Leaseholds have been one of the year’s hottest topics in the property industry, so here is a quick recap on what has happened so far.
The issue came to light earlier this year when it was revealed that a growing number of people owning new-build properties have seen ground rents rise by thousands of pounds after the developers, the original leaseholders, sold them on to investment companies.
Many of these firms are based overseas and the leases have forced home owners to pay escalating ground rents and fees. Many have also been unable to sell their home.
The need for change was further highlighted when recent figures published by the Government revealed that 4.2 million properties are affected. This is 200,000 more than had been originally estimated and has intensified calls for reform.
Ministers have moved to sort out the leasehold scandal and a consultation has just been completed with the Department of Communities and Local Government (DCLG) pledging to tackle the problem.
Campaigners want a ban on selling new homes with leases and quick action to deal with home owners trapped by the current system.
The Conveyancing Association (CA) has suggested replacing leaseholds with a working commonhold proposition which could solve many of the problems such as escalating ground rents, the sale of the freehold in order to make a substantial profit, and the rise in fees and premiums to leaseholders in order to allow them to, for example, extend leases and make alterations to the property.
The CA has also been lobbying for a review of the work of administrators who manage leases on behalf of the freehold, with many leaseholders being forced to pay extortionate fees in order to sell their homes. Sellers also experience delays which mean that, on average, the sale of a leasehold property takes 20 days longer than that of a freehold.
If you are thinking of investing in a buy-to-let property, call Knight Property Management today on 01992 308181.