Paul Harrison begrudges the thought of paying thousands of pounds to a man he has never met and who has never done anything for him.
However, that is the prospect the 61-year-old is facing, as the two-bedroom maisonette he is living in is a leasehold property with just 34 years remaining on the lease – and the cost of extending it is spiralling all the time.
The last quote he had from the freeholder around 18 months ago was £77,000 – but with legal costs, this will means a bill approaching £100,000.
And as the lease gets shorter, the costs for extending it go up astronomically, leaving Paul in a quandary.
“I live in a block of four maisonettes and three of the leases have not been extended,” he says. “So the freeholder is looking at an income of around a quarter of a million pounds for doing absolutely nothing.
“This is a guy I’ve never met, who has never done anything for me. It is a pointless lease. If the lease didn’t exist, it wouldn’t change our lives one bit – except we would have to spend £250,000 between us extending the lease.”
Paul and his wife Heather bought the two-bed maisonette in Maidenhead, Berkshire, 20 years ago. They had owned various properties in the past but had never had a leasehold one. They just wanted a small place to live so they could enjoy life and travel and lock it up when they went away.
Paul told The i Paper that when he purchased the property, no one – including the solicitor, the estate agent or the bank who gave the mortgage, discussed the fact it was leasehold with him or any implications.
A leasehold arrangement is where people buy the right to occupy a property for a set amount of time, but not the actual land, which is owned by the freeholder.
“We were told it was leasehold, which I knew nothing about,” remembers Paul. “I presumed it was just a bit of paper which kept things legal.
“We were told that the people selling to us were trying to extend the lease, but it was taking a long time, so rather than have the sale fall through, they would knock off the price they were being quoted for the lease extension, which was £12,500 at the time, from the selling price.
“We paid £178,500 for the maisonette after the reduction for the lease extension. The number of years left on the lease or the implications were not discussed at all.”
A short lease on a property significantly reduces property value and raises extension costs, particularly if the lease length is below 80 years. This is due to added “marriage value” costs which involve a premium of potentially thousands.
Marriage value is the increase in property value through a lease extension. For leases under 80 years, current legislation requires that this marriage value is split equally between the leaseholder and freeholder. A short lease makes mortgages harder to obtain and deters buyers.
Paul says after buying the maisonette he did not look into extending the lease at first as he didn’t know the implications of not doing so. There are no leasehold service charges associated with the property and there is an annual, very low, ground rent of £14.
However, over the years, he talked to neighbours about lease extensions and heard differing amounts. He heard that someone had paid £20,000 to extend their lease so he thought that as years had gone by, he might have to pay around £25,000 to extend his lease.
But in 2022, a neighbour told him another neighbour had paid a large amount to extend their lease and that had been 10 years earlier. It was a lot more than Paul was expecting, so he did some research.
Paul hates the idea of paying a stranger who has done nothing for him thousands of pounds to extend his leasehold“I found an online calculator for leasehold extensions and put the details in and it came up with a number that made me feel sick,” he said. “It was around £70,000.
“There are now 34 years left on the lease, so it must have only had 55 years left when we bought it. There should have been lots of alarm bells ringing with the organisations I was dealing with, but they all said nothing.
“I was quite distressed and had lots of sleepless nights.”
In June last year, Paul received the quote from the freeholder for £77,000 to extend the lease. However, as a further kick in the teeth, the extension would be for 150 years from 1990.
This is because the freeholder, who has 48 maisonettes across two cul-de-sacs, issued his first lease extension in 1990 and extended that by 150 years.
“It is deeply unfair because it means that the later you extend the lease, the more you pay and the less years you get,” said Paul. “So despite paying so much money, I would benefit from less years of the lease.
“I am 61 now, so will be 95 when the lease runs out. Part of me is tempted to just do as little as possible to the home now and run the lease down and give it back to him.
“However, what I really want is for the Government to confirm everything they are talking about doing with the leasehold reforms, as this includes increasing the standard lease extension term to 990 years.
“If they do that, I would probably just pay to extend the lease, as at least it will be more worthwhile if it is extended for a much longer time.
“However, it is stressful that the closer you get to zero with a lease, the extension costs shoot up massively. So the longer the Government drags on these reforms, the more it will cost.”
Paul knows he cannot change his own situation until ministers go ahead with the reforms, so until then, he is working to raise the issue of leasehold and help other homeowners avoid the same trap.
Katie Kendrick, founder of the National Leasehold Campaign, said: “Marriage value is a windfall for freeholders. It creates an unfair burden on leaseholders who simply seek to secure the value of their homes.
“The implications of marriage value and having a short lease should have been fully explained to Paul by his solicitor, but it’s an all too familiar story that leaseholders have no idea.
“The Leasehold and Freehold Reform Act of 2024 would make a massive difference to leaseholders like Paul but unfortunately implementation of the act is taking far too long, and, in the meantime, leaseholders remain held to ransom trapped in leasehold limbo.
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“It’s like a ticking time bomb, as every single day leases are approaching the 80 years and the question leaseholders have repeatedly is do they stick or twist? Do they extend their leases before it drops to 80 years or do they wait for the Government to enact the legislation?
“It’s an impossible question to answer. Leaseholders are losing faith.
“One of the most important changes in this act is it is set to abolish marriage value. This would significantly lower the premium for Paul and many other leaseholders. Another important change for Paul is that a lease extension would add on 990 years to the lease, not the current [statutory] 90 years.”
The i Paper approached Paul’s freeholder for comment, but received no response.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “This is one of many examples of the exploitation leaseholders can face and underlines why our reforms are so important.
“Our plans will make it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold, and we will act to bring in these stronger protections as quickly as possible.”
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