The leasehold and ground rents scandal of Oxford

Freehold or Leasehold .. which is best? Well, when buying a property in the UK there are two main types of ownership – freehold and leasehold and, when boiled down, they mean the following...

Freehold: The person who owns the freehold of a property owns the property and the land it stands on.

Leasehold: As a leaseholder you do not own the land the property is built on. A leaseholder essentially rents the property from the freeholder for a number of years, decades or in some Victorian terraced houses, for centuries. 

All apartments have to be sold as leasehold properties because of the very nature that you have a neighbour above or below you (so both of you can’t own the land) with the length of the lease being over 100 years (even more sometimes).

However, with some apartments – particularly Victorian and Edwardian houses converted into numerous apartments – which are sold on the basis that the leasehold apartment owner also owns part of the freehold (with other leaseholders in the same building), having what is known as 'share of freehold'. Similarly, the Government also brought in legislation a number of years ago for more modern apartment blocks built in the 20th century where it allowed leaseholders to club together and have the right to purchase the freehold together.

Now we must stress, there is nothing wrong with leasehold – it’s been a useful type of homeownership since Norman times, it’s just that with a leasehold comes a potential extra responsibility. If there are four apartments in a block, who pays for the leaking roof when all benefit from a watertight roof? Who pays for the bad foundations, when all benefit from good foundations? Who pays for building insurances? .. the list goes on – so clauses are added to the leasehold agreement to ensure everyone is protected and pays their fair share of the joint costs of the building with service charges and a nominal ground rent (ground rent is a nominal rent, commonly quite low, often in the region of £50 per year to the freeholder of the property).

Whilst houses tend to be sold as freehold as it's a more unambiguous set-up, given there is only one property on the land. Contentiously however, in the last 20 to 25 years this has not always been the case with new-builds as some new homes’ builders have sold the leasehold to the buyer and retained the freehold. There is nothing wrong with that, it’s just in some cases (not all) they also added some oppressive clauses to the lease of the property they were selling, which could be the next PPI scandal - albeit for property.

Government reports have emerged recently that suggest 12,000 leaseholders in the UK are facing ground rents – which they pay to the freeholder – that double in cost, usually every 10 years, but occasionally more frequently.

Builders started to add clauses into leasehold property sales with ground rent being set at £300 and £400 a year, yet it doubled every ten years. Though unwary first-time buyers were habitually told that their 500 and 999-year leases were practically freehold, the clauses inescapably meant that the ground rent would spiral to ridiculous levels meaning the average ground rent would be £23,750 a year by 2070 and £379,900 a year by 2130, making the properties practically unsellable today, with owners often left unable to re-mortgage too.

So, how many people are affected by this in our local area?

Well, using Government data, our research suggests that in Oxford 51 householders have bought a detached house, semi-detached house or town house (which would normally be freehold) as leasehold. Not all these have onerous lease clauses, yet some do. I know it doesn’t sound a lot, yet that is potentially 51 lives ruined with houses they can’t sell - making them prisoners in their own property.

The good news is the Government is on the case and serious about sorting this issue out as they have proposed a ban on the future sale of houses as leasehold, as well as cutting ground rents to zero. Yet stern questions remain about the future of homeowners in existing leaseholds. Westminster wants the builders to set up compensation plans, and we will say many (not all) have stepped up to the mark and started to sort this, although some campaigners have said the schemes are not fit for purpose, let’s hope they are wrong.

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697

What’s the biggest street in Oxford (OX1)?

Most weeks, my articles on the Oxford property market tackle some of the big issues about the local property market, such as the lack of new homes being built in Oxford, the trials and tribulations of being a Oxford buy-to-let landlord and the future of the Oxford property market .. yet in this article, I wanted to give you some fun facts about the Oxford property market – which is the largest street in OX1 by the number of properties on it?

The biggest street in OX1, when it comes to the number of houses on it is Roger Dudman Way, with 454 homes. In second place is Marlborough Road with 255 homes and in third is Abingdon Road with 234 homes.

Yet, size isn’t everything and the most valuable street of the top 20 biggest streets is Marlborough Road at £132.7m with an average value of £520,000 per property.

The 2 streets with the greatest number of movers in the last 3 years are Kennington Road, with a saleability rate of 10.6% and The Avenue with a saleability rate of 11.2%, with White House Road having the highest saleability rate of 12.1%.

Yet, on a more serious note ..

The basic rudiments of the Oxford property market remain principally healthy in many parts of Oxford, yet the existing political environment means that the vital element of confidence has been diminished slightly in certain parts, and that is triggering a minority of potential property purchasers and house-sellers to vacillate, yet with unemployment at an all-time low, a record number of people with a job, ultra-low interest rates and decent mortgage availability (with the Banks and Building Societies tending to drop mortgage rates instead of increasing them), those Oxford first time buyers (and especially Oxford buy-to-let landlords) who have adjourned their next house purchase because of perceived political uncertainty should be reminded that talking to many of my fellow Oxford agents they have more homes on their books than at any time for the last three or four years, so there is a greater choice of Oxford properties to call your next home/BTL investment with a potential of securing a great property deal in the next month or so.

Irrespective of what happens with Brexit, Oxford people will still need a roof over their heads and as I have mentioned on a number of occasions, I have proved beyond doubt we aren’t building enough homes both locally in Oxford and nationally. If supply is limited and demand increases (as the population grows and we get older), prices in the medium to long term can only go in one direction. Upwards!

So, whatever happens with BoJo and Brexit – why wait, because once we get over that hurdle, there will just be another hurdle and another hurdle and by which time – we will be in 2029 and you would have missed the boat. We survived the Global Financial Crash, 3-day week in 1970s’, hyperinflation etc etc … yet the choice is yours.

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697


www.fineandcountry.com/oxford

What’s the biggest street in Banbury (OX16)?

Most weeks, my articles on the Banbury property market tackle some of the big issues about the local property market, such as the lack of new homes being built in Banbury, the trials and tribulations of being a Banbury buy-to-let landlord and the future of the Banbury property market .. yet in this article, I wanted to give you some fun facts about the Banbury property market – which is the largest street in OX16 by the number of properties on it?

The biggest street in OX16, when it comes to the number of houses on it is Bretch Hill, with 434 homes. In second place is Britannia Road with 330 homes and in third is Warwick Road with 329 homes.

Not surprisingly, the most valuable street of the top 20 biggest streets is Bretch Hill at £78.6m with an average value of £181,000 per property.

The street with the greatest number of movers in the last 3 years is Britannia Road, yet its saleability rate was only 13.0%, with Marshall Road having the highest saleability rate of 19.1%.

Yet, on a more serious note ..

The basic rudiments of the Banbury property market remain principally healthy in many parts of Banbury, yet the existing political environment means that the vital element of confidence has been diminished slightly in certain parts, and that is triggering a minority of potential property purchasers and house-sellers to vacillate, yet with unemployment at an all-time low, a record number of people with a job, ultra-low interest rates and decent mortgage availability (with the Banks and Building Societies tending to drop mortgage rates instead of increasing them), those Banbury first time buyers (and especially Banbury buy-to-let landlords) who have adjourned their next house purchase because of perceived political uncertainty should be reminded that talking to many of my fellow Banbury agents they have more homes on their books than at any time for the last three or four years, so there is a greater choice of Banbury properties to call your next home/BTL investment with a potential of securing a great property deal in the next month or so.

Irrespective of what happens with Brexit, Banbury people will still need a roof over their heads and as I have mentioned on a number of occasions, I have proved beyond doubt we aren’t building enough homes both locally in Banbury and nationally. If supply is limited and demand increases (as the population grows and we get older), prices in the medium to long term can only go in one direction. Upwards

So, whatever happens with BoJo and Brexit – why wait, because once we get over that hurdle, there will just be another hurdle and another hurdle and by which time – we will be in 2029 and you would have missed the boat. We survived the Global Financial Crash, 3-day week in 1970s’, hyperinflation etc etc … yet the choice is yours.

Saul Roux Scrivener MRICS | Associate
E: saul.scrivener@fineandcountry.com
M: +44 (0)7867 664345 | T: +44 (0)1295 239 666 | DDI: +44 (0)1295 239661

Fine & Country: 1 South Bar Street, Banbury, OX16 9AA

www.fineandcountry.com

Oxford Property Market Update Summer 2019

The foundations of the Oxford Property Market over the summer have continued to be principally sound; yet the existing political macroclimate means that the critical element of consumer confidence has been reduced and that is triggering some potential Oxford property buyers and Oxford house sellers to falter slightly and hang fire making any firm decisions on property.

With record low interest rates at 0.75%, low unemployment rates of 3.8%, and decent mortgage availability (even those with low deposits - there were 224 mortgage deals available on the day of writing this article where only a 5% deposit was required and 5 main stream lenders that would offer 100% no deposit mortgages), Oxford buyers have a lot going in their favour, aside from the perceived political uncertainty. 

Interestingly, Rightmove have stated there are more properties for sale today in the Country, than at any time since 2016, and Oxford follows that trend. Even with that in mind, property values have remained reasonably stable as The Land Registry has just released its House Price Index for Oxford and the surrounding locality and it makes very interesting reading.

Overall, property values in the Oxford area are 4.8% higher

than a year ago as the average property value in Oxford now stands at £512,300.

When I looked at the types of Oxford properties, a slightly different picture appeared .

  • Oxford Detached homes rose by 5.3%
  • Oxford Semi-detached homes rose by 5.7%
  • Oxford Terraced/Town-House rose by 5.3%
  • Oxford Flats/Apartments rose by 2.9%

and splitting down the types of Oxford into property types ..

  • Oxford Detached £822,800
  • Oxford Semi-Detached £485,900
  • Oxford Terraced/Town-House £464,100
  • Oxford Flats/Apartments £333,500


Yet, Oxford Property Market Blog readers will know I always like to measure the health of the Oxford property market not only by house prices but transaction levels as well


1,392 properties were sold in the last year in Oxford,

lower than the 10-year average of 1,964 properties per annum



Considering the uncertainty the Country has been through in the last three years with the ‘B’ word issue, I don’t think that’s too bad and shows the underlying resilience of the Oxford property market

Now looking forward towards the end of the year .. how will Oxford house values change under the new Prime Minister?

Oxford buy-to-let landlords and Oxford first-time buyers seem to be sustaining their preceding activity levels, which is heartening news. It’s quite conceivable that both cohorts are presently profiting from the marginally increased numbers of Oxford homes on the market, which not only offers them greater choice, but aids with their negotiations. The suggested Stamp Duty changes made me look at previous Stamp Duty changes in the last decade and their effects have been rather short term.

That means those selling their homes in Oxford need to be realistic with their pricing, and, as most sellers also buy a property, what you might lose on your sale you will make up on the purchase.

BoJo, Brexit … to be honest are all short-term distractions from the long-term issues of the UK and Oxford property market. Until we start building at least 300,000 properties a year to meet the demand for UK property, demand will always outstrip supply, meaning irrespective of short-term fluctuations that may (or may not) be caused by domestic and world events (including the ‘B’ word’), prices will always in the medium to long term remain stable and increase.

Joe Wright | Associate
E: joe.wright@fineandcountry.com
T: +44 (0)1865 953 247 | M: +44 (0)7825 164 163
Fine & Country: 267 Banbury Road, Summertown , Oxford, OX2 7HT
www.fineandcountry.com

Banbury Property Market Update Summer 2019


The foundations of the Banbury Property Market over the summer have continued to be principally sound; yet the existing political macroclimate means that the critical element of consumer confidence has been reduced and that is triggering some potential Banbury property buyers and Banbury house sellers to falter slightly and hang fire making any firm decisions on property.

With record low interest rates at 0.75%, low unemployment rates of 3.8%, and decent mortgage availability (even those with low deposits - there were 224 mortgage deals available on the day of writing this article where only a 5% deposit was required and 5 main stream lenders that would offer 100% no deposit mortgages), Banbury buyers have a lot going in their favour, aside from the perceived political uncertainty. 

Interestingly, Rightmove have stated there are more properties for sale today in the Country, than at any time since 2016, and Banbury follows that trend. Even with that in mind, property values have remained reasonably stable as The Land Registry has just released its House Price Index for Banbury and the surrounding locality and it makes very interesting reading.

Overall, property values in the Banbury area are 2.6% lower

than a year ago as the average property value in Banbury now stands at £344,600.

When I looked at the types of Banbury properties, a slightly different picture appeared ..


  • Banbury Detached homes dropped by 2.3%

  • Banbury Semi-detached homes dropped by 2.1%

  • Banbury Terraced/Town-House dropped by 2.7%

  • Banbury Flats/Apartments dropped by 5%


and splitting down the types of Banbury into property types ..


  • Banbury Detached £515,000

  • Banbury Semi-Detached £293,000

  • Banbury Terraced/Town-House £258,100

  • Banbury Flats/Apartments £165,400

Yet, Banbury Property Market Blog readers will know I always like to measure the health of the Banbury property market not only by house prices but transaction levels as well ..

1,186 properties were sold in the last year in Banbury,

lower than the 10-year average of 1,257 properties per annum

Considering the uncertainty the Country has been through in the last three years with the ‘B’ word issue, I don’t think that’s too bad and shows the underlying resilience of the Banbury property market.

Now looking forward towards the end of the year .. how will Banbury house values change under the new Prime Minister?

Banbury buy-to-let landlords and Banbury first-time buyers seem to be sustaining their preceding activity levels, which is heartening news. It’s quite conceivable that both cohorts are presently profiting from the marginally increased numbers of Banbury homes on the market, which not only offers them greater choice, but aids with their negotiations. The suggested Stamp Duty changes made me look at previous Stamp Duty changes in the last decade and their effects have been rather short term.

That means those selling their homes in Banbury need to be realistic with their pricing, and, as most sellers also buy a property, what you might lose on your sale you will make up on the purchase.

BoJo, Brexit … to be honest are all short-term distractions from the long-term issues of the UK and Banbury property market. Until we start building at least 300,000 properties a year to meet the demand for UK property, demand will always outstrip supply, meaning irrespective of short-term fluctuations that may (or may not) be caused by domestic and world events (including the ‘B’ word’), prices will always in the medium to long term remain stable and increase.

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