This leasehold scam
Discussion
The Mad Monk said:
What snuffy said.
It is as simple as that.
Don't give anybody a non-refundable deposit for anything, anywhere, ever.
Indeed. I would certainly not be handing over a non-refundable deposit on a house until I was happy with all the legal arrangements (and it makes no odds if it's a new build or not, it's just the same).It is as simple as that.
Don't give anybody a non-refundable deposit for anything, anywhere, ever.
Leasehold is a fine concept , IF , you have a reasonable Landlord and management company..If you don't,it can be a complete nightmare. I purchased a leasehold flat about 10 years ago....had no problem until last year...Freehold was sold to a less than reasonable company....They employ a managing agent who increase the service charge 475%......Sure we have rights....we can RTM or try and purchase the freehold under CE.......but to do anything we have to pay the landlords legal fees.....so far this year our legal fees are £7500.....( To add some context the freehold sold for less than 10 K )..We have formed an RTM company and served notice on him.....but he will counter serve on us because he has nothing to lose....we take him to a FTT and we have to pay his fees to attend and his legal fees even if we win the case...its a cash cow that keeps on paying out with little or no risk to the freeholder.
Rant over..................
Rant over..................
Why has the leasehold house become more popular with new(ish) builds? Has something changed from a legal point of view, does it make it cheaper for the builder, etc?
Am curious as a few years ago it was pretty much a given that a house would be freehold and a flat leasehold.
Given the potential exposure to being rinsed at every opportunity, personally I would avoid a leasehold house but I guess others are less bothered by it as they are clearly still selling.
Am curious as a few years ago it was pretty much a given that a house would be freehold and a flat leasehold.
Given the potential exposure to being rinsed at every opportunity, personally I would avoid a leasehold house but I guess others are less bothered by it as they are clearly still selling.
KTF said:
does it make it cheaper for the builder, etc?
Yes - so they can sell off the freeholds to asset managers (see article from Grauniad below). I guess some FTBs were desperate to get on the housing ladder and either ignored or didn't read the leasehold terms. Maybe their conveyancer didn't emphasise the point enough - surprises they didn't have this on their 'checklist' ..https://www.theguardian.com/money/2017/jul/25/leas...
skirk said:
Leasehold is a fine concept , IF , you have a reasonable Landlord and management company..If you don't,it can be a complete nightmare. I purchased a leasehold flat about 10 years ago....had no problem until last year..
But this is about houses being leasehold, not flats. There's no reason for houses to be leasehold and up until a few years ago houses were never sold leasehold, only freehold, and that's the issue.
I bought a new build two years ago, it is technically called a Flat over garage, but also called a coach house. There are 2 carports and a drive through underneath the living area.
I had seen the plans on the web and the two most important questions I asked, even before it came up for sale were:
-Is it freehold?
-Are both the car ports mine?
Both were yes, (which is quite unusual for the second point) so I made sure I got it!
On the new build estate that I am on, I think it is only the flats in the blocks that are Leasehold.
I wouldn't like the idea of buying a lease, even if it is going to outlast me by decades!
I had seen the plans on the web and the two most important questions I asked, even before it came up for sale were:
-Is it freehold?
-Are both the car ports mine?
Both were yes, (which is quite unusual for the second point) so I made sure I got it!
On the new build estate that I am on, I think it is only the flats in the blocks that are Leasehold.
I wouldn't like the idea of buying a lease, even if it is going to outlast me by decades!
snuffy said:
But this is about houses being leasehold, not flats.
There's no reason for houses to be leasehold and up until a few years ago houses were never sold leasehold, only freehold, and that's the issue.
It's just a way of reducing the price of the house someone can afford to buy it, then recover the reduction via the leasehold.There's no reason for houses to be leasehold and up until a few years ago houses were never sold leasehold, only freehold, and that's the issue.
I'm sure there's lots of dodgy stuff going on too, but lots of people wouldn't be buying their house if they had to buy the freehold too.
KTF said:
Why has the leasehold house become more popular with new(ish) builds? Has something changed from a legal point of view, does it make it cheaper for the builder, etc?
Am curious as a few years ago it was pretty much a given that a house would be freehold and a flat leasehold.
Given the potential exposure to being rinsed at every opportunity, personally I would avoid a leasehold house but I guess others are less bothered by it as they are clearly still selling.
Exploitation of the current situation with restricted supply and high prices. Am curious as a few years ago it was pretty much a given that a house would be freehold and a flat leasehold.
Given the potential exposure to being rinsed at every opportunity, personally I would avoid a leasehold house but I guess others are less bothered by it as they are clearly still selling.
Whilst buyers should read the small-print and go elsewhere if they don't like what they say, that doesn't mean the law has to stay as it is.
snuffy said:
Surely the conversation goes like this ?
You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
I think a lot of new build houses are offered with free or very cheap conveyancing, so long as you use the builders chosen online firm. Who may not be that good at putting spanners in the works of a sale!You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
nikaiyo2 said:
I think a lot of new build houses are offered with free or very cheap conveyancing, so long as you use the builders chosen online firm. Who may not be that good at putting spanners in the works of a sale!
I think that home ownership is not for everyone.I feel that some people are better off sticking to rented accommodation.
If that comment is too subtle for anyone, please say so.
We bought a new build property last year (semi-detached house) on a leasehold (999 years). We knew this before we bought, and knew the cost to buy the freehold was £6k. We liked the house, as first time buyers it ticked all the boxes, was well priced for the area and in a great location, so we decided to buy whilst factoring in the extra cost to buy the freehold.
We knew before we decided to buy that we would be given three months after completion to buy the freehold or otherwise we would have to wait until two years after completion.
We had originally intended to purchase at the two year point but then found out that the freehold could be transferred/sold by the builder to another owner who could then increase the price. Therefore, we made the decision to buy it within the three month window, rather than run the risk that the price would be a lot higher later down the line.
As it happens, the builder has since relaxed the rule to allow purchase of the freehold any time within two years. Nonetheless, I've no regrets about buying it when we did.
Houses built after ours are being advertised for sale on a freehold basis, but are c£30k more expensive than ours. This suggests to me that if the law does change, the price of the house will just be increased by the builders so to preserve their profit margin.
I think the issue is where people are ignorant and/or get bad advice, and then get a nasty surprise later down the line when the freehold has changed hands and the price to buy the freehold has increased by 100% or more.
We knew before we decided to buy that we would be given three months after completion to buy the freehold or otherwise we would have to wait until two years after completion.
We had originally intended to purchase at the two year point but then found out that the freehold could be transferred/sold by the builder to another owner who could then increase the price. Therefore, we made the decision to buy it within the three month window, rather than run the risk that the price would be a lot higher later down the line.
As it happens, the builder has since relaxed the rule to allow purchase of the freehold any time within two years. Nonetheless, I've no regrets about buying it when we did.
Houses built after ours are being advertised for sale on a freehold basis, but are c£30k more expensive than ours. This suggests to me that if the law does change, the price of the house will just be increased by the builders so to preserve their profit margin.
I think the issue is where people are ignorant and/or get bad advice, and then get a nasty surprise later down the line when the freehold has changed hands and the price to buy the freehold has increased by 100% or more.
TTwiggy said:
Sorry - I'm still not with you. When I had a leasehold property (Thames water owned the land) I never had any issue with the lease. It was 999 years and while it was £150 per year (compared to the £10 per year a friend in the same borough paid) There was never a problem with any aspect of it and I never felt 'exploited'. Now, the management company and service charges were a completely different matter.
That's fine with modern 999 year leases. when I bought my property the usual was 99 year leases. I bought it at 85 years to go its now at 65 years and will cost about £20,000 to put it back to 99 years. Blue Oval84 said:
In a flat, I'd be extremely reluctant to ever go share of freehold unless I was hugely confident that an overwhelming majority of the other residents have good funds and a willingness to maintain their home. At least with a leasehold I can enforce the terms of my lease through a tribunal and collecting the money becomes the freeholder's problem.
Ditto. I am the only leaseholder in my block - everybody else has a share of the freehold. The investor I bought from steered well clear of the share of freehold, opting for a new 999 year lease instead, with a peppercorn ground rent.Not having to piss and moan with the 'freeholders' is great - they aren't professional land owners and they fixate over the silliest of issues. Instead I get pretty much what I need doing done, and have better protection as there is always the lands tribunal to fall back on.
KTF said:
Why has the leasehold house become more popular with new(ish) builds? Has something changed from a legal point of view, does it make it cheaper for the builder, etc?
Am curious as a few years ago it was pretty much a given that a house would be freehold and a flat leasehold.
Given the potential exposure to being rinsed at every opportunity, personally I would avoid a leasehold house but I guess others are less bothered by it as they are clearly still selling.
I imagine they can package up thousands of them and sell them to long income investors,,, getting a decent price - and it's all profit.Am curious as a few years ago it was pretty much a given that a house would be freehold and a flat leasehold.
Given the potential exposure to being rinsed at every opportunity, personally I would avoid a leasehold house but I guess others are less bothered by it as they are clearly still selling.
Matt p said:
I'm sure will have all the major house builders launching a PR fightback soon enough. Let's just hope Jarvid has the kahunas to nip this in the bud.
To be fair, some of the larger ones announced some time ago that they wouldn't do this anymore and launched schemes to sort out the issue.This measure is presumably to stop less scrupulous developers doing the same.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff