When James Sherman* bought his Sunderland home in the early 1990s, he had no idea he would be trapped there 30 years later. “Not a day goes by that I don’t regret buying this property,” said Mr Sherman.
The 56-year-old is one of almost half a million homeowners in England and Wales who have leases of under 75 years. Most of these people are shunned by lenders and unable to sell without losing huge sums.
It is rare for banks to lend on homes with these short leases, and those that do charge higher rates with stricter terms. Anyone wishing to sell their property will be forced to do so at a heavily discounted price, while the property continues to lose value as the lease ticks down.
Flat owners also have the option to renew a lease or club together with neighbours to buy the freehold, known as enfranchisement, making it much more attractive to buyers and lenders. But this often costs tens of thousands of pounds and becomes more expensive with each passing year.
Mr Sherman bought his two-bedroom flat for £33,000 in 1992 and it is now valued at around £85,000. To renew his lease to 99 years he would need to pay £20,000 to the freeholder – a price which grows by roughly £1,000 each year.
A quirk of the system means that his neighbours in the same estate who own houses were able to extend their lease for a fraction of the cost, between £2,000 and £3,000, but flat owners on the street face bills of tens of thousands of pounds.
Mr Sherman said: “The other flat owners and I all thought we could buy the freehold when we bought our properties, but the costs are extortionate. My life is on hold and it is only getting worse with the rising costs each year.
“My options are to rent, renew the lease or sell the flat at a considerable loss. To say I am devastated does not describe how I feel.”
There are 450,000 flat owners in the same predicament, according to analysis by Lifetime Mortgage Gateway, which provides lease extensions for equity release.
The Government has promised to reform the country’s leasehold system, including greater rights for homeowners to extend shorter leases by 990 years. It also pledged to abolish “marriage value” clauses, which can significantly add to the cost of extending a lease. The value of a property can rise significantly after a lease extension and marriage clauses can force the leaseholder to pay the equivalent of half of this increase as part of their extension fee.
But these plans to reform what it described as a “feudal” system have been quietly watered down. Details on lease extension rights were missing from this year’s Queen’s Speech, which instead focused on limiting ground rent paid by leaseholders.
Mr Sherman added: “I have always voted Conservative, but their lack of action means they have lost my vote. It is criminal how we are being treated and ignored.”
Harry Scoffin, of Leasehold Knowledge Partnership, a campaign group, warned short leases were “acting as a drag on the housing market” and widening the price gap between flats and houses.
He said: “Mortgage lenders used to be fairly relaxed about short leases, lending on those in excess of 60 years, until two decades ago when they changed it for those up to 80 years.
“Lenders’ position on short leases is hardening every year and leaseholders trapped with short leases were devastated that the promised reforms to enfranchisement were axed from the Queen’s Speech this year.”
In a speech earlier this month Boris Johnson promised to “supercharge leaseholders’ ability to buy their freehold” and end unfair leasehold terms.
*Name has been changed
He would/should have been made aware of this by his solicitor at the time of purchase. Trouble is when you are buying a house (or a leasehold as in this case) 100 years seems a long time, and £1,000 a year not so much.
And he’s not losing a third of its value, that is what the property is worth and all someone will pay for it as the leasehold stands.
This is such a Telegraph story: man buys property which fails to adequately appreciate in value, is furious.
>Mr Sherman bought his two-bedroom flat for £33,000 in 1992 and it is now valued at around £85,000.
Oh boo fucking hoo.
All my profit is because I’m a smart, well informed investor who checked details carefully and did my research; all my loses are because I was swindled by fraudsters who didn’t explain things to me.
I’m reminded of this quote when talking about investments (be they in a house, crypto, stocks, etc).
>”All investments involve a degree of risk. The value of an investment may go down as well as up and you may not get back the money you invested. It should not be assumed that the value of investments always rises.”
My favourite part is when they say: “I have always voted Conservative”.
Blind faith to any single political party is pure idiocy.
Yea, but they don’t care as you’re locked in now.
A reminder to those that consider property an investment that investments can go up, as well as down. It is also a reminder that the Tories only care about the wealthy and those who can do things for them. The average home-owner is not a huge concern for them.
I have never voted Tory to begin with 🫤
My parents wouldn’t give a damn if house prices fell.
To them it’s just a number, because they own the home outright
Any reasonable human should feel the same way.
And this is why you never buy leasehold, kids.
Oh why will no one empathise with me? Me? Me? Me? Me? Me? Me?
> Mr Sherman added: “I have always voted Conservative, but their lack of action means they have lost my vote. It is criminal how we are being treated and ignored.”
Didn’t give a damn when it was other people being poorly treated and ignored, did he?
And the irony here is that his complaint is entirely self-inflicted. He could’ve extended the lease _decades_ ago for a fraction of the cost.
This isn’t some great surprise, it’s something he willingly signed up to 30 years ago.
>Mr Sherman added: “I have always voted Conservative, but their lack of action means they have lost my vote. It is criminal how we are being treated and ignored.”
Fair enough dude! If there’s one thing I respect it is when people vote for parties based on policies they put forward.
Not quite sure what was in the 2019 Conservative manifesto, but looked like in 2021 they promised to help going off the wording of that article. And if they’ve gone back on that then it’s an entirely fair reason to move away from them. I’m sort of in the same boat with the “right to buy” scheme, and IF they do it/don’t water it down then I’ll probably vote for them next time out.
Still, the killer question for Mr Sherman here is; will another party be offering you that kind of thing? This is what annoys me about Labour personally, because if they have these kind of policies in their election manifesto you sure as hell don’t hear about them!
That’s not a good reason.
I just dont get this. He clearly wished to stay in the flat for 30 years as he’s never moved earlier. So why now?
Hes 56, hes paid his mortgage off, hes never going to live longer than the time remaining on the lease, why does he claim he has to sell? (or buy the lease)? Whats wrong with living there? mortgage free? The annual ground rent will be tiny.
If its a change in circs, new partner, marriage etc, he can rent it out. No mortgage permission required and the freeholder will have approved renting historically in the area.
Whats actually irritating is, he couldnt have lived any cheaper than he has for the last 30 years. Clearly hes a worker as he obtained a reasonable size mortgage for early ‘90s and rates were above 10%.
If anyone can build up savings, its a single bloke, mortgage free (tiny mortgage for its last 15 years), living in a dirt cheap flat. If hed topped up savings as his mortgage payments decreased he’d be quids in to have bought the freehold and probs a nice motorhome as well.
I dont get it.
The Tories are burning their voter base. They think by promoting green policies, being anti-landlord, etc they will win younger votes, but that ship has well and truly sailed.
Johnson is doing something no Labour leader ever could – destroy the Tory party.
Threads like this remind me that despite all the bluster and noise people make about affordability of homes etc, most people posting have absolutely zero knowledge of how property value works, how mortgages work or how any of it works.
Leasehold buying silliness aside… what the fuck the buyout goes _up_ each year not down?
20 comments
When James Sherman* bought his Sunderland home in the early 1990s, he had no idea he would be trapped there 30 years later. “Not a day goes by that I don’t regret buying this property,” said Mr Sherman.
The 56-year-old is one of almost half a million homeowners in England and Wales who have leases of under 75 years. Most of these people are shunned by lenders and unable to sell without losing huge sums.
It is rare for banks to lend on homes with these short leases, and those that do charge higher rates with stricter terms. Anyone wishing to sell their property will be forced to do so at a heavily discounted price, while the property continues to lose value as the lease ticks down.
Flat owners also have the option to renew a lease or club together with neighbours to buy the freehold, known as enfranchisement, making it much more attractive to buyers and lenders. But this often costs tens of thousands of pounds and becomes more expensive with each passing year.
Mr Sherman bought his two-bedroom flat for £33,000 in 1992 and it is now valued at around £85,000. To renew his lease to 99 years he would need to pay £20,000 to the freeholder – a price which grows by roughly £1,000 each year.
A quirk of the system means that his neighbours in the same estate who own houses were able to extend their lease for a fraction of the cost, between £2,000 and £3,000, but flat owners on the street face bills of tens of thousands of pounds.
Mr Sherman said: “The other flat owners and I all thought we could buy the freehold when we bought our properties, but the costs are extortionate. My life is on hold and it is only getting worse with the rising costs each year.
“My options are to rent, renew the lease or sell the flat at a considerable loss. To say I am devastated does not describe how I feel.”
There are 450,000 flat owners in the same predicament, according to analysis by Lifetime Mortgage Gateway, which provides lease extensions for equity release.
The Government has promised to reform the country’s leasehold system, including greater rights for homeowners to extend shorter leases by 990 years. It also pledged to abolish “marriage value” clauses, which can significantly add to the cost of extending a lease. The value of a property can rise significantly after a lease extension and marriage clauses can force the leaseholder to pay the equivalent of half of this increase as part of their extension fee.
But these plans to reform what it described as a “feudal” system have been quietly watered down. Details on lease extension rights were missing from this year’s Queen’s Speech, which instead focused on limiting ground rent paid by leaseholders.
Mr Sherman added: “I have always voted Conservative, but their lack of action means they have lost my vote. It is criminal how we are being treated and ignored.”
Harry Scoffin, of Leasehold Knowledge Partnership, a campaign group, warned short leases were “acting as a drag on the housing market” and widening the price gap between flats and houses.
He said: “Mortgage lenders used to be fairly relaxed about short leases, lending on those in excess of 60 years, until two decades ago when they changed it for those up to 80 years.
“Lenders’ position on short leases is hardening every year and leaseholders trapped with short leases were devastated that the promised reforms to enfranchisement were axed from the Queen’s Speech this year.”
In a speech earlier this month Boris Johnson promised to “supercharge leaseholders’ ability to buy their freehold” and end unfair leasehold terms.
*Name has been changed
He would/should have been made aware of this by his solicitor at the time of purchase. Trouble is when you are buying a house (or a leasehold as in this case) 100 years seems a long time, and £1,000 a year not so much.
And he’s not losing a third of its value, that is what the property is worth and all someone will pay for it as the leasehold stands.
This is such a Telegraph story: man buys property which fails to adequately appreciate in value, is furious.
>Mr Sherman bought his two-bedroom flat for £33,000 in 1992 and it is now valued at around £85,000.
Oh boo fucking hoo.
All my profit is because I’m a smart, well informed investor who checked details carefully and did my research; all my loses are because I was swindled by fraudsters who didn’t explain things to me.
I’m reminded of this quote when talking about investments (be they in a house, crypto, stocks, etc).
>”All investments involve a degree of risk. The value of an investment may go down as well as up and you may not get back the money you invested. It should not be assumed that the value of investments always rises.”
My favourite part is when they say: “I have always voted Conservative”.
Blind faith to any single political party is pure idiocy.
Yea, but they don’t care as you’re locked in now.
A reminder to those that consider property an investment that investments can go up, as well as down. It is also a reminder that the Tories only care about the wealthy and those who can do things for them. The average home-owner is not a huge concern for them.
I have never voted Tory to begin with 🫤
My parents wouldn’t give a damn if house prices fell.
To them it’s just a number, because they own the home outright
Any reasonable human should feel the same way.
And this is why you never buy leasehold, kids.
Oh why will no one empathise with me? Me? Me? Me? Me? Me? Me?
> Mr Sherman added: “I have always voted Conservative, but their lack of action means they have lost my vote. It is criminal how we are being treated and ignored.”
Didn’t give a damn when it was other people being poorly treated and ignored, did he?
And the irony here is that his complaint is entirely self-inflicted. He could’ve extended the lease _decades_ ago for a fraction of the cost.
This isn’t some great surprise, it’s something he willingly signed up to 30 years ago.
>Mr Sherman added: “I have always voted Conservative, but their lack of action means they have lost my vote. It is criminal how we are being treated and ignored.”
Fair enough dude! If there’s one thing I respect it is when people vote for parties based on policies they put forward.
Not quite sure what was in the 2019 Conservative manifesto, but looked like in 2021 they promised to help going off the wording of that article. And if they’ve gone back on that then it’s an entirely fair reason to move away from them. I’m sort of in the same boat with the “right to buy” scheme, and IF they do it/don’t water it down then I’ll probably vote for them next time out.
Still, the killer question for Mr Sherman here is; will another party be offering you that kind of thing? This is what annoys me about Labour personally, because if they have these kind of policies in their election manifesto you sure as hell don’t hear about them!
That’s not a good reason.
I just dont get this. He clearly wished to stay in the flat for 30 years as he’s never moved earlier. So why now?
Hes 56, hes paid his mortgage off, hes never going to live longer than the time remaining on the lease, why does he claim he has to sell? (or buy the lease)? Whats wrong with living there? mortgage free? The annual ground rent will be tiny.
If its a change in circs, new partner, marriage etc, he can rent it out. No mortgage permission required and the freeholder will have approved renting historically in the area.
Whats actually irritating is, he couldnt have lived any cheaper than he has for the last 30 years. Clearly hes a worker as he obtained a reasonable size mortgage for early ‘90s and rates were above 10%.
If anyone can build up savings, its a single bloke, mortgage free (tiny mortgage for its last 15 years), living in a dirt cheap flat. If hed topped up savings as his mortgage payments decreased he’d be quids in to have bought the freehold and probs a nice motorhome as well.
I dont get it.
The Tories are burning their voter base. They think by promoting green policies, being anti-landlord, etc they will win younger votes, but that ship has well and truly sailed.
Johnson is doing something no Labour leader ever could – destroy the Tory party.
Threads like this remind me that despite all the bluster and noise people make about affordability of homes etc, most people posting have absolutely zero knowledge of how property value works, how mortgages work or how any of it works.
Leasehold buying silliness aside… what the fuck the buyout goes _up_ each year not down?