| northern region news
LEASEHOLD HOME OWNERSHIP IS DEAD, LONG LIVE LEASEHOLD
W
hile the property industry awaits with interest the results of the
Government consultation into leasehold home ownership legislation, Rosemary Edwards of Shulmans LLP shares her view of the industry’s hot topic:
The sale of leasehold homes has recently been surrounded with controversy. There is an element of risk for homeowners purchasing a property with a leasehold agreement by nature of the fact they have very limited control over the future ownership of the freehold. There have been some headline-raising cases of private investors acquiring freeholds from property developers and owners and then seeking to charge home owners exponentially higher ground rents.
The issue has attracted media attention
and led many key players within the property industry to demand change. Consequently, the Government launched and has just completed a consultation to review the situation, the results of which are eagerly anticipated. The outcome will determine what measures the Government will introduce in order to curb unfair practices.
However, despite the difficulties and distasteful practice of some private investors, there continues to be a need and a place for leasehold home ownership. Unless and until there is a viable alternative to these arrangements, apartments continue to be sold leasehold, as there are legal problems involved with selling such accommodation on a freehold basis. In many parts of the country leasehold home ownership is common, either for historic reasons or due to local policy. For example, the local authority in Sheffield will only sell sites on a leasehold basis, therefore new build plots have to be sold leasehold as well.
Shulmans hosted an event recently attended by the region’s top property professionals, of which 64 per cent voted to say they believe leasehold home ownership is alive and well. I agree and in
my opinion the controversies have been overplayed.
There are undoubtedly some issues which disadvantage consumers, such as rent review clauses which allow ground rents to be increased disproportionately to the value of the property, and also “consent fees” where landlords have the right to claim uncapped amounts for granting routine consents, for example for alterations or underlettings. However, some parts of the media have blown this out of proportion suggesting that someone with a leasehold interest does not actually “own” their property. This is simply not true. Leasehold is a form of home ownership and provided that the length of the lease is sufficiently long, there should be no issue with the principle. That said, the industry has listened to the concerns and is responding, helping to safeguard homeowners purchasing properties on a leasehold basis. Already, Nationwide Building Society has introduced new requirements in relation to new build leasehold sales, specifying the length of the term. It is no longer acceptable to them for an unexpired lease term on a new build flat to be less than 125 years, rising to 250 years for a new build house. Developers need to take account of these requirements when setting up new schemes; it’s highly likely that many other lenders will follow suit. Most developers are currently reviewing the terms of their leases to ensure they remain acceptable both to buyers and to mortgage lenders, in terms of ground rent clauses and rent reviews among others. Some developers are moving away from leasehold houses altogether in the short term, until the outcome of the Government consultation is published. This article was written by Rosemary
Edwards (
redwards@shulmans.co.uk), partner and head of the Residential Development team at Shulmans LLP. For more information, please visit
www.shulmans.co.uk
ASSOCIATION OF WOMEN IN PROPERTY
T
he Association of Women in Property (WiP) has announced its new
Yorkshire & North East branch Chairman. Hannah Richardson, Associate: Chartered Town Planner at Spawforths, Leeds, takes on the role from 1st November until March 2019.
Hannah, who has been a member of
WiP for five years, has over 17 years of professional experience in the property industry, working within both the public and private sectors.
Hannah Richardson WiP Chairman
Hannah joined Spawforths in 2007 and provides
professional advice to a wide range of developers, housebuilders, landowners, and commercial clients. Her specialisms include project management of significant major development schemes, in addition to the preparation, submission and negotiation of planning applications, appeals and environmental statements.
BROUGH PARK O
ne of the region’s best known tea brands has become the latest occupier
at Brough Park Trading Estate, Newcastle upon Tyne.
Newcastle-based Ringtons has signed a five-year lease on a 5,701 sq.ft unit, which has recently undergone a comprehensive refurbishment. BNP Paribas Real Estate and HTA Real Estate acted as joint letting agents for Canmoor Asset Management and secured the deal prior to completion of the refurbishment works.
The trade park, which is situated on the Fossway in Newcastle, was acquired by BlackRock Industrial Trust in 2014 in conjunction with Canmoor Asset Management, which oversaw the recent refurbishments. Aidan Baker, director of agency in BNP
Real Estate industry leaders being interviewed at the Shulmans Real Estate Network event – 13 September 2017 12
Paribas Real Estate’s Newcastle office, who brokered the deal, said: “Since the acquisition of the estate by BlackRock and proactive asset management by Canmoor, we are delighted to have completed this most recent letting on the estate and reduced voids to a minimum. “Upon original instruction, we had seven vacant units to dispose of and following a full refurbishment of the vacant units by Canmoor we have secured six new lettings in the last 12 months.”
COMMERCIAL PROPERTY MONTHLY 2017
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