End to the leasehold trap: How do home owners benefit?

Living in a flat during lockdown. Picture: Getty Images/iStockphoto/conceptualmotion

Buying a leasehold flat is set to change with a reform in the law. - Credit: Getty Images/iStockphoto

People who own leasehold properties in Norfolk are being given a way out of the "scandalous pitfalls" that can be associated with buying this kind of home.

The government is overhauling the "bureaucratic and burdensome" system of leasehold, most commonly used when buying a flat in a block of others.

New laws are coming in which will prevent property owners from doubling or trebling ground rent on leasehold properties over time.

Other rules will enable people to extend their lease by up to 990 years without paying ground rent to the owner. The new changes will also put a stop to charges rising when, say, a block of flats is resold to another freeholder.

It comes as four of the nation's major housebuilders were investigated by the CMA, Competition and Markets Authority, last year for allegedly breaching consumer protection law in relation to leasehold new homes.


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They were alleged to have imposed escalating ground rents, which in some cases doubled every 10 years. 

The government has also pledged to extend the improvements to cover new retirement properties.

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Some of these types of homes can be tied up in expensive charges which go up each year. For example, in the event of a property coming up for sale after a person has died, it can land families with huge increasing bills which need to be paid until the property is sold. 

Jan Hytch, chairwoman of the NDAEA, Norwich & District Association of Estate Agents, said: "Property leases with less than about 80 years remaining can be almost impossible to obtain a mortgage on, leaving leaseholders at the mercy of cash buyers. The problem is not as widespread in Norfolk but with many new developments in Norwich, the question of leasehold properties is certainly relevant here. We don’t yet know what the cost of extending a lease will be, it could be up to 12pc of the value of the property. But this could be a small price to pay."

Jamie Minors, who runs Minors & Brady estate agents in Norfolk, said: "Some leasehold properties are subject to long-winded, bureaucratic, and often very unfair terms which trap people in not being able to re-sell easily.

"These reforms will be much fairer and protect the small guy from the big corporations. This is a win for the normal person."

Housing secretary Robert Jenrick described the reality of being a leaseholder "too bureaucratic, burdensome and expensive".

Mr Jenrick said the new laws were being introduced to banish the "scandalous pitfalls of leasehold' and 'put fairness back at the heart of the housing system".

What's the difference between leasehold, freehold and commonhold?

Freehold:  If you own the freehold, you own the property lock, stock and barrel including the land it stands on. Most houses are sold freehold.

Leasehold: You do not own the land the property is built on. A leaseholder essentially rents the property from the freeholder for a number of years, decades or centuries. This usually applies to flats in blocks and has benefits as well as drawbacks because you are only responsible for your share in the entire building.

Commonhold: The government is moving towards this as a system. It allows you to own the freehold of an individual flat in a block and there is no limit on how long you can own it for. 

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