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Government helps fuel toxic leasehold housing scandal with 25% of Help to Buy properties sold as leasehold

The latest research from for sale by owner platform, www.OkayLah.co.uk, has looked at the proportion of properties sold as leasehold in England through the Government’s Help to Buy scheme, and how these buyers could be left at the mercy of the freeholders, their hidden charges and drastic escalations in ground rent.

OkayLah.co.uk analysed Help to Buy data for thousands of properties since the scheme began and found that across England, a total of 25% of all properties sold through Help to Buy were done so as leasehold.

In London, this hits 82% of all properties on average and in some boroughs, this percentage of homebuyers in the firing line accounts for 100% of all properties sold through the Help to Buy scheme.

Outside of London, an average of 20% of all Help to Buy homes are sold as leasehold, with over 40 areas seeing the number of Help to Buy properties sold as a leasehold exceed 50%.

It has been previously highlighted that the government has failed to legally protect homeowners from the leasehold scandal and instead has asked that they come to their own agreements with the freeholders.

However, even if such an agreement is met it can mean drastic increases in ground rent based on ‘outdated measures of inflation and the leasehold owner could also unwittingly: –

  • Sign away any right to compensation if firms are found to have mis-sold contracts in the future.
  • Still be liable for any huge hikes in ground rents at the freeholder’s discretion.
  • Be unable to secure a sale should they wish to move
  • Get blindsided by hidden charges to own a pet, remortgage or even build a conservatory.
  • Have to fork out thousands in legal advice.

Those buying through the Help to Buy scheme, often for the first time, are unaware of the dangers of a leasehold property and the trap they could be getting themselves into.

OkayLah’s data shows that outside of London, the area where most buyers are in danger is Blackpool where 92% of all Help to Buy properties were sold as leasehold. St Albans (91%), Elmbridge (87%), Salford (84%), Bury (81%), Burnley (80%), Epsom and Ewell (79%), Oldham (77%), Stockport (74%) and Bournemouth (73%) are also home to some of the highest levels of Help to Buy properties sold as leasehold.

However, the higher price of property in the capital and the resulting desperation for many to get on the London ladder means that across all London boroughs, at least 77% of properties have been sold as leasehold via the Help to Buy scheme.

In Hammersmith and Fulham, Hackney, Kensington and Chelsea, Camden and Westminster, 100% of Help to Buy properties were sold as leasehold. Southwark (99%), Greenwich (99%), Lambeth (99%), Tower Hamlets (98%) and Richmond were also home to some of the highest level of leasehold Help to Buy property sales.

Founder and CEO of OkayLah.co.uk, Paul Telford, commented:

“Our previous research highlighted that the increasing demand spurred by Help to Buy coupled with the Government’s failure to build any homes to meet this demand has resulted in property prices purchased through the scheme climbing 27% higher than the average first-time buyer house price.

In their half-hearted attempts to be seen as addressing the current UK housing crisis, the Government has not only inadvertently pushed up the price of starter homes, but with the help of developers selling land on to third parties, they’ve left Help to buy homebuyers high and dry and liable to absorb the debt.

This is pretty scandalous and as a result, it’s left many homebuyers in a leasehold nightmare, susceptible to backhanded tactics, below the belt fees and exuberant increases in ground rents by the new freeholder, having already paid more than market price for the property.

It’s impossible to know the true extent of this toxic leasehold practice but when the dust has settled it will be interesting to see if the Government continues to chalk Help to Buy down as a win.”

Area
All properties
All Leasehold
Total H2B Properties Sold
Total Leasehold Sold
Leasehold % of Total H2B
England
169,102
42,125
25%
London Boroughs
12,205
9,970
82%
Outside of London
156,897
32,155
20%

 

Areas for most H2B properties sold as leasehold (outside of London)
Location
Total H2B Properties
Total Leasehold
Total Leasehold %
Blackpool UA
171
157
92%
St Albans
102
93
91%
Elmbridge
46
40
87%
Salford
990
827
84%
Bury
437
354
81%
Burnley
317
254
80%
Epsom and Ewell
159
125
79%
Oldham
481
369
77%
Stockport
424
312
74%
Bournemouth UA
230
167
73%

 

Areas for most H2B properties sold as leasehold (inside of London)
Location
Total H2B Properties
Total Leasehold
Total Leasehold %
Hammersmith and Fulham
55
55
100%
Hackney
276
276
100%
Kensington and Chelsea
36
36
100%
Camden
2
2
100%
Westminster
32
32
100%
Southwark
468
464
99%
Greenwich
732
725
99%
Lambeth
405
401
99%
Tower Hamlets
644
630
98%
Richmond upon Thames
115
112
97%

 

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