Nearly half of leasehold homeowners say they did not fully understand what they were getting into until it was too late.
Thousands of homeowners are trapped in properties they cannot afford and are unable to sell because they bought them on a leasehold basis.
Nearly half of people who purchased leasehold houses in the past 10 years failed to realise they weren't buying the freehold until it was too late, with two-thirds saying they feel like they were mis-sold the property.
Many find themselves locked into escalating costs for ground rent and maintenance, as well as having to pay high fees for making cosmetic changes to their own home, according to NAEA Propertymark.
Homeowners often do not even have the option to move, with a third of those trying to sell their property saying they were struggling to attract buyers because they did not own the freehold.
Mark Hayward, chief executive, NAEA Propertymark, said: “Almost all of the homeowners we surveyed say they wouldn’t advise their friends or family to buy a leasehold home, which is a damning indictment on the industry.
“It’s time we listened to this and sought a robust solution for all those affected, unable to sell their homes, and serving a leasehold life sentence.”
Why is this happening?
Unlike a freehold property, under which people own both their home and the land it sits on, a leasehold only gives exclusive possession of the property for a fixed period of time, as set out in the lease.
When the lease expires, typically after 99 to 125 years, the current owner loses the property unless they can extend the lease.
Leasehold properties have traditionally been flats which have communal areas and shared facilities which need maintaining.
But a growing number of new-build houses have also been sold as leasehold in recent years.
Land Registry figures show that leasehold properties accounted for 43% of all new-build registrations in England and Wales in 2015, up from just 23% a decade earlier.
Above: a new-build home, which has been clearly marketed for sale as leasehold
Who does it affect?
Around 94% of people say they regret buying a leasehold home and 93% would definitely not purchase another leasehold property.
Many leaseholders have had to obtain permission to make minor alterations to their home, with 10% forced to pay a fee to the freeholder to get the go-ahead.
The average charge for those who wanted to install double glazing was £1,422, while a change of kitchen units cost £887 and leaseholds had to pay around £689 to be allowed to replace the flooring in their home.
Some people even faced a bill of £527 for changing their blinds, while others had to pay £411 to install a new front door.
What’s the background?
NAEA Propertymark’s research found that most people had not fully understood the implications of buying a leasehold property and had not sought independent advice.
Three-quarters of leasehold houseowners had bought their home directly from the developer, with two-thirds of these using the solicitor their housebuilder recommended.
Nearly half of people claimed they did not know they were only buying a leasehold, and not a freehold, until it was too late, and 57% said they did not understand what a leasehold was until after they had purchased the property.
Almost 50% were not aware they would face escalating ground rent, and 15% even said they were never told they were buying a leasehold property by a professional and had to find it in the contract for themselves.
The Government is currently looking into the issue of leaseholds and it has recently said developers will not be able to use government funding schemes for unjustified leaseholds on new houses.
But the move does little to help those who already feel trapped in a leasehold property.
Top 3 takeaways
- Nearly half of people who purchased leasehold houses in the past 10 years did not realise they were not buying the freehold until it was too late
- Many leasehold house owners face escalating costs for ground rent and maintenance, as well as having to pay high fees for making cosmetic changes to their own home
- Two-thirds of leasehold house owners say they feel like they were mis-sold the property