The tale of toxic leaseholds hit the headlines again this week in an article in the Daily Mail. This time the focus is on a young couple from Binfield, Berkshire who have been told their leasehold flat is unacceptable to their buyer's mortgage lender. They have applied to the landlord to amend the lease and bring the ground rent down, but the landlord is demanding more than £7,000.
Leigh Shapiro from our Leasehold Enfranchisement team reminds us that these stories are not always black and white:
"This is the leasehold saga – it is nothing new and continues to play to the all landlords are bad headline – the causes are from developers but this only worked because the buyers were poorly advised in their conveyancing and were not told about the ground rent or the buyers were told but did not understand the effect of it or they did understand the effect but did not think about the later consequences.
There are two ways out of it – negotiate with the landlord to change the rent, which they are doing – or serve a lease extension claim to extend the lease by 90 years and reduce the ground rent to a peppercorn. The latter is the better result but is likely to cost them more. However, if they were to do this as part of the sales process, they could pass the costs to the buyer and probably reduce the sale price accordingly, but at least they wouldn’t have to pay out and then the buyer would have a better lease with no ground rent."
Just two weeks ago, the Competition & Markets Authority (CMA) launched an investigation amid concerns that some leaseholders may have been mis-sold their properties, as they had no idea what the terms really meant.