Icylyn Goddard, 86, has lived in her maisonette in Wembley, north London, for more than 40 years. She finished paying off the mortgage on it 20 years ago, but still does not own her own home and was recently told she would need to spend more than £200,000 to ensure she can spend the rest of her life there.
Goddard is a leaseholder and has 11 years left on her lease. In July, lawyers for the freeholder of her building told her that she needed to pay £212,000 plus valuers’ fees to extend it for 125 years. She was told that if an agreement was not completed within three months, the terms offered to her would be revised.
She says that a recent valuation of her home found that with a long lease it would be worth £350,000. Paying about two-thirds of that to extend the existing lease will be very difficult for her. But if she does not do so, ultimately it will expire and her home will become the property of the freeholder.
“I believe I’m not the only elderly person facing this kind of financial challenge despite having paid off my mortgage years ago,” Goddard says. “The situation I’m in is distressing and unjust. The choice I am faced with is either to be forced out of my own home or to be subjected to unreasonable financial demands because of the terms of the leasehold agreement.”
She feels that the situation is a “legal scam”. She says: “It is causing me anxiety, sleepless nights, loss of appetite and grief overload.”
Goddard is right that there are others who have been through similar. Levi Thomas and his wife bought their home in north-west London in 1974. He assumed that once he had finished paying off the mortgage, the home belonged to him and his family. But instead, since 2008 he has been paying £1,040 a month to live in the same house – a big strain on the 86-year-old’s budget – and he has nothing to leave his children.
When they bought, the couple had recently come to the UK from Jamaica and were not familiar with the way the leasehold system worked. They did not realise that there was a lease on their home that they needed to extend before it expired. There were 34 years left at that point and as the clock ticked down they were oblivious until he received a letter warning him that his lease was due to expire soon.
Thomas was appalled to discover that the mortgage he had paid off counted for nothing. A letter was sent to the freeholder from a family member in 2008 pleading with them to allow Thomas to extend the lease. But instead it expired, the property reverted to the freeholder and Thomas was given an assured tenancy on it. Although eye-watering to many, the freeholder says the rent is below the market price for a property of that size in that area.
The plight of people who buy leasehold homes, whether from private developers or former council properties, and face crippling service charges has been widely reported. But less is heard about those whose leases have expired or are due to expire soon.
In response to concerns about the many problems leasehold arrangements can cause, the previous government passed the Leasehold and Freehold Reform Act 2024, which increases rights for leaseholders.
Calls are mounting to pass the secondary legislation needed to enforce the act, which would ban developers from selling new houses as leaseholds, make it cheaper to extend a lease and increase the standard lease length to 990 years.
The new government is also planning further reform with the introduction of the leasehold and commonhold reform bill.
Currently, if the lease on a property has only a few years left on it, it is likely to be very expensive to renew or extend it. Once the lease drops below 80 years, there is an additional expense factored in, called marriage value, which is based on the increase in value of the property if the lease extension is granted. The money is paid to the freeholder.