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25 January 2019

I bought a leasehold house 10 years ago and I am worried I may have difficulties selling it. What should I do?

This article was first published by City AM, Friday 25 January 2019.

Firstly, please do not assume that a leasehold house is bad news. There are many parts of the UK, especially in London, where there are a considerable number of leasehold houses that are perfectly saleable and mortgageable.

You need to look through the documents you received from your solicitor to check whether there are any issues that may impact your ability to sell your property; these will have been brought to your attention by your solicitor. General concerns would include the length of the lease, high ground rent provisions or the contribution towards and the repair and maintenance of communal areas you use in common with others.

In the past few years, the press has highlighted some house (and flat) leases that contain onerous ground rent provisions and the impact this has on selling, requiring a lease term extension or buying the freehold, for example. An initial ground rent of £250 may seem unremarkable. However, if the ground rent doubles every 10 years, £8,000 will be payable on the fifth anniversary. Such a sum may be unaffordable and, crucially, breach a lender’s requirements and prevent a buyer from borrowing money to buy the property. A high annual ground rent of £250 (or £1,000 in London), also has the little known and unintended effect of enabling a landlord to seek possession of a property for non-payment of ground rent (within specific timescales), bringing the lease to an end. For some time, the Government has invited consultation about implementing reforms to the leasehold system and intends to making it easier for leaseholders to buy the freeholds of their houses, cap ground rents and ban leasehold houses (subject to exceptional circumstances) for the aforementioned reasons. The consultation closed in November 2018 and the results have not yet been published.

If you have a long lease with reasonable provisions you probably have little to worry about. If you have unfavourable terms and this was not properly brought to your attention, you may have recourse against your solicitor for failing to advise you. In addition and subject to meeting the relevant criteria, pursuant to the Leasehold Reform Act 1967 (as amended) as a leaseholder of a house, you may have statutory rights to buy the freehold of the house to change the status from a leasehold house to a freehold house or may consider acquiring a lease term extension, which is less widely pursued.

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