A solicitor is warning home buyers to know their rights when purchasing a property which is leasehold.
Helen Clutterbuck, solicitor in the Litigation & Dispute Resolution team at law firm Napthens, reports that many new-build property developments are offering homes as leasehold, as opposed to freehold.
A fundamental difference is that where the property is leasehold the freeholder may be able to recover possession of the property if there are any breaches of the lease.
Historically, this was never a problem in respect of long leases that were for a term of 999 years, and for a nominal rent; however, as rents increase and more conditions are inserted into leases this may pose more of a problem in the future.
A typical clause is where building work is carried out on a property, most leases will require permission first. Other clauses, such as rent reviews, can have legal ramifications.
Helen said: “If a leasehold contract has a rent review built in, it’s important to be aware of this. Traditionally the rent may just have been a few pounds a year, but more recently-built properties can have significantly more to pay.
“It’s important to be aware that if a rent increases over £250, the lease may become what is known as an assured tenancy. This can bring with it important legal changes to the rights of a homeowner.
“As such, it’s important to be aware of the differences between freehold and leasehold, and for home buyers to take proper legal advice if they are unsure.”