Its survey questioned over 2,000 buyers to find out if they understood the difference be-tween leasehold and freehold properties. It found that around 20% of adults do not know what a freehold property is and that 49% of buyers think a leasehold property is something completely different to what it actually is.
But when younger buyers were asked to define these terms, they had even greater problems than their elders. Some 41% of the 18 to 24 year olds questioned were unable to correctly define what a freehold property is, while only 57% understood the term leasehold.
The problem is worse in the north of the country than in the south. While 61% of people living in London know what a leasehold property is, only 44% of those in Scotland do, and that figure falls to just 23% of those living in the North-East.
Interesting answers include 2% believing that freehold properties can only be bought by freemasons and a similar proportion believing that leasehold homes are exempt from Council Tax. The head of AA Legal Services suggests that buyers are so desperate to get onto the property ladder they may be overlooking important legal principles, and that the legal community has failed to explain itself in plain English.
This lack of understanding about how the housing and mortgage markets work is a big disadvantage for first-time buyers in what is al-ready a difficult environment for them.
With property prices so high, to be able to buy, most first-time buyers need to be able to think creatively when it comes to securing the funding they need. Yet with such a lack of know-ledge about how the system works, how can they do this?
In its report, AA Legal Services blames this lack of knowledge on schools for not teaching children about such issues and the legal profession for operating in a confusing manner.
Maybe it is right. But while this is the case and while the housing and mortgage markets remain complex and diff-icult to understand, first-time buyers will need people who can offer them advice and guidance. And who could be better placed to provide the help and advice they need than mortgage brokers?