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The government’s consultation into unfair practices in the leasehold market ended this week. The results are currently being analysed and we’re keen to hear the outcome. This could prompt the biggest shake up in leasehold law of the last 15 years.
On of the main focuses of the consultation was the problem of existing leases which have onerous ground rents. Problems occur where the ground rent starts at a relatively small amount but doubles every few years. An example would be a lease starting with a modest annual rent of £350, with an increase every 10 years. In this scenario, after 50 years the homeowner is having to paying £11,200 – almost £1,000 per month. We shouldn’t all be panicking though. The vast majority of leases are reasonable and any increase in ground rent is relatively small – often tied to the Retail Price Index (RPI).
Understandably, however, with all the coverage that is in the press we are getting more and more instructions from people wanting to buy the freehold of their home. They want peace of mind, and the comfort of knowing that they are the ‘lords of their own manor’.
So, if you would like to buy the freehold to your leasehold property, there are two options available to you.
You can informally ask the landlord to sell you the freehold at any time. This is a simple negotiation process to try to reach a price that you are both happy with. A solicitor can then complete the transfer of ownership and registration process.
However, once you’ve owned your home for two years, you have a right to buy the freehold. Under the Leasehold Reform Act 1967, the landlord cannot refuse. The Act sets out a strict procedure and timescales which must be followed. The benefit of this more formal route is that where you cannot agree on the value of the freehold, you can apply to the First-tier Tribunal (Property Chamber) to set a fair price. This process must be strictly followed, so you should contact us as soon as you’ve decided you would like to purchase the freehold. We’ll talk you through the next steps and get the ball rolling.
If you would like to discuss any details about your leasehold or freehold then please do not hesitate to contact our Conveyancing Team who will be happy to help. Contact us on 01270 762 325.
For more information see our Residential Property services page.
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