When is your home not really your home?

A shocking new report from HomeOwners Alliance has shed light on the true scale, practices and widespread consumer misunderstanding of the leasehold property market.

If you spend hundreds of thousands of pounds on a flat or a house, it is reasonable to expect that your home would then be yours to own forever. But for millions of ‘homeowners’ across the country this is not the case, because of the fact that they are leaseholders. In the eyes of the law, leaseholders do not own their properties, but merely have a contract that gives them access to it for the remainder of time left on the lease.

Homes Held Hostage shows how 1.577 million British ‘owner-occupiers’ do not truly own their own home in the eyes of the law, and how this is exacerbating the country’s home ownership crisis. Were these numbers to be included in official government figures, the true rate of home ownership in the UK (which is already declining) would plunge to just 58.9%, a figure comparable with the early 1980s.

The research has also identified widespread confusion among consumers over the leasehold system, along with an alarmingly high number of properties which imminently require lease extensions. Only 58% of leaseholders questioned said they knew the length of their current lease, and of those that did, almost a quarter (24%) said that it was under 80 years (typically seen by agents and mortgage lenders as the point at which the lease begins to adversely affect a property’s value and ‘mortgageability’). Analysis of these figures suggests that over £4 billion will need to be paid to freeholders by leaseholders to extend these leases over the coming years.

Further investigatory research by the HomeOwners Alliance showed that less than half of adverts on popular property websites were clear as to the correct tenure of a property. Only 49% of flat listings specified whether the property was a share of freehold or a leasehold property. Furthermore, only a quarter of the listings (24%) were specific about the length of time left on the lease; a piece of information vital for the potential purchaser to be able to make an accurate assessment of value.

Paula Higgins, Chief Executive of the HomeOwners Alliance, had this to say: “Leasehold ownership can be traced back to the Domesday Book and it is a practice that should relegated to history. Unscrupulous and avaricious actors within the property industry are using sharp leasehold practices to line their own pockets and fleece householders. Developers and estate management companies rely on leasehold to bamboozle consumers, charge exorbitant administration fees, ever increasing ground rents and render properties unsellable.

The situation is exacerbated by the fact that many estate agents are themselves are ignorant about leasehold and fail to inform and educate their customers properly. The Government needs to take urgent legislative action to protect people from these practices, help people who are already trapped and avert a full-blown crisis. Our report highlights the problems and makes a series of simple and sensible recommendations that could be introduced.”

The HomeOwners Alliance’s report makes ten recommendations as to how policymakers can legislate to prevent the abuse of leasehold and ameliorate the situation for those already stuck in a leasehold trap.

1.    Commit to scaling back leasehold
2.    Review of the whole leasehold system
3.    Outlaw the creation of new leasehold houses
4.    Outlaw the doubling of ground rents
5.    Mandatory commonhold tenure for all newly-built blocks of flats or apartments
6.    All lease extensions to be 250 years minimum with a peppercorn rent
7.    Standardised leasehold contracts
8.    Make it faster and fairer to buy and sell leasehold properties
9.    Provide accurate and timely information to purchasers
10.    Extend the rights afforded to private leaseholders to other groups

The full report and details of these recommendations is available here, along with advice and guidance for people experiencing issues with their leasehold property.

source http://blog.evolutionproperties.co.uk/2017/04/06/when-is-your-home-not-really-your-home/