Are new properties being sold with a leasehold trap for their owners?
Wednesday 24th May 2017
Many of the new houses being built by developers are being sold as long leases (leases of longer than 21 years), with the promise that a house buyer might buy the freehold 2 years down the line for a minor sum of approximately 15% of the premium value of the freehold. But are these promises being kept?
By owning the freehold, you own the property and the land outright and are solely responsible for maintaining it.
Under the Leasehold Reform Housing and Urban Development Act 1993 (LRHUDA) if you have owned your property under a long lease for more than 2 years, you can buy the freehold to your property. This process is called Enfranchisement.
Whilst this sounds like a positive step in enabling more and more families to save up and purchase the freehold to the house they already own and occupy, many tenants are finding the purchase of their freehold more expensive than initially promised.
The problem comes when your landlord sells the freehold to other companies who request higher values for the Freehold. Tenants are then left in the position of either accepting an offer which is two or three times more than the value initially quoted, or the option of serving formal notice on their landlord, and potentially incurring legal fees for the same amount.
This formal process requires you to serve notice on your landlord of your intention to buy the freehold, and they must then respond to accept your notice to buy or give reasons why not. If purchase is agreed in principle, often surveyors must be instructed to value the freehold and ascertain a cost payable to the Landlord. Potentially this could be protracted if your Landlord is particularly unwilling to sell.
Here at Marsden Rawsthorn we act for many types of tenants, both individuals, those in blocks of flats, and village communities who wish to Enfranchise and purchase the freehold to their property. With low costs and high standards of work, we aim to ensure that the cost to you of purchasing your home outright is as little as possible. If you are looking to Enfranchise, please contact Hayley Bamber or Julie Flynn in our Disputes Team.
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