UK

Calls for change to leasehold law

A row of houses
Image caption Millions of people live in houses that are leasehold properties

Lawyers want the rules surrounding leasehold homes to be clarified amid claims some freeholders are charging too much for extensions.

About 3m people live in leasehold flats and houses in England and Wales but, even if they have a mortgage, never technically own the property.

Paul Marsh, former president of the Law Society, said many leaseholders do not understand the system.

"It is an unfair market but we want to make it fair," he said.

In some cases, leaseholders are charged tens of thousands of pounds to extend their contracts - as well as other sums to cover elements such as ground rent and legal fees.

One such case saw a freeholder ask for £15,000 to extend a lease by 30 years. But when an independent valuer was brought in, they said it was only worth £10,000 to extend it by 90 years.

In a leasehold situation, the land belongs to the freeholder who can ask for a cash sum to renew the lease if it falls below 80 years.

Mr Marsh said many leaseholders do not understand the system.

"Some landlords are using the complexities of the legislation and the innocence and gullibility of flat owners to their own advantage and I'm anxious that flatowners know what their rights are."

'Declining asset'

If leaseholders feel that they are being asked to pay too much, they can take the case to a legally binding tribunal.

But the advice from experts such as the Leasehold Advisory Service (LEASE) is to research first and try to negotiate because the amount being asked for may not necessarily be the final amount homeowners are expected to pay.

This can be done by involving an independent valuer and using an online calculator tool, which will work out what is a fair price based on the lease length, the ground rent and when the property was purchased.

That amount can then be pitched to the freeholder.

Tony Essien, of LEASE, said people should "appreciate that a lease is a declining asset so the shorter it gets, the harder it becomes to extend it.

"And ultimately, when they see their value, they're in a far better position."

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites