After the introduction of the Help to Buy Mortgage Scheme, a lot of home builders started putting up their newly built homes for sale on a leasehold basis other than a freehold one. After a while, the government decided to intervene after seeing how wrong the system was.
Some of the major housebuilders in the UK have been accused of neglecting social conscience in a bid to make profit. These housebuilders tend not to care that the country needs new houses, but are rather interested in making profit. The media have accused them of intentionally waiting for the market to be favorable without building new homes, a term referred to as “land banking”.
The consolidation of the industry has made builders inherit lands that are on leasehold into their organization. They claim to provide both leasehold and freehold properties up for sale to buyers to help them make informed decisions.
Alot of persons began feeling as though the property market had shifted a lot towards leasehold houses as soon as they got an idea of how much the builders have been making from the leases. Alot was exposed after it was discovered that a chief executive of one of leading builders in UK made about a £100m in bonus.
After asking for permission to make certain alterations in their homes, some of the leasehold owners discovered that they had received thousands of pounds in quotes. The fees were charged by leasehold management companies.
The owners also discovered that the annual ground rents would double after ten years and they would find it difficult to sell their homes in the future after this increase.
They were able to notify their MPs and the subject was debated in parliament; it was agreed by the government that anyone buying a house (not an apartment or a flat) will most likely be a freehold.
So, if you own one of these houses and you are not aware it is a leasehold then it’s important you know that you can inform the free holder of your house if you have interest in purchasing the freehold off them.
You will have to negotiate a deal with the free holder if you’re interested in buying. The length of time that you have lived in the property would have to be factored in as well.
Service charges are also another major issue alongside leasehold house. When housebuilders get permission from the council to build on a plot of land, certain areas such as roads, grass verges are usually left out.
These areas would then need to be outsourced to other companies, saving money for the homeowners and builders. The owners of the leasehold property would then have to contribute on top of their council tax. This could happen to either leasehold or freehold houses.
The costs of service charges may rise as well and this is another expenditure that will be added on your taxes as well. In some case, the residents would have to come together into an association that would allow them pick another service provider.
As trusted Help to Buy Mortgage Advisors in Essex, it’s important you consult your solicitor first concerning the lease if you intend to buy leasehold houses. It’s quite easy to get excited about buying a home, it’s important you realise that this is a major investment and the decision should be done carefully.
Date Last Edited: December 6, 2023