Leasehold agreements: opportunities or obstacles?


This September, our CEO Guy Horne is tackling the issue of leasehold properties. Through a series of posts, Guy will assess the misconceptions, opportunities and obstacles that come with leasehold agreements, and why they illicit such strong opinions.

Part one – Misconceptions

In the first instalment of this blog series, I wanted to challenge the ongoing misconceptions that surround leasehold agreements.

Leasehold agreements have a difficult ride in the in UK press, with allegations that they can be underhand. Recently, there has been a lot of press activity on this, including a BBC story entitled “Leasehold properties ‘not explained’ to buyers”. In this article, a lawyer stated that over 100,000 people were affected by the inaccurate selling of leasehold agreements, making it bigger than the PPI scandal. I believe this to be an incorrect statement.

The Solicitor Regulations Authority has only received “a handful of complaints” since issues with leasehold contracts were raised approximately 14 months ago. However, in response to the allegations of unfair selling, the Law Commission has announced a desire to reform leasehold agreements. A detailed consultation is due for publication in September 2018, which is expected to demand fairer regulations and more transparency.

Leaseholds have been widely criticised in recent years, with accusations of financial exploitation due to increasingly expensive ground rent. However, for property owners, it is extremely difficult to take a one-sided view of the debate since there are a variety of strengths and shortcomings to the contracts.

At HS Property Group, we acquire properties on both a freehold and leasehold basis, having found them to be equally desirable. Despite the sometimes-negative connotations surrounding leasehold agreements, they can work very well under the correct circumstances and are given an unfair ride by the British media.