Posts with tag: leaseholders

Industry reacts to Government plans to ban leaseholds on new builds

Published On: July 26, 2017 at 11:11 am


Categories: Property News

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Yesterday saw the Government outline plans to ban housebuilders from selling new build properties as leasehold in England, following outrage over contracts permitting property owners to pay fees for ordinary works.

Unsurprisingly, the move has been welcomed by a number of property investors and industry peers.

Leasehold Bans

Martin Bikhit, Managing Director of Kay & Co, observed: ‘We welcome the ban for leasehold fees on new build houses. High ground rents substantially increase the cost of a lease extension or the purchase of the freehold of a property, so this proposal will make things much fairer for buyers in the long run.’[1]

Despite the proposals being met with optimism by many, there is still confusion on the future of many existing leasehold homeowners.

It is expected that the Department for Communities and Local Government (DCLG) will consult on what measures it can take in order to support leaseholder facing onerous charges. These include spiralling ground rents.

A DCLG spokesperson said: ‘Under Government plans, ground rents could be reduced so that they relate to real costs incurred and are fair and transparent to the consumer.’[1]

Positive Step

Mark Farmer, Government advisor on construction CEO of property and construction consultancy Cast, said: ‘The government’s plan to ban leaseholds on new build houses in England is a step in the right direction for fixing our broken housing market.’

Industry reacts to Government plans to ban leaseholds

Industry reacts to Government plans to ban leaseholds on new builds

‘Leasehold agreements for houses and the subsequent ground rents that are charged, artificially distort a housing market that is already struggling with issues surrounding affordability. Banning developers from selling new-build houses on leasehold agreements to drive additional revenue may help recover some of the confidence that the public has lost in the sector.’

Mr Farmer went on to note: ‘Without action on this and the parallel housing quality debate there is a real risk of buyers starting to move away from new build stock which would be a disaster for housing supply.’[1]


Camilla Dell, Managing Partner at Black Brick, feels that the planned ban will give both protection and more certainty to buyers of new builds in the future.

Dell stated: ‘When purchasing any property, new build or not, with a long lease, the ground rent should always be peppercorn, but it does come down to the conveyancing process and for the buyers solicitor to carefully check the sales contract and ensure buyers interests are protected.’ [1]



Lack of knowledge over property leases

Published On: November 10, 2015 at 10:58 am


Categories: Property News

Tags: ,,,

A shocking new survey has indicated that many property owners in Britain who are leaseholders do not know enough about how the system works.

This is due to poor advice being passed on by conveyancing solicitors, according to the investigation conducted by law firm Bolt Burden Kemp.


The firm believes that some owners have a very poor understanding on how leases work, what to do to get them extended and the consequences of not extending a short lease.

Results from the survey show that over half of leaseholders are unaware of an 80 year old rule that states once the time left on a lease falls below 80 years, an extension will immediately cost thousands, if not hundreds of thousands, to renew.

Nearly all flats and apartments in England and Wales are leasehold property, yet only a fifth of leaseholders know that they have leases with less than 80 years let. They therefore are facing lofty bills to extend their agreement. Worryingly, 36% do not know the length of their lease.

Leaseholders are said to not know that they can extend their lease following two full years of ownership. Bolt Burden Kemp points out that a lease with less than 80 years left to run becomes less valuable, leaving the owner with a diminishing asset.

Lack of information

In addition, the survey shows many respondents were not given basic information about the importance of the length of a lease. It points out that buying a leasehold can be full of underlying issues and a lack of knowledge can lead to expensive problems.

‘It is clear from these results that leaseholders are simply not being given enough information by their professional advisors before buying flats and apartments,’ noted Stephen Hill, partner at Bolt Burdon Kemp. ‘This is creating a ticking time bomb for many leaseholders.’[1]

Lack of knowledge over property leases

Lack of knowledge over property leases

‘Not knowing the length of your lease of the impact if it balls 80 years is very serious, it could mean you struggle to sell the property or renew your mortgage. Solicitors and conveyancers advising leaseholders must do more to ensure property owners are fully aware of what they are getting themselves into when they buy a lease,’ he added.[2]

Results from the survey indicate that 39% of respondents were not advised of the significance of the 80 year rule when purchasing a property. 42% were told not to take legal advise in time before their lease dropped below the 80 year mark.


The law currently states that when an unexpired term of lease falls below 80 years, the calculations to work out the cost of an extension changes. When a lease is extended, the freehold becomes less valuable. Should the lease have less than 80 years left, when a leaseholders comes to extend, the law states that compensation for any lost value should be paid to the freehold owner.

Despite half of those surveyed knowing that their lease had more than 80 years left to run when they purchased their home, 20% said that bought a home which had less than 80 years left on the lease. 29% could not remember.

Hill believes that, ‘the general lack of knowledge around the 80 year rule is shocking. This is one of the first things property buyers should be enquiring about when they are looking to buy a home which has a leasehold title rather than a freehold.’[3]