A fairer deal for leaseholders
Leading housebuilder, Persimmon, and insurance company, Aviva, have agreed to make key changes to the way they operate when it comes to leaseholds.
The changes follow an investigation by the Competition and Markets Authority (CMA) in 2019 which examined the high fees leaseholders faced when buying a freehold or paying ground rent.
What changes are Persimmon and Aviva making for leaseholders?
Persimmon has said that it will allow both new and existing leaseholders to buy the freehold of their property at a discounted rate. While Aviva, which purchases freeholds from many of the leading housebuilders, will repay homeowners who saw their ground rents double.
Aviva have also agreed to remove terms which resulted in doubling ground rents, and convert them into gradual increases based on inflation or the retail price index. Doubling ground rents have become a major concern in recent years both to consumers and mortgage lenders, as the ground rent can end up being extortionate by the end of the lease term, so this is a welcome change.
What do these changes mean for leasehold property owners?
Not only will those who paid over the odds for ground rent get some of that money back, but leaseholders who are struggling to afford to buy their freehold may now be able to do so. In addition, leasehold property owners who have struggled to sell their property will now be in a better position to do so.
This is of course great news for those who bought, or are buying, a leasehold home with Persimmon, or whose freehold belongs to Aviva. However, the focus is now shifting to the many housing developers and insurers who have remained silent on the cost of owning a leasehold home.
What is a leasehold property?
With a leasehold property, you own the property, but the land upon which it is built is owned by the freeholder. This is normally a management company, or sometimes an individual.
Being a leaseholder gives you the right to occupy the property for as long as the lease is valid, which is usually around 100 years, and could be as high as 999 years.
Can I buy the freehold?
Yes, owners of leasehold property can purchase the freehold from the freeholder at any time. There are various legal steps and rules which you will need to follow, so it’s best to seek specialist advice from a conveyancing solicitor to ensure the process goes smoothly and in your best interests.
You can also extend your lease.
Thinking of buying a leasehold? Contact our expert conveyancing solicitors in Bristol
Although the term ‘leasehold’ has traditionally been associated with flats or apartments, it’s becoming increasingly popular for new builds to be sold as leasehold homes. This is particularly true in Bristol, with not only new builds but older homes too.