There are calls for the rules surrounding leasehold homes to be clarified amid claims that some freeholders are charging too much for contract extensions.
Several cases have seen leaseholders charged tens of thousands of pounds to extend their contracts in addition to ground rent and legal fees.
In England and Wales around 3m people live in leasehold properties and technically never actually own them. The problem is that many leaseholders simply do not understand the system and a small number of free holders are taking advantage of this.
In a leasehold situation, even though the leaseholder can hold a mortgage on the property, it is the free holder who owns the land. If the remaining time on the lease falls below 80 years, the free holder can ask for a cash sum to renew it.
If a leaseholder feels that they are being asked to pay too much they can take the case to a legally binding tribunal. However, before reaching this point, the leaseholder should attempt to negotiate a fairer price with the free holder. There are a number of online calculators that can work out a fair price based on a number of factors, such as, the lease length, ground rent, and when the property was purchased. An independent valuer may be able to work out a more accurate price and lend further weight to negotiations.
