Leasehold v Freehold(17 Posts)
I am normally put off viewing any properties especially new build if they are leasehold. Due to not a lot of properties coming onto the market in my price range I went to view a 1930's semi which is leasehold today. I liked it but leasehold is still holding me back.Would be interested in other peoples experiences/ views.
I wouldn't personally go there for several reasons. Do you know how long is left on the lease?
In some areas a lease would be 999 years so you would have hundreds of years left if this is the case. If leasehold is normal for the area, it’s not a big deal. I too prefer freehold as it’s ultimately down to the one owner to make all the decisions, but a very long lease wouldn’t put me off provided the terms with the freeholder are reasonable. The cost of a service charge and other expenses should be looked into. If it’s a short lease, stay well clear.
It depends how long is left on the lease and whether you can purchase the freehold.
If you can purchase the lease then its fine if you can afford it. If theres less than xx number of years left (check with your mortgage company) then you may not get a mortgage unless the lease can be extended.
Some leaseholders may put restrictions on the lease so check that too. You may need to increase payments every year or similar so check the details.
For me its freehold or nothing. I've had several issues with leaseholders in the past. I'd rather just not bother.
It depends on several factors:
1. Length of lease-if it's a 999 year lease not a big deal but if there is only 30 years left then that's a different story.
2. The option of and cost of buying out your lease. The development we live on was built leasehold but a lot of people have bought out their leases for something like £6k.
3. Ground rent-how much is it, what are the mechanisms for increases.
4. Does the lease prevent you from using the property in a certain way (sone leases have various curtailments on them).
If you do decide to opt for a leasehold property make sure you address all of these issues with a property lawyer/a conveyancer that you know to be quite intelligent/diligent-a conveyancer is typically not a qualified lawyer and won't necessarily think/know to do all of these checks.
You could state they must purchase the freehold before you buy? It would up the value though. Otherwise it depends how long it's got left.
I'm a property solicitor and would not buy a leasehold house for myself.
OP, there is a real difference between long leasehold and more recent leasehold.
Here in the NW, long leasehold is the norm - as you describe pre and mid war semis are usually leasehold. We've lived in 5 houses in and around Manchester and they've all been leasehold.
They are usually for 999 years which start in the 1930s (ours is 1939) and the ground rent is £4 and is not allowed to change. There is usually a provision in the lease that says you must have the freeholders permission to extend or make structural changes and
if you contact the freeholder to ask permission you pay an admin fee of £100 or thereabouts (on ours). It is very rare to worry about buying the freehold, there's no point.
It is completely different to modern leasehold of 199 years (or less) and the implications of having increasing ground rent, having problems as the lease gets older etc. Don't confuse the two.
Definitely be careful with leasehold and new properties. I almost bought a house I was initially informed by the estate agent the lease was £20 a year. Only to be told by the solicitor it was £600 a year and would soon double and then would double every ten years after that. We backed out. I have since found out the seller had to make a £40000 loss on the house in order to sell it and that many others are finding their houses unsellable.
Having said that the house we did buy is a leasehold. But it has over 900 years left on the term and is just £2.50 a year. I think in my area for some reason most where leasehold so we would have really limited ourselves if we wanted freehold.
Thanks for all your views.
It does seem normal for this area, streets of 1930's semis all leasehold.
I would not view a new build leasehold as I have read horror stories. However properties in this particular area go quickly so obviously it does not put a lot of people off.
It's only a problem when people who don't understand the different types of leasehold. As long as you use a local property solicitor who understands that it is the norm in certain areas and what long leasehold actually means (instead of the headlines in the press which always relate to new build leasehold) you'll get considered advice. If it's any comfort, I'm also a solicitor
Loads of London leasehold flats are 125 year leases. That’s normal for London.
Most flats are leasehold as until recently there was no alternative.
I'm a property solicitor and would not buy a leasehold house for myself. how odd.
As already mentioned, lots of areas are mainly leasehold with very long leases. So there's no problem there as long as you check the length.
The rest of the issues mentioned so far can be said for both freehold/leaseholds - Covenants/easements can appear on freeholds too of course, it just needs checking by your solicitor which is done as normal on every conveyance.
It would depend entirely on who the freeholder was and their track record, as well as their future rights.
But on balance, no.
Interesting comments, yes obviously I shall check how long is left on the leasehold and ground rent. It still puts me off as I would like to own the land my home is built on at the end of the day. There again its a really nice house with a lovely private garden and I would be mortgage free.Decisions , decisions.
If it is peppercorn rent and the lease has many years left, you can probably acquire the freehold for not very much money - you could well have the right to if you own the property for two years.
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