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Report exposes ‘scandalous mis-selling of leasehold properties on an epic scale’

Leasehold property ownership has come under yet more fire today after a new report laid bare the scale of mis-selling in the leasehold sector.

The report by the Solicitors Regulation Authority (SRA) found that a high proportion of conveyancing solicitors are failing to properly explain the implications of leasehold ownership.

The SRA report also revealed that almost a quarter - 23% - of firms did not explain the difference between freehold and leasehold properties, with some relying on the client's knowledge or information provided by an estate agent.


It also transpired that around 20% of people who had acquired a leasehold property did not remember being provided with any information on the length of the lease, service charges and other payments, such as ground rent.

Somewhat worryingly, just over a quarter - 26% - did not recall being given a draft copy of their leasehold contract to review prior to signing it, while 17% did not think that their solicitor had clearly explained the features of their leasehold arrangement – rising to one in three among first-time buyers.

What’s more, legal process failures by firms included failing to advise on issues relating to leasehold properties and common pitfalls, such as shared ownership, increasing ground rent.

Louie Burns, managing director of The Leasehold Group of Companies, said: “This report highlights scandalous mis-selling of leasehold properties on an epic scale.

“Inadequate legal advice has left thousands of leaseholders subject to escalating charges and onerous ground rents which, in the long-term, may make extending their lease unaffordable or their property unsellable.

“Ultimately it is the responsibility of conveyancing solicitors to ensure prospective purchasers of leasehold properties are aware of the ownership structure, the lease terms and their long-term effect.

“Freeholders constantly use the argument of Caveat Emptor (‘buyer beware’) and accuse leaseholders of failing to properly understand the implications of owning a leasehold property. If conveyancing solicitors are negligent in their duty to provide accurate and comprehensive legal advice to their clients, then how on earth are leaseholders supposed to make an informed decision?”

A recent report by NAEA Propertymark found that 65% of leasehold house buyers used the solicitor their house builder recommended. 

The Housing, Communities and Local Government Select Committee report on Leasehold Reform, published in March, found that affected leaseholders may have a strong claim that their properties were mis-sold.

Burns is among those supporting the Select Committee’s call for the Competition and Markets Authority to investigate mis-selling in the leasehold sector and make recommendations for appropriate compensation. 

“Conveyancing solicitors who are found to have given inadequate or misleading advice should be held accountable and leaseholders must be given adequate compensation,” she added.

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

Poll: Has inadequate legal advice ever left you, as a leaseholder, subject to escalating charges and onerous ground rents?


  • icon

    There is a lot of maths involved in this topic. That is why huge numbers of people do not understand what they are doing. It's not complicated but I have never found teachers teaching the subject or even understanding it even though it is a very important subject for grown up life. Even many journalists are very slow off the mark. The BBC are useless unless crowing about negative equity. Vanishing equity is a far more important subject.

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    • 07 August 2020 15:41 PM

    Surely everyone knows that leasehold is NOT freehold.
    Freehold gives you total authority over the property.
    Leasehold DOESN'T.
    Pretty basic wouldn't you say!?

    Leasehold exposes you to always ever increasing service charges and possibly GR

    They NEVER reduce!

    I knew the difference at school between free and leasehold!

    Are people really that thick!?
    This for probably the biggest purchase they will ever make.

    Surely some DD would be appropriate.

    Easy to do.

    Google freehold then leasehold.
    That is sufficient


    '' Are people really that thick! '' Yes Paul they really are and most of them have uni degrees !


    Unfortunately Paul, the snowflake generation like to be spoon-fed everything and if they're not then everyone else is to blame, they don't want to take any responsibility for their own decisions - someone else 'made them do it'!

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    • 10 August 2020 16:34 PM

    Yes I accept that there seems to be a consensus that many homebuyers have failed to carry out full DD on their home purchase.

    So significant is the freehold issue I believe amended documents should be legally required which highlight the purchase type and ramifications of.

    Put it in bold uppercase type.

    Require a separate sub-signature for the bold paragraph.

    If then a snowflake complains having read and signed then that really would be their fault.

    They could hardly then claim it was buried in the small print.

    I am simply amazed that people take so little care over what will be their biggest debt and purchase in their lives!!!

    But as they say a fool and his money are easily parted!!

  • icon

    leasehold=mis selling scandal

  • Matthew Payne

    There is no problem with most LH properties, it is only a question of knowing the technicalities of what you are buying no different to buying a second hand car, futures, gold, a timeshare or any other investment that requires some technical knowledge in that field or an advisor to assist in making sure you are protected. Commercial markets are commercial markets, and you will find the same headlines in any industry press regarding those who get their fingers burned. Some buyers will make poor decisions, some advisors (lawyers in this case) will be sub standard, and some chancing FHers knowing this will take advantage. Equally there are more savvy buyers, excellent lawyers and honest FHers. It is very British only to focus on a smaller % of what goes wrong.


    We will have to agree to disagree there mate, I wouldn't touch anything leasehold.


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