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‘Real win’ ends unfair leasehold terms for homeowners

Real leasehold reforms have been slow, but new changes finally mean a win for consumers

4 minute read

leasehold reform

There’s finally some good news for leaseholders who’ve found themselves trapped in homes they can’t sell because of doubling ground rent clauses and unaffordable freehold prices. House builder Persimmon and financial services group Aviva, which bought freeholds from developers, have promised leasehold reforms. Some consumers may also be entitled to refunds on money they’ve paid in the past.

The move follows an investigation by the Competition and Markets Authority, launched in 2019, into leaseholds because it was worried that leaseholders were facing huge increases in ground rents and large and unexpected increases in the cost of buying a freehold. These two companies are the first to commit to change. But the CMA is expecting other housing developers and investors to take similar action.

What are the changes exactly?

Aviva has announced it is axing leasehold clauses that allow ground rents to double or increase in line with the Retail Price Index measure of inflation. In some cases, such clauses have left homeowners unable to sell their homes. Under the changes announced, these leaseholders’ ground rents will go back to the original amount when the home was sold. And it will not increase over time. Aviva has also agreed to refund leaseholders who have paid doubling or inflation-linked ground rent increases. Homeowners will be refunded the excess money already paid due to these clauses.

In a similar vein, Persimmon will offer thousands of leasehold homeowners the opportunity to buy their property’s freehold at a discounted rate in its Right to Buy scheme, capped at £2,000 until 31 December 2026. And it has agreed to reimburse customers who previously, under the Right to Buy scheme, paid more than £2,000. This is providing they still own their freehold.

Are you thinking of buying your freehold? Our specialist solicitors can help provide advice you can rely on. Find out more and speak to them today

‘A real win for thousands of leaseholders’

The move was welcomed by Andrea Coscelli, chief executive of the CMA. He said, ‘This is a real win for thousands of leaseholders – for too long people have found themselves trapped in homes they can struggle to sell or been faced with unexpectedly high prices to buy their freehold. Now, they can breathe a sigh of relief knowing things are set to change for the better.

‘But our work isn’t done. We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action.’

Paula Higgins, Chief Executive of the HomeOwners Alliance also supports the move. ‘Unjustified ground rents were addressed in this year’s Queen’s speech with the announcement of the Leasehold Reform Bill. With this Bill, the government proposes “to end the practice of ground rents for new leasehold properties”, other than a “peppercorn rent” amount.

‘We were concerned the Bill would only help new leaseholders – and not current ones. So while this development doesn’t go as far as that, it’s a step in the right direction. We welcome the move by Aviva and Persimmon and urge others – including the investment companies who were sold the freeholds –   to follow suit swiftly.

What have the companies said?

Persimmon has made no admission of wrongdoing, it said in a statement, while the group stopped selling leasehold houses in 2017 and introduced the Right to Buy program the same year. This enabled customers with leasehold houses to buy their freehold at a price below market value.

Persimmon CEO Dean Finch said, ‘Building on our existing Right to Buy scheme, this agreement provides a fair deal for all leaseholders of Persimmon built houses, extending the opportunity to purchase their freehold at a price well below market value’.

While a spokesperson for Aviva told MoneySavingExpert.com, ‘Where Aviva is the current freeholder, the Fund has agreed that all leases with 10- and 15-year doubling ground rent terms, including those that have been converted to RPI-based review terms, will be CHANGED to remove the rent review provisions. Those leaseholders’ ground rents will revert back to the original amount. i.e. when the lease was first granted – and this will not increase over time.’

What are ground rents?

If you own a leasehold house, you own the building but not the land it’s built on. The freeholder owns the land and you must pay them ground rent annually. In 2019 the Government confirmed its previously announced plans to abolish the practice of selling newbuild houses as leasehold properties. But it only applied to new houses. So houses already built could continue to be sold as leasehold. With leasehold flats, the freeholder also owns the building and common areas so you may also face other fees like a service charge too.

Historically, ground rents faced by leaseholders have usually been low, typically around £50 per year or less.  But in recent years, we have seen an increase in the amount housebuilders are charging. Typically, this has increased to an initial amount of between £250 and £500 per year. Some leases contained clauses allowing the ground rent to double, for example every 10 years. This could see a £250 per year ground rent to increase to £16,000 annually over a 60-year period. This has led to some people being trapped in homes they can’t sell. If you own a leasehold property it is possible to buy the freehold. To find out more, read our Step by step guide to buying a freehold

Have you been affected by the leasehold scandal? Let us know your thoughts below and help inform our campaign to end leasehold


Leave a comment (13)* Required

  1. Susan RandlesSusan Randles

    I own a shared-ownership bungalow for older people, the lease is owned by Guinness Partnership, does anyone know if the leases on this type of property would be able to be purchased? I have only 64 years left on the lease, this doesn’t bother me as I won’t be around when it runs out but when I die I may be leaving my children with a property which is unmortgageable.

  2. Carmela PapilioCarmela Papilio

    This is a huge step forward to end a system completely unfair and buiolt to favour only the rich. I am actually writing to understand more about how we can get rid of leasehold completely on flats as I find it ludricous that owners of flats cannpot fully own the land where the flat is build on, This ancient and obsolete system has to end.

  3. Stephen BrowellStephen Browell

    I bought my home in 1990 from Leech homes 99 year lease
    my wife and i struggled for almost 10 years and never gave the lease much thought i thought it was just renewed i have now only got 67 years left
    I now understand marriage value comes into buying my lease which i am just starting to understand i feel i have been conned
    and the goverment promising to help
    but its just been words

  4. K HinceK Hince

    Hopefully everyone commenting on the Leasehold Scandal is a member of the National Leasehold Campaign some great advice is offered for free. We now have over 21 k members all campaigning to abolish leasehold.. I note a number of people are paying fees to Adriatic via Homeground. for a price to purchase your freehold, you are wasting your money go down the formal route & give notice to Homeground to purchase freehold via a experienced leasehold solicitor & surveyor you are legaly protected using this method & it will probably work out cheaper.

  5. Debbie RileyDebbie Riley

    We bought a new build 3-storey house 7 years ago in Peterborough, Morris Homes. Lease is £250.00 per year worried what happens when its 10 years. The lease is 999 years. A few people have bought their land but its costly for us not only do we have to pay our legal fees we would have to pay HomeGrounds costs as well. £50 for a telephone call. £100 just to fill out the application. (Landlord is Adriatic Land 3). People here have struggled to sell their houses because of the leasehold and maintenance charges which are ongoing at this year 17.20 pm and they go up every year. Can’t imagine what the cost of our postage stamp of land would be? We will soon be at retirement age and will not be able to afford the extra costs long term, inevitably we will have to sell. Wish we had never bought the house.

  6. ValerieValerie

    Small freeholders can be the most greedy. I have a flat worth £160K (same as purchase price 11 yrs ago) doubling ground rent now at £500pa, next rise in 2027 to £1000pa. Can’t sell, tried for DOV and was quoted £80k. Will these small owners be pursued by CMA? Still waiting for lease extension cost reductions.

  7. Maxine billingtonMaxine billington

    I am in a leasehold maisonette and have 60 years left, but cannot afford the silly cost if extending it, when are these fees going to be looked at, its very wrong and unfair

  8. KateKate

    Hi may I ask when will lease extension costs be reformed. Thank you

  9. geraldine vickersgeraldine vickers

    I brought the leasehold and built a house which belongs to the leaseholder Crown estates. I was sold a l00 year lease. Then I found after 40 years it was not able to be mortgaged. So I had to purchase the extension which has cost me £250,000 plus two sets of solicitors fees

  10. Michelle ParmenterMichelle Parmenter

    I have just negotiated a fee of £8,000 to extend my lease, paid over £2,200 for my solicitor/surveyor costs and now I have to pay up to £3,000 for the freeholders solicitor/surveyor. What a complete rip off and now the freeholder wants to build another floor on top of a 3 storey 6 block of flats and if he gets planning permission I will have to endure all the noise and disruption of that. My advise to anybody thinking of buying a leasehold flat DONT

  11. C. H.C. H.

    We bought our Leasehold house from Bellway in February 2016, At no point in the process were we told by Bellway or our solicitor that it was possible to buy our Freehold at that point. We found out later that some home owners on our estate had managed to buy their Freehold at point of sale for sums ranging from £7000 to £14,000 – this sum seemed to be determined by how well the buyer bargained rather than the value of the house involved. We fully intended to buy our Freehold after being resident for 2 years. We had been resident in our house for about one year when we received a letter on the 16th February 2017 from Bellway informing us that the freehold on our house had just been transferred to Adriatic Land 6 (GR1) on the 1st February 2017 . We were given no prior warning that this was about to happen and no opportunity to buy the Freehold for ourselves. I did some research on the Companies House website and found that various Bellway directors had served on the board of Adriatic Land 2, Adriatic Land 3, Adriatic Land 4 and Adriatic Land 6 at intervals from 2011 to 1st February 2017. After we had been resident for 2 years we contacted a leasehold law firm to ask them to represent us in our attempts to buy our Freehold from Adriatic Land 6 (GR1). In January 2019 we instructed the law firm to act on our behalf and they spent the rest of the year gathering their clients into groups depending on which company owned their Freehold. In May 2020 we were informed that they had served legal notice on Adriatic Land 6 (GR1) for us to buy our Freehold. This was the beginning of a long tortuous process during which the price and terms of transfer were discussed between our solicitors and those representing Adriatic Land. This process is still ongoing. This has been a prolonged period of stress and frustration – buying your Freehold is not easy or straightforward and reform of the Leasehold system is a matter of great urgency.

  12. LydiaLydia

    I have noticed in my lease that my ground rent doubles every ten years. Of course at the time of purchase I was not aware of this and I feel strongly this should have been made clear.

  13. John BellJohn Bell

    We bought our home in 2011 and we were fully aware it was leasehold. We we advised we could buy the lease after 2 years and then we learned after the 2 years that the lease had been sold by Bellway to a private company called Adriatic Land. We were never made aware that our lease had been sold on. To find out how much the lease would cost we would be charged £100 just to enquire. We have a suspicion that if we were to pursue the purchase of the lease we would have to pay £8000+ We feel that we were mislead from the start and we feel we should be compensated and given the opportunity to purchase the lease at the original cost.

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