Bruce Collinson, Director and Head of Leasehold Reform comments:
"I read a very interesting and perceptive daily email feed called "Property Matters". This morning, it reports that Santander and HSBC are reportedly reviewing their lending policies on leasehold properties with "huge annual ground rent levels" (in my Leasehold Reform terminology, an onerous ground rent).
Nationwide has recently revised its policy, with a broad guideline that ground rent should not exceed 0.1% of the capital value, a sensible starting position in my view but slightly on the low side for a lot of perfectly saleable leasehold property across Leeds and West Yorkshire.
It's also reported that Taylor Wimpey is setting aside a very large amount to deal with complaints from purchasers of their properties over the last few years who've bought houses that would ordinarily have been sold as freehold, on leasehold title with onerous ground rents and particularly quite nasty review provisions. I have seen 5 or 6 of these cases in the last 3 months. One of my clients, in Harrogate, was able to buy his freehold for a lot less than the new freeholder wanted (the housebuilders invariably sold the freeholds after they completed the estates as they're very valuable investments) so that he could then sell his house without the problems of the lease.
Of the cases that have come across my desk, the common denominator seems to be that these housebuyers weren't properly advised about the effect of the ground rent review provisions. I have seen speculation that builders tend to offer discounted or subsidised legal fees as part of their sales incentives, and that solicitors acting for buyers in these circumstances are sometimes slightly less than assiduous in pointing out the long-term effects of onerous ground rents.
I couldn't possibly comment on that assertion.
There's a simple message here. Be certain of the lease terms before confirming your offer or your intention to proceed with a purchase. It probably means getting your hands on a copy of the lease.
Very few house sellers can recall the exact details of their lease, ground rent and review patterns. Estate agents are rightly nervous of the potentially onerous sanctions contained in the Consumer Protection Regulations and it's simpler to make a bland statement to the effect that the agents haven't seen the lease and therefore can't confirm the precise terms. Nine times out of 10, when I'm surveying or valuing leasehold property (which I do quite a lot) I find that I have to dig in to get accurate details, sometimes delaying the report, and even on occasions causing me to spend several pounds on HM Land Registry's website to try to find the genuine, accurate information.