How the poor are robbed by professionals over lease extensions
By Sebastian O’Kelly
Every day LKP is contacted by leaseholders being systematically cheated in one way or another.
It might be any of these:
1/ Completely inflated building insurance costs.
2/ A local authority charging £8,000 to paint a communal corridor.
3/ Sublet consent fees, which the Upper Triubunal has ruled should be around £40, charged at anything between £125 and £250. Sometimes freeholders try it on with regular payments of “subletting licences”. Sometimes no subletting fee is permitted in the lease, but the bill (with legal threats) arrives.
4/ Ad nauseam game playing over service charge bills.
5/ Routine threats of lease forfeiture even for trivial money disputes from bottom-feeding debt collecting outfits, like the Liverpool solicitors JB Leitch.
6/ Etc etc … et bloody cetera.
But the resourcefulness of the leasehold sector to make a dishonest penny also shocks at times.
We have just been contacted by a woman who owns a £70,000 “bedsit” that had 58 years on the lease.
She decided to extend by 99 years. A good idea, except she left matters to a solicitor for an informal lease extension.
The result? She has just paid out £10,000 for a lease extension with ground rents that have risen from £25pa to £125pa doubling every 25yrs until it reaches £2,000 pa.
“At no time did the solicitor tell me this was going to be in the new lease,” she writes to LKP.
“I worry now in case this makes the property difficult to sell. Since then I have been informed by a relative that when you extend a lease you should usually get free ground rent. Please could you let me know your thoughts on this?”
Our thoughts are that she has been badly let down by her solicitors and should look to suing them for negligence (which is likely to be very difficult, unless the lawyers were very sloppy at covering themselves).
£125pa ground rents on a flat she reckons is worth £70,000 is way in excess of the Nationwide’s mortgage criteria. https://www.leaseholdknowledge.com/nationwide-bans-mortgages-doubling-ground-rent-properties
Admittedly, this formally applies to new build properties only, but there is no reason at all why it would not apply to resales, too.
So, the flat may well be very difficult to sell.
This leaseholder has been well and truly shafted: what little money she has is being taken off her by cleverer people.
The woman wanted to secure her future and her home; she has in fact created a long-term investment asset at her own expense to the freehold owner.
The wonderful fairness of good old English leasehold law, on which an edifice of parasitism sits.
If you wonder why Corbynmania is taking such a hold – sorry to boast, but I didn’t: predicting a hung Parliament when the election was called – you could not find a better example of rampant unfairness than the way this country chooses to organise the “ownership” of flats.
Anyone thinking of extending their lease should read our section on lease extensions in the menu above, or here
And here is the excellent Louie Burns, of Leasehold Solutions, explaining why informal lease extensions are poisonous