New build leasehold - always check the small print

30th May 2017

New build leasehold - always check the small print

Recent reports about the perils of buying leasehold properties have made buyers think twice before investing their hard-earned savings in a new build home.

But a Midlands property expert says that as long as purchasers are fully aware from the outset of what is involved in the leasehold T&Cs, there is no reason why they can't have the property of their dreams.

Mitesh Lala, a residential property lawyer with law firm Higgs & Sons, said: "Buying a new build property has its attractions: you get a brand new, energy-efficient home, with all the latest mod cons and facilities, and all without being stuck in a chain.

"And while there are drawbacks - properties are typically smaller in scale, on tightly packed plots, and on occasions with modest build quality - there really is nothing like owning an untouched property.

"However, in this state of eagerness and excitement, it is far too easy for buyers to miss the detail within the literature that needs signing, when committing themselves to the purchase."

Recent negative press coverage has very much focused on leasehold new build properties.

Mitesh added: "Traditionally leasehold properties were often apartments with communal areas with the lessees paying an annual ground rent to the freehold owner of say, a block of flats.

"Today however, thousands of houses up and down the country are being sold by developers under a leasehold arrangement.  It has been reported that where only 22% of new builds sold in 1996 were leasehold, in 2015 this had increased to 43%.

"The scenario means, in effect, that the seller retains the freehold land on which the properties are built, and sell the properties under a long lease, often with a term of 999 years, and seek annual ground rent payments from the homeowners."

In one recent reported case, the lease stipulated that the ground rent would double every 10 years, starting at £250, increasing to £500 from the 11th year onwards, and then £1000 from the 21st year onwards etc. Owning the property for over 50 years would equate to a total of over £77,000 of ground rent payments over that period.

The leases may also include obligations on homeowners to pay service charges for the maintenance and upkeep of communal areas and gardens much like those for a block of flats.   Whilst a Leaseholder will have a right to purchase the freehold from the developer, the price being ask for can be in the region of £30,000 or more where the developer has sold the contract on to investors.

As a final note of advice, Mitesh urged any prospective buyers concerned about buying a leasehold newbuild property to:

  • give consideration to using their own solicitor, rather than opting for the lawyer suggested by the developer
  • ensure their lawyer has experience of dealing with newbuild estates
  • read all legal documentation carefully, and
  • ask questions and make enquiries early during the transaction to ensure that answers are obtained quickly and well before an exchange of contracts has taken place.

Higgs & Sons, based at offices on the Waterfront Business Park in Brierley Hill, employs over 230 people and offers a broad range of legal specialisms. For further details go to


Other news

Contact us

3 Waterfront Business Park
Brierley Hill
West Midlands, DY5 1LX

Call Us: 0345 111 5050


Keep up to date with all the latest here.