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Home Buyers Beware

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Home Buyers Beware

If you have bought a leasehold house (not a flat) from a developer in the last 6 years, you should check that the cost of buying out the freehold is as you were led to believe by the developer. If not then you may have a claim against the developer for the difference between the cost now and the cost as you were led to believe it would be.

Background

Houses can be sold to you so you own it for a set number of years. This is called leasehold. When the years have passed it is no longer your property and reverts to the owner of the freehold to the land (often called the landlord). Normally the landlord is the developer and they normally have a reputation to protect so would not want to depart from the price they led you to believe would be payable if you did want to buy the freehold.

The Law

Most contracts to buy property have a clause which says that if any statement by the seller in any negotiations leading to the contract to buy the property was misleading or inaccurate due to an error or omission by the sellers then you are entitled to damages. In law the damages are designed to put you in the position you would have been in had the representation been followed.

The Problem

Developers have realised that they can sell their interest (called “the freehold reversion”) to  an investment firm rather than the buyer and the investment firm demands much more in the knowledge that there will come a time ( usually when there is less than 30 years remaining on the lease - but it can be when there is less than 75 years ) when it is imperative that you buy the freehold otherwise it is almost unsaleable, since  most mortgage lenders will not lend to  anyone interested in buying the property without it.  The mortgage lenders might tighten up their conditions now this is happening, to ensure the buyer gets the freehold reversion as well as the lease if the lease has what they think is a dangerously short period left to run.

If you are affected by this call Stephen Mackie our solicitor who specialises in such disputes on 01934 410910.

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