Updated Fact Sheet for owners of Leasehold Houses

Many purchasers of leasehold houses across High Peak have told me they feel they are not getting a fair deal when they attempt to purchase the Freehold to their property. I have therefore been pressing the government for a fairer system for leasehold homeowners to purchase their freehold.

 

THE CURRENT LEGAL POSITION FOR LEASEHOLDERS

 

Can I buy my Freehold?

Leaseholders have the legal right to buy the freehold after they have owned their leasehold property for 2 years.  Sometimes freehold owners will permit leaseholders to buy their freehold before the 2-year qualifying period has passed.

 

How much will my Freehold cost?

If you wish to buy your Freehold, you need to request the price from the company which owns the Freehold.  They may charge you a fee to send you this quote.  The cost quoted is decided by the Freeholder and can vary widely over time.

 

Can I challenge the quoted cost of my Freehold?

If you do not agree with the purchase price quoted, you can respond to the Freeholder to give your reasons for believing the price quoted is too high and to request that it is reduced.  If you cannot agree a price, you can apply to have the price determined by Tribunal – the Residential Property division of the First-tier Tribunal. There is no deadline for applying to the tribunal.

You will need a solicitor to help you in this process as both the freeholder and the leaseholder need to submit expert valuation evidence.

In a claim to buy the freehold of their property, the leaseholder is not only responsible for paying the purchase price and your own valuation, conveyancing and legal costs, but also the freeholder’s  ‘reasonable costs’ for:

  • Investigating your right to acquire the freehold
  • Valuation costs (although not the costs for the freeholder’s negotiations).
  • Conveyancing costs

These costs can make the purchase of a freehold much more expensive and can make it difficult for leaseholders to achieve a reasonable price to buy their freehold.

That is why I have been pressing government not just to ban the sales of new houses by leasehold, but also for a fairer system for existing leaseholders to buy their freehold.

 

RECENT GOVERNMENT ANNOUNCEMENTS FOR LEASEHOLDERS  

In December 2017, the government responded to a recent consultation on leasehold houses and committed to:

  1. Legislate to prohibit the creation of new residential long leases on houses, whether newly built or on existing freehold houses, other than in exceptional circumstances (which would include where the developer did not own the land the houses were built on);
  2. Restrict ground rents in newly established leases of houses and flats to a peppercorn value;
  3. Address loopholes to improve transparency and fairness for leaseholders and freeholders; and
  4. Work with the Law Commission to support existing leaseholders. This will include making buying a freehold or extending a lease “easier, faster, fairer and cheaper.”

The Government state that their aim is to seek to bring forward solutions by the end of July 2018 and then to legislate “as soon as Parliamentary time allows.”

It is still likely to take at least a year – if not more – for legislation to be passed.  I know how important this is to many homeowners in High Peak and I will continue to press the government to take effective action as swiftly as they can.

You can see the full proposals at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/670204/Tackling_Unfair_Practices_-_gov_response.pdf

 

Existing leaseholders

 The government have not confirmed definite measures to help existing leaseholders, but they have proposed to:

  1. Consult on introducing a simple formula for owners to buy their freehold or extend their lease.
  2. Consider introducing a Right of First Refusal for house lessees before their Freehold is sold to a third party.
  3. Help leaseholders to access advice on compensation if they feel they have been mis-sold a lease.

 

  1. A simple formula for buying a Freehold

We also want to make it easier for leaseholders to be able to exercise their right to buy their freehold, or extend their lease, and for this right to be available as soon as possible. The Government will prioritise solutions for lessees of houses. We will work with the Law Commission on this and consult on introducing a simple prescribed formula to help owners enfranchise or extend their lease without incurring additional court costs, whilst also providing fair compensation to the landlord.

 

  1. A right of first refusal

It has been suggested that long leaseholders of houses should be given a right of first refusal to ensure that freeholders offer the sale of the freehold interest to the leaseholder before selling to a third party.

The government’s consultation on leasehold houses suggested that transfers to third parties without the leaseholder’s knowledge is not in consumers’ best interests.

The Government has said that it will “consider introducing a Right of First Refusal for house lessees.”

 

  1. Advice on compensation for mis-selling or bad advice

“To help consumers access justice we will work with the redress schemes and Trading Standards to provide leaseholders with comprehensive information on the various routes to redress available to them, including where their conveyancer has acted negligently. We will also work with the Law Commission to consider whether unfair terms apply when a lease is sold on to a new leaseholder. This will help resolve the current ambiguity around this, and provide better protection for leaseholders”.

 

Other Complaints

If you live on another estate and feel that you were also misled over your sale, please let me know by email to ruth.george.mp@parliament.uk

 

Residents Groups

Residents on Beckets Brow have formed a Facebook Group to discuss issues with their Service and Maintenance Contracts, and a WhatsApp Group to discuss their leasehold issues.

Let me know if you are on that estate and would like to join, or if you are on another estate and would like to set up a group with your neighbours and I will put residents in each estate in touch with each other if you agree to share contact details.

 

Further Information

The Leasehold Knowledge Partnership (LKP) is a charity which “aims to help leaseholders, publish authoritative editorial and campaign for legislative and regulatory changes.

“If you are a leaseholder needing advice, please feel free to contact us.

“LKP provides no paid services whatsoever – although if we have provided assistance you are welcome to make a donation.”

Their website contains all the latest news on the leaseholding campaign, and advice for leaseholders:

https://www.leaseholdknowledge.com/

 

LEASE: The Leasehold Advisory Service.

An independent advice agency for leaseholders, landlords, professional advisers and others dealing with the law affecting residential leasehold property. The site includes the texts of detailed advice leaflets on statutory rights to enfranchisement (including collective enfranchisement) and lease extensions, decisions of the Leasehold Valuation Tribunal and a number of reports on commonhold and leasehold reform.

https://www.lease-advice.org/