According to recent government estimates, up to four million people do not own the freehold to their own properties.
Instead, many homeowners, particularly of new build homes, own their homes on a leasehold basis. This means that these homeowners own their home for a fixed period during which it is rented from the freeholder (often the developer or a management company) in return for payment of ground rent. The freeholder remains the ultimate owner of the property, including the land it stands on.
While owning a leasehold interest in a flat has long been standard practice, government figures suggest that of the 21% of private housing that is owned by leaseholders, 30% are houses rather than flats.
In most instances the ground rent payable to the freeholder by the leaseholder is reasonable. However, there can be onerous clauses included in leases that provide for dramatic increases in ground rent, which can sometimes double year on year.
Homeowners may be offered the chance to purchase the freehold at the same time as purchasing the leasehold. If the new owner declines and attempts to purchase the freehold at a later date the freeholder may demand a significantly increased price.
While onerous leasehold rent clauses can be challenged, it can be a long and very expensive process. If you are purchasing a new build home or a leasehold property is it very important that you seek competent legal advice at an early stage so that you are fully aware of the ownership being offered for sale and the options available to you.
If you require assistance or are thinking of purchasing a property then our Property department can assist. Please contact us on either Bicester 01869 252244 or Oxford 01865 244661.