Leasehold lunacy: what estate agents don’t tell you

    8 October 2020

    I love a good paradox. Remember how estate agents always used to come out in polls as the least-trusted profession — and indeed still do? We damned them for taking too much of our money, for fibbing about the homes they were selling, for the flowery language they used to describe a fetid fleapit they were trying to flog for quarter of a million quid. Then, 20 years ago, the internet suddenly freed us from the need to use their services. A host of websites appeared where we could sell homes to each other directly, cutting out the sharp-suited middleman in the Vauxhall Astra.

    And how did we react? We shunned those websites and instead carried on employing the services of Kevin Whitesocks and his colleagues on the high street.

    Faced with the prospect of buying a dodgy house from a member of the public, the spivs with the tape measures didn’t seem quite so bad after all. Estate agents, unlike the public, are at least bound by the terms of the Property Misdescriptions Act.

    All the same, why do estate agents have to be so bad at giving vital information about the properties they are selling? It is not that they tend to tell outright fibs any more, or that they glorify grotty hellholes. Many have indeed become very good at offering good floor plans, fly-through videos and the like. The ability to get a good idea of the layout and the state of a property before you commit to viewing it saves everyone’s time.

    But how is it that they find it so difficult to tell you whether a flat they are advertising is leasehold or shared freehold; if leasehold, how long the lease is, how much ground rent you might be paying to some shady company in Monaco and whether the residents manage the property or it is managed by a bunch of shysters based above a chip shop?

    All these pieces of information can make the difference between a good investment and an absolute nightmare, yet for some reason most estate agents think they are less important than the colour of the bathroom tiles and the brand of dishwasher.

    It doesn’t take much to change a dishwasher and it is not an insurmountable problem to spruce up a tatty old bathroom.

    But if you find your flat is really owned and managed by people who see you and other leaseholders merely as a means to extract as much money in as many devious ways as they can, you are due a life of misery.

    When you buy leasehold you are not really buying a property at all — you are buying a long rental contract, one where you have to stump up most of the money upfront and agree to pay all the maintenance.

    True, there are some protections for leaseholders in the shape of the right to enfranchise — i.e. club together and buy the freehold — and the right to manage the block. Trouble is, it can be a tortuous process to exercise these rights. It is first necessary for a majority of leaseholders to get together to serve notice on the freeholder. And that might not be easy in a block of 300 flats, half of the owners of which live in the Far East and an unknown proportion still belong to the freeholder.

    There is also the right to extend your lease by a further 90 years — vital in any property where the lease has fallen below about 80 years, when it really starts to become a wasting asset. It isn’t easy, however, and it will cost you thousands — both in terms of the lease extension itself and the legal fees of the freeholder, which you will have to pay.

    Yet so often when I see details of flats on Rightmove, there is no word whatsoever on any of these matters. It will just say ‘leasehold’. Even when I have rung up the estate agent he or she often doesn’t have a clue as to these details — or they don’t want to part with them.

    The tragedy is that the Blair government was going to force estate agents to hand over this information. It was a lesser-known clause in the ill-fated Home Information Pack legislation. HIPs, as they were known, became discredited because they would have involved a vendor having to shell out several hundred pounds for a Home Condition Report which many mortgage lenders said they would refuse to accept as a valuation. In the end, the only part of HIPs which survived was the equally pointless energy report, which is a crude estimate of how much it will cost to heat and light a home — often far different from the reality.

    But as for leases, estate agents should be bound to provide all the crucial details. They should have to tell you the length of the lease, who owns the freehold, how much the ground rent is and whether it rises with inflation or by doubling, and who manages the common parts of the building. They should be able to email you the full lease on request.

    Why is it so difficult to provide this information? Never mind who made the dishwasher, tell us who really owns the place and give us an idea of by how much they are likely to try to sting us.