News that Liverpool mayor Joe Anderson has banished developer Countryside from building homes in Liverpool once again brings to the foreground the issue of buying leasehold properties.
In England and Wales we’re used to flats being sold under leasehold terms, but over the past decade developers have dramatically increased the proportion of new-build leasehold houses. The north west in particular has been a hot spot for these type of properties with a 12% increase from 2012 to 2017.
The public have now becoming fearful of leasehold properties generally thanks to archaic laws that have allowed builders to sell on the freehold of the properties to investors. These investors are attracted by the rising income from ground rents, which would typically double every ten years, and the seemingly limitless costs of buying the freehold back from those investors.
There is however a place for leasehold properties if developments are set up correctly. The difficulty is that so many developers took advantage of the law and used it to their advantage as there weren’t the protections in place to stop them.
The house buyers that have been badly affected should have been advised better by their legal advisers at the time of buying the properties. As the government tries to help house buyers who are stuck in this catch-22 situation, I wouldn’t be surprised to see a number of claims over the next few years against the legal profession for those solicitors that failed to advise properly over the issues involved.
This is particularly true in cases where buyers were forced into using the solicitor recommended by the housebuilder. Thankfully there are still some very good solicitors that will have picked up on the traps and so it shows the importance of choosing the best lawyer you can rather than the cheapest.
Mayor Anderson’s banning of Countryside will only go as far as not selling the developer Council-owned land so the measures can only go so far. But it does bring attention to an area of the law that is in need of overhauling and in the meantime the importance of getting the best advice before purchasing a property.