Leasehold property buyers – beware the pitfalls

Sydney Mitchell LLP

A recent investigation into the leasehold property market has unearthed practices by some housebuilders that unfairly locks buyers into a leasehold trap.

These include problems with high ground rents or rents which double over time, high costs and fees in providing consents and permissions for matters such as property alterations and where the property is a house a few years after the purchase of property, developers or owners of the freehold who previously may have suggested to the property owner that they could buy the freehold for a nominal sum, are selling on the land to unscrupulous businesses that are then increasing the cost of freehold.

Some buyers of leasehold houses find themselves trapped in a vicious circle unable to afford to buy the freehold of their property and to sell as freehold due to the new landowner increasing the amount to purchase the freehold sometimes 5 or 10 fold e.g. from £5,000 to £30,000 pounds; ground rents in some cases increasing are 10-fold.

We have seen leases where the ground rent runs into tens of thousands of pounds per annum.

This in turn makes a property potentially unsaleable as more and more lenders are reticent to lend in these circumstances.

The Competition and Markets Authority (CMA) have said that some developers are misleading buyers in not making them aware of the potential for the onward sale of the freehold to a third party or in explaining the implications of buying a leasehold property.

Adam Oleskow, Partner at Sydney Mitchell LLP said: "Sydney Mitchell LLP welcomes the Government and CMA involvement in calling for a change in the law. It is vitally important to instruct a competent legal team for your property purchase to ensure that all the small print is double-checked. Some terms and conditions on new builds need a fine toothcomb and a full understanding of the implications before committing to the purchase. In addition to new builds, there are many older properties constructed over the last 10-15 years which have problematic lease provisions and any buyer of any property should consult with a specialist solicitor who is familiar with and understands the complications of buying a leasehold property before committing themselves."

"As a member of the Law Society approved Conveyancing Quality Scheme, Sydney Mitchell LLP ensures that all clients are made aware of the potential problems and implications when purchasing a leasehold property. It is important that you can trust your legal team to ensure they have your best interests at heart."

For help on this or other related property or conveyancing matter, please contact Adam Oleskow on 0808 166 8827 or email