In the midst of 2016, there was a boom of developers selling leasehold houses. This boom became known as the Leasehold Scandal.
What is the Leasehold Scandal?
In a nutshell, there are two types of property sale in England. There is a freehold sale, which means you own the property, forever. A leasehold, however, is a sale that is basically a long contract of rent for a property.
Why has this Become a Scandal?
Just in case you’ve not quite understood, a leasehold is a contract for rent for long periods of times (some up to 999 years). This means, you will have to pay ground rental fees every year. Now, that might not sound bad, but there is fine print in every contract. The ground rental fees require the amount to grow every ten years, sometimes doubling (if you’re lucky) or even tripling. This means you are stuck for your time of lease under these conditions, without being able to leave, cancel, or sublet the property.
This brought on a plethora of freeholders that had conditions that anyone would consider unreasonable. For example:
· No animals allowed on premises.
· No more than 4 people living on the premises at one time.
· No construction without proper consent, and a full payment for permission from freeholder and legal permits.
· The property must not be left alone for more than a month without prior consent from freeholder.
· In case of a long trip, there will be no subletting without prior consent and contract form freeholder.
The leasehold scandal is simply a group of people that do not want to be taken advantage of for a piece of property they will be living in for a long period of time. So, if you are looking to buy a house, make sure you do your research on whether it is a freehold or a leasehold, and pick whichever suits you the best!