A search of properties for sale in Lytham St Anne’s shows that a great percentage of houses and flats are currently sold on a leasehold basis. However, leaseholds are now in the spotlight as many are being sold on to companies who hike the charges or use the contract small print as a generator for additional fees.
This has been highlighted by the Competition and Markets Authority (CMA) who have reported that some leasehold homeowners either have been unfairly treated or may, in the future, be unfairly treated. Some prospective buyers are also being misled by housing developers.
The CMA has reported these deep concerns:
- Homeowners having to pay escalating ground rents, which in some cases double every 10 years. This increase is often built into contracts, meaning people often struggle to sell their homes and find themselves trapped.
- Homeowners have been misled about the cost of converting their leasehold to freehold ownership. When buying their home, some people were told the freehold would cost only a small sum, but later down the line this price had increased by thousands of pounds with little to no warning.
- Buyers are not being told upfront that a property is leasehold and what that means. Some sellers are failing to explain the differences between leasehold and freehold when directly asked, and some actually tell potential buyers that there is no difference. By the time people find out the realities of owning a leasehold, including the regular charges to be paid, they are often unable to pull out of the purchase, or would face significant difficulties if they tried to do so.
- Leaseholders being charged excessive and disproportionate fees for things like the routine maintenance of a building’s shared spaces or making home improvements. If people want to challenge such charges, the process is often difficult and costly, meaning few people decide to go through with it.
Andrea Coscelli, the CMA’s Chief Executive, said: ‘We have found worrying evidence that people who buy leasehold properties are being misled and taken advantage of. Buying a home is one of the most important and expensive investments you can make, and once you’re living there you want to feel secure and happy. But for thousands of leasehold homeowners, this is not the case. We’ll be looking carefully at the problems we’ve found, which include escalating ground rents and misleading information, and will be taking our own enforcement action directly in the sector shortly.’
The CMA has said that they will work with the Government to reform the leasehold market, which will include banning the sale of new leasehold houses and reducing ground rents for new leases to zero.