5 Jun

Leaseholder hit with £100k bill over property changes

Leasehold reform remains in the news as both Government and the Law Commission work towards reform of this type of property tenure.

But a recent story in the Telegraph outlined some of the pitfalls that can befall leaseholders who fall foul of the terms of their lease.

Dentist Anne Hellan was locked in an expensive legal dispute with the freeholder of her ground-floor flat that ended up costing her and her partner an estimated £100,000. The disagreement centred on interior changes to the property done by a previous owner that the freeholder said were done without permission and had made the whole building unsafe. The freeholder also owned the top-floor flat in the property, a converted Edwardian terraced home.

The couple took the matter to court, paying around £45,000 in legal fees, but only settled the dispute by selling their flat to the freeholder for around £55,000 less than its market value.

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Move towards a different kind of home ownership

Speaking to the Telegraph, Ms Heelan said: “After a year and a half, he had us in a corner. We were battle weary. We’re educated people in a position to fight and we still lost. It’s appalling and we want to help other leaseholders.

“We looked at every kind of solution but felt totally helpless. After our experience, I really think we need to move towards a different kind of home ownership, like they have in other countries.”

In leasehold property, the leaseholder owns only the building but not the land on which it stands. The lease sets out the terms under which they are allowed to live there and is set for a fixed period of time that can be renewed – for a price.

In England, it’s estimated there are around four million leasehold properties and around 70 percent of those are flats.

Landlord-tenant relationship

Last year the then-Housing Minister Sajid Javid announced that the Government would ban the sale of newbuild houses as leasehold as reformers hit out at unfair ground rent clauses that imposed crippling increased costs on leaseholders. However, flats and shared ownership properties will continue to be sold as leasehold.

Meanwhile, in its May briefing paper, the Commons library noted: “Owners of long leasehold properties do not necessarily appreciate that, although they are owner-occupiers, they are in a landlord and tenant relationship with the freeholder.”

The Law Commission is to publish its proposals on reform of enfranchisement – how leaseholders can extend their lease inexpensively or buy the freehold on their property – before Parliament goes into its summer recess.