How to avoid the potential pitfalls of a long lease

There has been a great deal of controversy and adverse publicity in the legal press recently regarding long leases with high ground rents in new build houses and flats. In this instance, there could be quite significant adverse consequences for buyers of such dwellings. 

The same issues can also affect sheltered housing, which might be sold off on a long lease or even some care home accommodation, where rather than the resident occupying the home under a contract or licence agreement, they have a separate personal care agreement alongside residence rights under a tenancy or lease. 

The problem is that if the annual ground rent payable by the owner of the unit is more than £1000 per annum (for a property in greater London) or more than £250 per annum (for a property outside greater London), then certain sections of the Housing Act 1988 apply. This means that the lease or tenancy is an ‘assured tenancy’, which in turn means that the landlord’s remedies to obtain possession or forfeit the lease are in some cases very harsh with regard to the owner of the accommodation.