If you answered ‘yes’ to any of the above questions, you could be entitled to bring a compensation claim against the conveyancers and property developers who mis-sold you your leasehold property.
Complete the quick enquiry form and discover how ClaimExperts.co.uk can help you make a leasehold claim.
Any compensation won could be used to buy your freehold.
There are approximately 4 million leasehold properties in England.
Most of these leasehold properties are flats. In recent years however some developers have been selling leasehold houses too.
If you are a leaseholder you do not technically own the property you live in.
You are effectively renting it. Typically for a period often ranging from 99 to 999 years.
As a leaseholder you are obliged to pay ground rent to the landlord every year.
What are mis-sold leasehold property claims?
Many homeowners who have bought a new build in the past ten or so years were not told the full implications of purchasing a “leasehold property”, and now find themselves stuck in spiralling ground rents.
Below, we list all of the questions you need to know to find out if you have been affected, and whether or not you can make a claim for compensation.
What is a Leasehold?
- Leasehold Property– When a property is bought, but the ground which it is built on is not
- Freehold Property– When you own the property, and the land on which it stands
The land, when you buy a leasehold property, is owned by the freeholder. The freeholder charges the purchaser ground rent, per annum (every year). The leaseholder also needs to get permission from the freeholder should they want to make any changes to the property.
Leasehold properties are a relatively new trend, as traditionally houses have been sold as freehold. This means we are seeing new-build properties caught in the scandal more than older properties.
Why are Leasehold properties a problem?
The main issue is in relation to the ground rent, which is paid by the leasehold owner per annum.
In the past, this ground rent charge was minimal, sometimes as little as £1 a year. However, a growing trend, in an ever increasing squeezed property market, has seen property developers begin to take advantage of this little known clause.
We are now seeing property developers inserting clauses into leasehold contracts, increasing the ground rent from £1 a year, to £200-£400 a year. The clause would then state that this charge would double in price every ten years.
This means that the ground rent could soon spiral into thousands and thousands of pounds, with the Government predicting a family house could have a ground rent of £10,000 by 2060.
Is it just the ground rent that is a problem with Leasehold properties?
Ground rent is the main issue with leasehold properties, but not the only one. Freeholders can be as lenient or demanding as they want with the leaseholder. For example, our panel have seen cases of clients being charged up to £3,000 to build a garage, and even £100 to merely have a letter answered by the freeholder.
In essence, you are at the freeholder’s mercy when you own a leasehold property, and that can sometimes be a nightmare for many of our clients.
In addition to this, figures show that many of the leaseholders cannot escape this nightmare by selling their home, as once you inform the potential buyer of the leasehold status they are massively put off.
Many lenders, such as Nationwide, simply will not grant mortgages against homes with difficult ground rent clauses. Very often, conveyancers will also warn off prospective buyers.
How many people are affected by the leasehold scandal?
Leading figures in the property industry are estimating around 100,000 homebuyers are caught in this mis-selling scandal. Nearly all of these are new-build properties.
Can I buy the freehold of my property?
The short answer is yes, as leaseholders have a legal right under the Leasehold Reform Act 1967 to buy the freehold of their house, providing they meet certain criteria.
However, since the turn of the century, there has been a huge increase in prices for freeholds, which is putting many leasehold property owners off.
ClaimsExperts.co.uk recently received an example of a client who had been told they could buy the freehold when the property was first built for £3,000.
When they realised the issue, they had asked to buy the freehold, a few years later, and it had increased to £40,000.
Who is at fault for the leasehold scandal?
Figures show that seven out of ten buyers of new-build leasehold homes used the conveyancing advisors recommend by the new-build developer.
There is a huge conflict of interest here, with the developer potentially knowing that leasehold properties may put potential buyers off.
The main responsibility lies with the conveyancer in question. Many of these conveyancers are being accused of conflict of interest and failing to warn buyers of the potential pitfalls of leasehold properties.
Some of the fault may also lie with the developer. Many developers informed their buyers that their new-builds were “virtual freehold”, something which does not exist in law.
The vital point is, if you believed you were mis-lead or mis-informed when purchasing a leasehold property, the conveyancer and/or the developer may be liable.
Is any action being taken to stop the Leasehold scandal?
The UK Government has been forced to step-in in the wake of the ground rent scandal. It has proposed a ban on the future sale of houses as leasehold, as well as proposals to cut ground rent to zero.
It has held an open consultation which looked at a multitude of measures to ensure property buyers are protected from any mis-selling, in the interest of fairness in the leasehold sector.
It is not yet known to what extent these proposals will be moved forward.
In any event, the proposals do not help those who have already been affected by the scandal.
What are my next steps if I’m a victim of the Ground Rent Scandal?
If you believe you were mis-sold a leasehold property, ClaimsExperts.co.uk's panel of solicitors can act on your behalf to ensure you receive the compensation you deserve.
Their three simple steps can get your claim off to the best possible start:
- They will contact your conveyancer, the solicitor who acted for you when you purchased the property
- They will retrieve your conveyancing case file, to see if there was any mis-leading information
- They will then assess whether you have a case
They will guide you through the process, step-by-step.
Why use ClaimExperts.co.uk
ClaimsExperts.co.uk have a panel of leasehold solicitors in relation to claiming for mis-sold leasehold properties.
Our goal at ClaimExperts.co.uk is to provide practical, comprehensive claim guides, and connect with you expert, pre-vetted legal firms, who can then help you progress your mis-sold leasehold claim.