Persimmon Homes has announced that it will allow leaseholders to buy the freehold of their property at a discount. It has extended its Right to Buy scheme, which allows anyone who purchased a house on a leasehold basis on or after 1 January 2000 (where Persimmon still owns the freehold) to purchase that freehold at £2,000 or less. Anyone who has already purchased the freehold of their property from Persimmon for more than £2,000 can apply for a reimbursement of the difference. The scheme has been extended to 31 December 2026.
Aviva (which buys leaseholds from builders) has said that it will remove unfair ground rent clauses from leasehold contracts and repay those homeowners who have paid excessive ground rents because their contract contained a clause that allowed their ground rent to double every 10 or 15 years.
The Competition and Markets Authority (CMA) is delighted with the decision made by these two companies and says that it expects other housing builders and developers will follow suit.
What is leasehold?
If you buy a leasehold property, you will own the property for a fixed period, but not the land it stands on. This is owned by the freeholder – the landlord. Typically, when buying a new property, you will be granted a lease for 99 to 125 years, but this can be up to 999 years. As the house gets older, the lease becomes shorter, which can make it difficult to sell as many mortgage providers require a period of 70 to 80 years to remain on the lease. You may have the option to extend your lease or buy the freehold, depending on who your landlord is.
As with freehold property owners, you will have certain payments to make, such as mortgage, insurance, repairs and maintenance. However, as a leaseholder, you will have additional fees to pay – depending on whether your property is a house or a flat. These can include:
- ground rent
- communal insurance
- administration fees
- maintenance fees
Caroline Murray, partner and head of Graysons’ property team says:
“Ground rent and the cost to extend the lease or purchase the freehold on leasehold properties have long been issues for leaseholders. The government announced plans earlier this year to make changes relating to leasehold properties, which include cutting ground rent to zero on new properties and to making it easier for people to extend their lease. It is great to see that Persimmon and Aviva have acted in advance of these plans coming to fruition to make owning leasehold property more attractive for buyers.”
If you want advice on purchasing a leasehold property, contact one of our conveyancing experts now. You can also get a competitive quote by using our conveyancing calculator.
Author: Caroline Murray