Leasehold Houses – Everything you Need to Know

What is a leasehold house?

Off the back of Help to Buy Scheme, many major Builders started selling houses on a leasehold basis when traditionally houses had always been freehold. Over time this became a controversial issue. 

Indeed in the end the Government felt the need to intervene. 


Some of the country’s major Housebuilders are sometimes accused of putting profit before their social conscience. Whilst they understand the need to build homes for families they also have shareholders to answer to.

The media regularly accuses them of “land-banking”, that is when they own land for some time and choose not to build on it because the market conditions are not favourable. 

Due to consolidation in the industry, sometimes Builders inherit land into their organisations which is on a leasehold basis. They argue that they offer both leasehold and freehold properties for sale so that buyers can make an informed choice.

The Impact on The Market

Many people who took out a first time buyer mortgage felt that the market had swayed much too far towards leasehold when it came to light how much profit the Builders had been making off the back of the leases.

Things came to a head when the Chief Executive of one of the UK’s biggest Builders received a bonus of over £100m. At the time this was one of the largest bonuses paid in corporate history. 

Some Leasehold Homeowners were shocked when they were being quoted thousands of pounds in fees when they sought permission to make alterations to their homes. The fees were being charged by their Leasehold Management Companies. 

Some of the annual ground rents were to double every 10 years and owners could see that selling their home in the future once these increases have kicked in would be more difficult. 

After notifying their MP’s and getting the subject debated in Parliament, the Government agreed that if you were buying a house (not a flat or apartment) then it is reasonable that you should own the freehold. 

Leasehold Facts to Be Aware Of

If you are in the situation of owning one of these houses and you didn’t realise it was leasehold then you definitely should have been made aware.

If you feel that the Solicitor acting for you did not give you the full facts about the lease you signed you should re-contact them immediately to investigate why. 

You can contact the freeholder at any time if you are interested in buying the freehold from them. 

In addition to leaseholds, there is the issue of service charges. When Councils grant permission for Housebuilders to build on land they don’t always agree to adopt the common areas (such as grass verges) and roads.

That means that the upkeep of these areas needs to be outsourced, usually to a private company. The owners in the area then make a financial contribution to this maintenance work on top of their council tax.

By the way, this can happen whether the house is leasehold or freehold. 

The costs of the service charges can go up which infuriates homeowners who are affected. Sometimes the residents in the area get together to form an association that might allow them to choose a different service provider. 

Get in Touch for Leasehold Mortgage Advice

If you are considering buying a leasehold property take advice from your Solicitor in regards to the lease. It’s really easy to get carried away with the excitement of buying a home but you need to also realise it’s a major investment decision that you need to think about carefully. 

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