New research reveals shocking lack of awareness amongst leaseholders
Recent research shows a shocking lack of awareness amongst leaseholders of the '80 year rule'. We take a look at how homeowners can have a better understanding of what they need to watch for when buying a home.
January 27, 2016 | post last updated on November 6th, 2017
Leasehold vs Freehold
A recent survey has revealed that over 15% of homeowners don’t know the difference between leasehold and freehold properties. Unfortunately, the difference can be hugely expensive if you end up getting it wrong.
Owning a leasehold property means that you just have a lease from the freeholder (sometimes called the landlord) to use the home for a number of years. Leases are normally long term – often 90 or 120 years, but sometimes as high as 999 years. However, sometimes they can be a lot shorter.
Over 36% of homeowners don’t know the length of their lease, according the the survey conducted by solicitors Bolt Burdon Kemp.
The ’80-year rule’
A lease becomes progressively less valuable once it drops below 80 years in length, but if it is above 80 years, it’s value is protected. This undoubtedly catches many homeowners out.
In fact, the survey revealed that over half (56%) of current leaseholders do not know about the 80 year rule. This rule could be costly for leaseholders as it could mean shelling out tens of thousands of pounds to extend the lease on their home, when less than 80 years remains on its term.
Properties with shorter leases can be harder to sell or get a mortgage on.
Poor advice from solicitors to blame
Further shocking revelations from the survey results reveal that 41% of current leaseholders said they were not warned by their solicitors about the ’80-year rule’ and over 36% said their solicitor failed to advise them that the lease would continue to fall in value.
What can I do?
- If you’re worried about the length and value of your leasehold property, read our step-by-step guide to extending your lease for further advice
- Use our leasehold extension calculator to estimate how much a lease extension will cost you
- Join HomeOwners Alliance as a member for personal guidance and advice on extending your lease
With thanks to lease negligence solicitors Bolt Burdon Kemp for this data.