A question of tenure
I’ve mentioned this in the past but there’s a ticking time bomb and it’s getting louder. In our rush to build more and subsequently to buy new houses developers are often offering just a ‘leasehold’ rather than the ‘freehold’ interest in the new home, something that in some cases may be a problem for todays buyers when they come to sell in due course.
There are some good reasons to sell leasehold interests in say flats since offering the freehold would be difficult on a number of levels but there is very little reason that I can think of to sell a leasehold interest in a house. It doesn’t happen elsewhere in the world in anything like the volume that we are doing so here in England and Wales and in my view it should be stopped.
Not only is a lease less preferable but there are reports of unscrupulous freeholders including multipliers for the ground rent that the leaseholder pays each year that would see the initially modest figure double every ten years – if you do the maths you will quickly see how this adds up.
£500 a year to start with becomes £1000 a year after ten years and £128,000 every year after 80 years and over £2m every year in 110 years time! Imagine what would have to happen to inflation for that to seem relatively affordable?
My advice to those looking at buying a new home is to ensure you use your own solicitor to advise you about the purchase, not one recommended by the developer and to look very carefully before considering a leasehold property in the first place. Buying a home is a serious business, not something that should be rushed and if you are in ANY doubt about what you are being offered, walk away.
More background here;-