Estate agents have been labelled as “ignorant” after failing to properly display leasehold information on listings.
A report by the HomeOwners Alliance campaign group on issues with leaseholds, Homes Held Hostage, looked at a sample of 100 agent listings on Zoopla at the end of March, finding that 51% didn’t list the form of tenure.
The report said: “Only 49% of flat listings specified whether the property was a share of freehold or a leasehold property. Furthermore, only a quarter of the listings were specific about the length of time left on the lease, a piece of information vital for the potential purchaser to be able to make an accurate assessment of value.”
It is not just estate agents who come under scrutiny in the report, freeholders are criticised for excessive charges and delays to provide information during a property sale.
In 2015, leasehold properties accounted for 43% of all new-build registrations with the Land Registry – almost double the proportion of 22% in 1996, according to the report.
Citing a Leasehold Knowledge Partnership report from 2014, the HomeOwners Alliance says there are 4.99m occupied leasehold flats in the UK. Using Government and LKP data, the research then extrapolates that 1.577m of these leasehold flats and houses are owner-occupied.
The report said: “In the eyes of the Government they are home owners, but in the eyes of the law they are little more than tenants.”
Only 58% of leaseholders questioned said they knew the length of their current lease, and of those that did, 24% said that it was under 80 years.
Analysis of these figures then suggests that more than £4bn will need to be paid to freeholders by leaseholders to extend these leases over the coming years.
Among the recommendations in the report are calls for all lease extensions to be a minimum of 250 years and for a ‘peppercorn rent’ to be charged.
Paula Higgins, chief executive of the HomeOwners Alliance, said: “Leasehold ownership can be traced back to the Domesday Book and it is a practice that should relegated to history.
“Unscrupulous and avaricious actors within the property industry are using sharp leasehold practices to line their own pockets and fleece householders.
“Developers and estate management companies rely on leasehold to bamboozle consumers, charge exorbitant administration fees, ever increasing ground rents and render properties unsellable.
“The situation is exacerbated by the fact that many estate agents are themselves ignorant about leasehold and fail to inform and educate their customers properly.
“The Government needs to take urgent legislative action to protect people from these practices, help people who are already trapped and avert a full-blown crisis.”
Comments (6)
This is my first post so be kind. In response to sb007ck’s comment, our intention is not to ‘moan at every opportunity’. In our report, the research- that more than three-quarters of estate agents listings do not display legally required information about tenure and length of lease – was just one of the many findings commenting on how unfair the leasehold system can be. In our report we also suggest that buyers should be required to sign a one-page key facts document about their leasehold property before it is marketed. This would be based on the information contained in the LPE1 form they will eventually need to complete honestly when the conveyancers/solicitors get involved.
I apologise if my “moaning” comment was a touch inappropriate, but every time your alliance pops up it is estate agent bashing time. Regarding the length of lease, i agree it is important to display this information to the public, however that is assuming that the public are aware what a reasonable length of lease should be. Also to settle a discussion, can you please provide a link showing where it states that displaying the length of lease is a legal requirement.
And to clarify any problems with the “leasehold system” are nothing to do with estate agents….this falls at the door of big time developers and government.
Being upfront, open and honest from the very start saves time and disappointment or indeed frustration later.
Rather than just constantly moan at every opportunity, how about the HomeOwners Alliance, provide a suggestion on how to solve the problem. Yet again they feel the need to slag off estate agents, where in reality in this situation it is not needed. I am sure upon buyers contacting estate agents they are provided with the length of lease remaining, and the service charge payments etc.
I personally consider the leasehold information to be fairly critical and has a major impact on value and saleability. It has been poor practise for years not stating how long a lease is and what the ground rent and service charges are. I am of the view that lease information is more important than than EPC’s and certainly more important than publshing letting fees!. When speaking with some agengecy staff they do not understand leasehold tenures. Why not put the information on the details and in the ads before Government and the do gooders push for it. Why not be proactive? It is crucial information for purchasers and investors alike.
Fully agree with Will. For the record, I think agents should also be aware of whether subletting is permitted. If this knowledge is known earlier it removes potential for landlords to get offers agreed only to pull out later when it’s found subletting is not permitted. Always be proactive and keep showing what a valuable service we provide!