Nine in ten leaseholders regret purchasing a leasehold house, and 6 in ten believe they may have been mis-sold by developers or their recommended solicitors.
That’s according to a new report by NAEA Propertymark, which reiterates some of the findings of our investigation into the leasehold scandal in June.
The new information claims buyers live a ‘leasehold life sentence’ as spiralling ground rents and permission fees make their houses unsellable.
Here, we check out the report’s findings and explain what the government is doing to help leaseholders.
Homeowners at nighttime over leasehold terms
Research by NAEA Propertymark has cast a light around the confusion and not enough information that has surrounded many leasehold house purchases.
The report claims that almost half (45%) of more than 1,103 people surveyed didn’t know these were only buying the rights to a lease until it had been too late.
The report also found:
As an effect, nearly two-thirds (62%) of leaseholders seem like they have been mis-sold their property.
Mark Hayward of NAEA Propertymark says: ‘If you buy a new-build house, you'd usually deal directly with the developer's salesforce instead of an estate agent.
‘But sales assistants aren't bound through the Auctions Act 1979, leaving buyers vulnerable and without protection, which explains why a lot of feel like they were mis-sold.
‘It's the perfect time we paid attention to this and sought a strong solution for anyone affected, unable to sell their homes, and serving a leasehold life sentence.’
Permission fees adding to costs
Propertymark’s research also found that one in 10 homeowners have had to pay electric power charge to create cosmetic changes to their property. These charges are commonly – otherwise formally – known as permission fees.
On average, freeholders charged respondents lb1,422 for permission to install double glazing, lb887 to alter kitchen units, and lb689 to replace flooring.
Questions were also raised around service charges. If you buy a leasehold flat, service charges cover maintenance of any communal space or shared assets like a roof or guttering.
However, standalone leasehold houses don’t have communal areas, and this has resulted in service charges instead charged to keep outdoor communal areas on estates.
More than half (51%) of homeowners who responded to the NAEA survey said that between council tax and service charges, they think they’re paying twice for the similar service.
Our research into the leasehold scandal
Which? conducted the biggest research project available into issues surrounding new-build homes captured.
Our full investigation: ‘To possess in order to leasehold? Inside the leasehold new-build homes scandal‘ laid bare the different issues faced by leaseholders and how owners have been left with unsellable homes.
During the course of our research, Which? received 192 letters from leaseholders, covering leasehold issues with 19 housebuilders, including seven of the largest 10 developers in the united kingdom.
Leasehold houses to be banned
Last December, the government announced measures to ban the sale of new-build houses as leasehold, and also to set ground rents on new long leases to zero.
At this stage it remains unclear when these changes will come into force.
While the federal government also pledged to ‘allow it to be cheaper and easier for existing leaseholders to purchase out their freehold’, there are currently no indications around how specific redress works for all those with onerous clauses.
Leasehold Select Committee deadline approaches
The Housing, Communities and native Government (HCLG) Committee recently launched an inquiry into the progress from the government’s leasehold reform measures, looking in particular in the issues facing existing leaseholders.
The deadline for submissions is next Friday (14 September), using the committee inviting submissions on: