Owners of leasehold property, or leaseholders, are given rights over their land for a fixed period of time. These tenancies can often be for as long as 3000 years, but at the end of this term, the property will be returned to the freehold owner, or landlord.
Leaseholders can expect to pay rent, which will usually be a nominal sum. However, leaseholders may also need to pay a service charge to managing agents, who look after the property for the landlord. Typically, this will involve the landlord insuring the property, and the leaseholder paying a contribution towards the cost of insurance.
It has recently been revealed that in a number of leasehold properties, secret bribes have been paid to managing agents and landlords by insurance brokers, at the time when buildings insurance was up for renewal. These payments are said to have run into the hundreds of millions of pounds.
The cost of these undisclosed payments was apparently subsidised by the brokers setting the insurance premiums at a higher rate, with leaseholders left to pick up the balance. As well as being charged an inflated sum for their insurance, leaseholders may have also been covered by less suitable insurance, with managing agents preferring to focus on the best deal for themselves, rather than for their tenants.
If you have any questions relating to a leasehold property, then contact us at Audley Chaucer.
Written by Syeda Anjum
