Leasehold house prices rise faster than freehold as developers accused of cashing in
Leasehold property prices have jumped 4.3% over the past year, while freehold new homes increased by 2%, according to analysis of Land Registry data by estate agent James Pendleton.
It shows developers are wringing profits from the “exploitative” arrangements while they still can, the agency said.
The average sold price of a new leasehold house – excluding flats and maisonettes – is up to £256,117 from £245,471 last year.
The government has been urged to act fast to protect buyers who buy leasehold houses, only to discover many lenders will refuse mortgages for the homes, leaving owners struggling to sell.
In many cases new leasehold homeowners are subject to doubling of ground rents to the freeholder.
Over the summer, the government announced plans to ban the sale of new build houses as leasehold altogether.
Lucy Pendleton, founder director of James Pendleton, said: “Developers have realised the commercial value of leases and they have become a ticket for profiteers who are able to take advantage of buyers with little choice but to proceed to get their foot on the ladder.”
Help To Buy buyers hit with leasehold tie-ins
It’s feared many property owners of leasehold houses were first-time buyers using the government’s Help to Buy scheme.
Pendleton added these buyers are likely to be “less aware of the downside of taking on open-ended leases on homes that should be freehold”.
Sebastian O’Kelly from the Leasehold Knowledge Partnership said developers have adopted the practice of selling leasehold houses at the expense of their own customers.
He added: “It is tragic that we taxpayers have poured money into the Help to Buy scheme to encourage first-time homeownership and in fact fuelled housebuilders’ profits and investments for ground rent speculators.”
It comes after Labour MP Justin Madders called for a leasehold ‘emancipation bill’ to help homeowners escape unfair agreements.
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