Whilst they have announced plans to help people facing these issues with their leasehold properties there is no time scale at the moment for when we can expect to see changes in the leasehold market.
How can Nelsons help?
Charlotte Dowdy is a Trainee Solicitor at Nelsons.
At Nelsons, we can advise on the possibility of making a claim against the conveyancing solicitors that acted in the purchase of leasehold properties where the advice was potentially negligent.
For more information, please contact Charlotte or a member of our Professional Negligence team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.