Love and Money
Spring is almost upon us and romance is in the air. Or is that pragmatism? Recent research from property portal Zoopla reveals that four out of ten young people believe taking out a joint home loan is a bigger commitment than marriage. Since couples are together on average for three to four years before jumping onto the property ladder we can only assume bricks and mortar have taken priority over windy walks and roses?
My concern for happy couples making the move to home ownership is many seem to treat buying a property in much the same way they treat downloading a cool new app. They neither read nor understand the terms and conditions. This is particularly true when it comes to leasehold rather than freehold.
Home builder Taylor Wimpey hit the headlines last month for all the wrong reasons when residents living in a development in Preston discovered their annual ground rent doubled every ten years. What began as a reasonable £250 per annum ended up after forty years costing them £4,000 per year. An eye watering sum but worse, they will then be unable to sell their property with these fees attached.
In an interview with the local paper one resident said “Everyone we’ve spoken to said they wouldn’t have gone ahead with getting their homes here if they had known.” This jaw dropping statement revealed that most of the 250 residents of the development had no idea that their ground rent would double every ten years when they put pen to paper.
In fairness to Taylor Wimpey they have discontinued this practice and now link ground rents to the Retail Price Index. A spokesman for Taylor Wimpey, said: “All our customers received legal advice from independent firms of solicitors and the contracts and lease terms were set out clearly and simply.”
And there is the rub. Home buyers solicitors and conveyancing experts had sight of the contracts and nothing was hidden under the carpet. Yet 250 presumably intelligent, educated people signed up to eye watering fees on a property they can never sell.
Leasehold can be an attractive option for first time buyers. In a block of flats, insurance and maintenance are covered by service charges which must be reasonably incurred and it is up to the buyer to decide if these charges are indeed reasonable.
Consumer law in the UK has moved away from the Caveat Emptor model with the Consumer Rights and Sale of Goods acts offering us all enhanced protection. The one exception appears to be leasehold contracts. Once you sign a lease there is no going back so my advice is talk to someone who really understand the contract and until you do, step away from the pen.