What YOU need to know about the leasehold scandal affecting homes

What YOU need to know about the leasehold scandal affecting homes 

What is a leasehold property?

When a home is sold as leasehold, the buyer owns only the house itself. The freeholder owns the land, meaning the buyer has to pay ground rent each year. They may also have to pay to make changes to the property. Ownership returns to the freeholder when the lease comes to an end.

Why is this a problem?

Leaseholds have been used for many years with the freeholder charging small ground rents. But developers saw this as a way to make money and many set rents quite high – at £200 to £400 a year – and some have doubled every decade.

Can families buy their freehold?

Sometimes. But, in some instances, the freeholder sells it to a third party who then charges a sky-high fee to sell it on to the leaseholder.

Why don’t sell up?

Many find their homes almost unsellable as some lenders will not grant mortgages against homes with excessive ground rents. Potential buyers may also fear the prospect of rents doubling.

How many are affected?

The Government says there are about 1.4million leasehold houses in England. The Leasehold Knowledge Partnership estimates that 100,000 of these are affected by onerous ground rents.

So what is the Government doing?

It has proposed a ban on the future sale of newly-built houses with leases. It has also encouraged freeholders to soften the terms of lease contracts to current owners. But this is purely voluntary and campaigners say it is not enough

What to do next?

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