What is leasehold scandal?

When it started?

Buying leasehold houses is not something new. Many years ago our parents and grandparents also had possibility of buying leasehold houses. It’s more-less same principle and it worked in same way as today. Big difference is that they had to pay 1 pound annually and sellers were not so motivated to ask for this one pound, so basically you had no rent to pay back then. Suddenly it started changing. Developers started to ask for 200 to 400 pounds per year. Leasehold scandal has begun in the beginning of this century, but it popped up recently.

What is the problem with rent?

Well 200 to 400 pounds annually is not so much money, you think. Indeed it’s not, but that is not the problem. Problem is that freeholders started putting many clauses in the contract that was bad for leaseholders. One of the clauses is that leaseholder need to pay thousands of dollars just for permission to build something in the courtyard. One of the most significant things about leasehold scandal is clause about doubling rent. That means that your rent is going to double every 10 years. It maybe doesn’t sound too much, but if you calculate it you will see that it is indeed too much money. How many people are affected by this scandal?

We don’t know exact number, but research tells us that there are about 100 000 leaseholders who bought leasehold houses under these conditions. It is huge number. But that’s not all. There are many others buyers of leasehold flats. It is true that you can’t buy freehold flat, but these flat buyers also fell in trap of sellers who put those clauses in contracts.