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"Nightmare" new-build leasehold properties

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Making a new-build leasehold claim

Do you feel you were mis-advised in relation to your house purchase?

Have you purchased a new-build leasehold property only to now find out that your ground rent will double every few years?

Did you think you could buy the freehold only to now find out it will cost thousands of pounds more than you were first told?

Up and down the country, buyers of new-build, leasehold homes are finding themselves faced with huge increases in ground rent and are discovering that the cost of owning the freehold may be wholly out of reach.

Many of these homeowners now believe that they were ‘mis-sold’ their properties.

The old adage an “Englishman’s home is his castle” may be under threat by the practices of new build property developers selling properties on a leasehold basis and purchasers not being fully advised of the implications of this.

There are two aspects of this that could come back to bite purchasers further down the line: increases in rent being paid to the freeholder; and being quoted extortionate prices to purchase the freehold.

When you buy your new home, you expect to own the bricks, mortar, roof and the land that the house is built upon. Unfortunately, some developers are only selling these properties on a leasehold (or what they have called a “virtual freehold”) basis, which means that you lease the property for the period stated – anywhere between 40 and 999 years, but usually around 125 years.

In some cases, the new owner was not advised about the rate at which their annual ground rent would increase.  We have seen cases where what started out at £250 per year doubled every 10 years.  This may not seem much now, but in 20 years time when it is £1,000 per year and you can’t sell the property because of this annual expense, things seem quite different.  As well as the ground rent charges, the freeholder can also control things like the utilities suppliers, making it difficult for the owner to switch electricity supplier, and buildings’ insurance.

There are also cases where the purchaser has been told they could buy the freehold for the property for £2,000 - £5,000.  The owner has then saved up to do this and 18 months later has contacted the developer to tell them they now want to buy the freehold.  However, the developer has sold the freehold to someone else, and when the owner contacts them they are told the cost has risen to £34,000.

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Brief summary of the case

Mis-selling

Many purchasers may have been mis-sold leasehold property and may not have been told the full implications of what is involved.

  • Purchasers may have been told that the property they are buying is “virtual freehold”.  But no such thing exists in law – it is either freehold, or it is leasehold. 
  • Purchasers may have been told that they can buy the freehold at a later date and been given an example figure of a few thousand pounds.  In reality, if the purchaser doesn’t buy the freehold at the start or very shortly after, the developer may sell this to an investment company who then charges many thousands of pounds if you want to buy the freehold.
  • The investment company may also levy charges of several thousand pounds for things like consent to build a conservatory, change windows or even landscape the garden.
  • Purchasers may not have been told how the ground rent increases – what is initially £250 per year could very quickly become £10,000 per year and rising.

An example of this quick increase in ground rent is set out below:

  • Year 1: £250
  • Year 10: £500
  • Year 20: £1,000
  • Year 30: £2,000
  • Year 40: £4,000
  • Year 50: £8,000
  • Year 60: £16,000
  • Year 70: £32,000
  • Year 80: £64,000
  • Year 90: £128,000
  • Year 100: £256,000
  • Year 110: £512,000
  • Year 120: £1,000,024

Who is responsible?

Some of the responsibility may lie with the developer for not having fully advised you. The developer may have told you it was “virtual freehold” and “not to worry” about the freehold or that “you can buy it later”. Sometimes these statements are misleading. The developer then argues that they had no control over what their sales team was saying and that the salesperson no longer works for them.  They also often try and argue that your solicitor should have told you everything about the property. This is not always correct!

In many instances, you may have been advised, or even offered a reduction on the purchase price, to use a certain solicitor recommended by the developer. A solicitor has a duty of independence and to advise you on all aspects of your purchase, the good the bad and the ugly, so you know exactly what you are buying. If they didn’t, the solicitor might have been negligent.

The solicitor who acted for you in purchasing the property may also be at fault for not highlighting things like the increase in ground rent and the possibility and consequences of the developer selling the freehold to someone else. Sometimes these clauses are buried deep in the lease in legal jargon. Were these properly explained to you? If they had been properly explained to you, would you have still bought the property? If the answer to these questions are “no”, then you may have a claim in negligence against the solicitor.

For an expert initial assessment of your potential claim, call us now on  0808 149 3441(calls are free from landlines and mobiles). Or just complete the 'Start your claim in 10 minutes' option at the bottom of the page and we'll call you straight back.

I found your service very helpful and the staff very friendly. I would recommend you to everyone I know who needs help. Thank you so much."

Mrs L. Allen, Cambridgeshire

Can we help?

Issues concerning leasehold properties are top of the agenda for an all-party parliamentary group on leasehold property.  It is great that real steps are now being taken to overhaul this area.  However, that does not help you in your immediate circumstances.

We are acting for homeowners like you who feel that the developer misled them about being able to buy the freehold and/or whose solicitor did not advise them of the onerous clauses in the lease.

If you think you are affected, please contact us on 0808 149 3441 for a free, no obligation discussion.  Or just complete the ‘Start your claim in 10 minutes’ option on the right of this page and we’ll call you straight back.

If we think you have a claim, we will look at your case on a “no win no fee” basis, meaning you pay nothing if your case is not successful.

"This is not about a claims culture. We just want to defend the rights of the people who are suffering because of this."

Claire Critchley
Head of Financial, Property and Professional claims

Conditional Fee Agreement (CFA)

We will take your claim forward on a No Win, No Fee basis by entering into a Conditional Fee Agreement (CFA) with you.

This means that in the event we win your case, we will recover our fees and expenses from the other party or parties.

In exchange for us taking the risk that we may not be paid if the claim is not successful, we are entitled under the terms of our CFA to claim a success fee from you to be paid from any damages recovered.

You may already have an insurance policy in place that provides legal cover for you in the event that any claim is unsuccessful, for example with your home or car insurance. If not, we will put in place an After The Event (ATE) insurance policy to provide this cover. The premium for such a policy is normally only payable if the case is successful and is deducted from any damages recovered.

Our team will be able to take you through the key features of the CFA as a funding agreement and will address any questions you may have.

Start your claim in 10 minutes

For a FREE, confidential, no-obligation assessment of your claim, simply complete this short form. We aim to call you back within 10 minutes.


For a confidential chat, call one of our experts today  0808 149 3441    As seen on TV

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Frequently asked questions

What is 'freehold'?

Freehold means you own the building and the land it stands on until you sell it.

  • You don’t have to pay any rent to anyone else.
  • You are solely responsible for any repairs and upkeep on the property.
  • You can make alterations (subject to any planning laws) without asking the consent of anyone else.

What is 'leasehold'?

A leasehold means you have a lease from the person that owns the freehold.  You own the right to occupy the property during a specific period; however you do not own the property itself.  This is a form of contract which sets out the rights and responsibilities of you and the landlord.

  • You will pay an annual 'ground rent” to the landlord.
  • You will have to pay a “service charge” to the landlord or their agent for the upkeep of common areas and the external walls of the property.
  • You must obtain the landlord’s permission before you make any alterations to the property.
  • You may have other restrictions, such as not owning pets
  • If you don’t keep to your obligations (for example, by not paying the ground rent), the landlord can take back the property.

What is 'virtual freehold'?

Many leasehold properties were advertised as being a 'virtual freehold' as the lease was for 999 years.  Some people were told a 'virtual freehold' is as good as a freehold because of the length of the lease and were re-assured by this.  Legally there is no such thing as a “virtual freehold”. It is no different to a leasehold, and will have exactly the same obligations on the owner in terms of ground rent, service charges and obtaining consent from the landlord.

How long do I have to bring a claim?

You must start court proceedings within 12 years of signing the lease for any claim against the developer.  For any claim against your solicitor, the claim must be started within 6 years of when you acted  their advice.  Failure to commence your claim within these periods may mean that you are likely to lose your right to claim damages and you will run the risk of not receiving any compensation.

What losses can I claim?

You are entitled to claim for losses you have suffered as a direct consequence of the incorrect advice you may have been given. You must demonstrate that the losses you are claiming are directly attributable to the actions of the defendant you are claiming against – e.g. that you would have bought the freehold earlier had you known it might be sold to someone else and cost you many times more than you initially thought it would.

For a confidential chat, call one of our experts today  0808 149 3441    As seen on TV

How long will the claim take?

It can be very difficult to estimate how long a claim will take from start to finish as each claim is unique.  We will keep you informed every step of the way, but we do advise it may take over 2 years from when notification of the claim is first made to it reaching trial. Of course, since your home will be the most important purchase you make, it is worthwhile for peace of mind.

I am thinking of joining up. Is there anything I should be doing at this stage?

Yes. Call us on 0808 149 3441 for a free, no obligation discussion about your case.

Once you have signed with us as a client, we will contact you to explain what next steps we will take and what next steps you will need to take to assist us with investigating your claim. However at this stage we recommend that you retain all the paper and electronic records that you hold in relation to your purchase of the property and any sales material you were given by the developer (where possible).

Please also note that any advice, information, or documents produced by our legal team directly to you concerning the progress of the claim and/or its merits must not be reproduced or reported on social media or forums/bulletin boards. Such information will be confidential and privileged and must not be reproduced or placed in the public domain. It may harm your claim if it is seen by the other side.

Will I need to go to court?

Very few claims reach the stage of trial as most settle before the court hearing.  We will endeavour to settle your claim as quickly as possible before trial, but always balancing this against the quality of the deal available.  However, as a matter of best practice, if court proceedings do become necessary in your case, you should proceed on the assumption that the case will go to trial.  We will be with you every step of the way and will explain what will happen at court if your case goes to trial.

Do I have to pay anything up front?

No. We are currently retaining clients on a ‘No Win, No Fee’ basis, meaning you will only have to pay us if the case is successful. (for a further explanation, please see our page entitled Conditional Fee Agreement).

For a confidential chat, call one of our experts today  0808 149 3441    As seen on TV

Are you not personal injury solicitors?

Yes, we are.  But we also specialise in professional negligence and property claims.  We have a dedicated team that deals solely with these types of cases.

I want to instruct you to investigate and deal with my potential claim. What do I do next?

Contact us by telephone on 0808 149 3441 to speak to one of the team about the next steps in the process.