What would you do? Leasehold

[Amerimoon]

We have to make a decision and I’m just wondering if others have bought leasehold properties and what their experience of them is? This is not a very old/ new build property - just a bog standard 1960s three bed semi.

Context: we live in a small, very desirable school catchment area where houses don’t seem to come up that often! When we bought our current house, there really wasn’t any other option in this area and although it’s a really beautiful house (tiny Victorian town house) it’s also small and there’s no drive which isn’t ideal. One of our children is in the school now, one more to go so we really don’t want to move areas. A couple of months ago, a dull but practical semi came up for sale just round the corner and we put in the highest bid for it - we were very pleased! We asked straight away if it was Freehold and we’re assured it was. We’d like to do it up over time but it offers us more space and the right area. Ours had an offer within days too from a lovely couple hoping to move ASAP. They have a child applying for school (deadline mid January) and really wan our house. They offered a low amount, not the asking price but the bare minimum we’d need to move to other house so we just agreed for the speed! We knew everyone was up for a quick move.

No we’ve just had the searches back and they’re showing that the house is in fact Leasehold - we’re really frustrated that we were lied to. The vendor says the freehold is owned by a lady who owns the whole street and won’t sell, she’s apparently very stubborn on the issue. They’ve offered to lower to price by 10k if we continue and we all complete at Christmas. It’s a 500k house so as a percentage isn’t really a big drop, not that we were hoping for a drop at all really, we’d rather pay the full price and have a freehold tenure.

We are awaiting a copy of the lease to read but really put off it now. Do not want to let our buyers down at all and there’s nothing in the catchment to even rent, bar a few very very tiny flats we couldn’t make work.

Can anyone tell me their experiences of leaseholds? We are minded to pull out at this stage and really don’t want to.

[GoldenZigZag]

A leasehold house is very strange, and with a difficult freeholder I'd be very wary indeed

[piglet81]

I understand in some parts of the country leasehold houses are commonplace... I’ve owned a leasehold flat, but wouldn’t want a leasehold house personally.

How long is the lease? Hearing that the freeholder is difficult would definitely put me off.

[CatherineMaitland]

I would read the lease and check for length, doubling ground rents, responsibilities split between you and freeholder, odd clauses, and fees/permissions needed for making changes to the house as major issues. An older lease might need adjustments to make it more suitable for modern living - would the freeholder be amenable? Who would pay to get that legal work done?

Most people don't seem to read their leases or tenancy agreements at all.

[Metallicalover]

I have a leasehold house, it's has 992 years left on the lease and we pay £150 per year and have done for the past 7 years. We've looked into buying the lease and it's around £5000.
Have a look into the lease and see what the clauses are etc and see if you can buy it.

[Threetoone]

I would pull out now and tell your buyers, the more time they have means they might be able to formulate a plan b.

It’s really not your fault. If they’ve lied about this, what else have they lied about. I would assume they thought you’d get too far down the line and proceed.

What is the estate agent saying, didn’t they do any due diligence before they marketed the property.

Situation throws up so many questions. What impact does it have on the variation and any mortgage offer?

[Threetoone]

Valuation not variation!!

[PicsInRed]

They're offering you only £10k off when a significant amount of the value is in the land ...which it emerges you wouldn't own. It sounds like the house is priced as freehold, when leasehold is potentially hundreds of thousands cheaper.

Would you have viewed if you'd known? And at that price? That's your answer.

[PicsInRed]

Just walk away.

[AGeeseGoose]

There’s a good few leasehold houses near us - all houses from the 60s onwards in a particular suburb. We were going to view one a few months ago but it sold - it had something like a 999 year lease.

[WombatChocolate]

Walk away. The government has ruled that new houses can no longer be built as leaseholds for good reason. There is zero reason for houses to ever be leasehold...it is just a money making venture.

The government is about to rule further on leasehold flats and over time anything which remains with a high ground rent etc will be almost impossible to shift. Many already have zero value when mortgage lenders value. Your solicitor will warn you off a leasehold house in the strongest terms to avoid being sued later for not raising the issues which are now well known. Just walk away....disappointing but it really will be a bullet dodged.

[Remona]

Leasehold flats I can understand, but a leasehold house? You’ll own the bricks and mortar, but not the land it stands on. Personally I wouldn’t touch any leasehold house with a barge pole, never mind a half a million pound one!

I think they’ve been misleading, Freehold/leasehold should be clearly stated in the sales particulars, surely? Plus a £10k drop is nothing in the scheme of things. They’re trying to make it look like they’re doing you a good turn when they’re not and will be quaking in their boots about you backing out. Personally I would walk away.

[LooseMooseHoose]

I wouldn't touch it with a barge pole, unless it is a particularly unusual situation. Ie there are some leasehold houses near here that are converted barns/stables of an estate house and all sit in communal estate grounds. Not my cup of tea, but I can see why leasehold is appropriate in that situation.

If you are interested, he will need to knock much more than £10k off the price. More like £100k I should think.

[DelphiniumBlue]

It depends very much on the area - in some places there are lots of leasehold houses.
Sometimes they are leasehold because of restrictions on area- such as imposing obligations to maintain the property in a particular style/manner, or to contribute towards the upkeep of a private road. Sometimes they are leasehold for historical reasons.
I suspect it won't affect the value much, but the valuer will be the one to confirm that. If there is a considerable ground rent, that may be a different matter, though, so you will need to see the lease and get full disclosure on sums paid or demanded.
I think some mortgage lenders used to refuse to lend on leasehold houses, don't know if that is still the case, and would hazard a guess that it is area-related.
There is also legislation entitling almost all leaseholders to obtain the freehold. Get your solicitor to advise whether you would be entitled. From memory ( and I haven't done this work for several years,) I think there may be a residence/length of ownership qualification, so it may be that the seller will need to deal with it rather than you.
Long story short: it needn't put you off buying but you need to carry out proper checks first, and this may take time.

[baffledbyworksheets]

I live in Bath and leasehold houses are incredibly common here. I've lived in two boring ugly 1960s houses and one Victorian terrace. All leasehold with remainder of 1000 years on the lease. Slightly more faff with conveyencing, occasionally the odd (probably unenforceable) clause about not drying laundry in front garden, generally absolutely nothing to worry about. The ground rent on the Victorian house was 10p/ year and on the 60s houses, about £12. Rents were capped and never increased.

I have also lived in a 2002 leasehold flat in London where the ground rent was significant, there was a service charge with occasional extra surprise payments, and the rent increased annually. This is the type of arrangement I'd be wary of.

Basically ask your solicitor to check it out but it will likely be fine. The things you ideally want to see are a long long lease, no service charge, and a cap on ground rent increases.

[GinandGingerBeer]

Leasehold is very common where I am. Our first house was leasehold and we paid about £7 a year. (South Yorkshire)
It had a very long lease (can't remember how many years) never been a problem.
Why did they lie?
They must have known as they pay the ground rent on it!
Ours is even stranger in that is both lease and freehold. But we own the lease which will pass to the next owner. So it is classed as freehold.

[ComtesseDeSpair]

My house (London) is leasehold. It’s a post-war build and it’s just some quirk of the land being owned by a philanthropist and that they wanted it to be used for domestic purposes in perpetuity. The lease was 999 years so has about 950 left to run with a ground rent of £40 per year. It doesn’t affect the use of the property in any way and doesn’t appear to put people off buying. Our freeholder is “absent” (the long-dead philanthropist left it as part of his estate but it isn’t exactly a money spinner so whoever owns it seems to not care much.)

The leasehold houses to be cautious of are those with onerous terms, those where public roads haven’t been adopted by the council and those where the ground rent doubles every few years.

[ComtesseDeSpair]

Why did they lie?
They must have known as they pay the ground rent on it!

Possibly they don’t. I send by recorded post a witnessed cheque for £10 every quarter as per the terms of my lease to the address stated within it. I’ve no idea if the address is still the correct one and nobody has ever been in touch to say otherwise. My neighbour had admitted she no longer bothers sending the cheque because she forgot for a bit and hasn’t heard anything in the six years she hasn’t either.

[MyGazeboisLeaking]

That's a big blow when you think you've got things sorted.

Personally - I wouldn't touch a leasehold house with a barge pole (unless it's a very unique situation as detailed above).

The fact that the sellers are offer discounts to get you to continue tell you how problematic resale will be.

Weight it up very carefully. If you're still open to going ahead, negotiate a MUCH steeper reduction.

[baffledbyworksheets]

When we bought our current house the seller didn't know it was leasehold. It came up in the searches. Her late husband had paid the very small land rent each year. It's not an issue at all here. Hope you can work it out OP. Such a stressful thing to find out at the last minute (happened to us too for reason just explained!)

[Africa2go]

OP there's some really poor advice on here.

You need to understand the difference between long leasehold and short (or newer) leasehold.

We're in the NW, have owned 4 or 5 houses (including a 1960s house) and they've all been leasehold. Freehold houses are not as common as leasehold houses. They all have 999 years from when they were first built (so even our 1930s semi still have 900+ years to go) and we pay a fixed ground rent of £4 a year. There are no onerous clauses in the lease, nothing to be wary off and the difference in value between the leasehold and freehold is negligible.

That is completely different to a short leasehold (say 100 years) which you often see with flats, or newer leaseholds which come with quite a high ground rent (hundreds of pounds) which increases over the term. Those are the problematic leaseholds that have had quite adverse press recently (lenders refusing to lend, companies buying up the freehold etc).

Just get hold of the lease, read it very carefully and do your research. Get legal advice on it before you make a decision. Don't jump the gun & walk away until you know the facts.

[GiantKitten]

Our house (1892) is balance of 999 years - common where I live. It has to do with mineral rights or something?

Our ground rent is only £1.45 (probably a lot in 1892!)

@Amerimoon, you need to find out
a) length of lease
b) how much ground rent is currently
c) whether/when it can be increased

The lease might not be a deal breaker, but you need those details before you decide.

[AgileMadness]

Just to echo other PPs who have said, it depends what part of the country you're at.
We're in the North west and it's very common for houses to be leasehold here.

Ours is leasehold with 950 years left on the lease. The ground rent is £15 per annum. I think the cost of the freehold is £2K if we do choose to buy it.

Some people on here will advise against leasehold houses with no consideration for regional circumstances. Probably best you speak with a local solicitor.

[timeforanewstart]

My nan has a leasehold flat when she bought 10 years ago it had something like 60 years left , what she didn't know is that leases go up in proportion to the property and now it has less than 40 years left no one can buy with a mortgage has to be cash , and my nan can't afford to buy the lease as would be about £60000 so bare that in mind.
In my opnion leaseholds shouldn't be allowed

[timeforanewstart]

** bought 20 years ago
Her ground rent is very minimal but its the cost of lease going up with maisonette value that is issue and not 1000 year lease like some

[Amerimoon]

Thanks for all the advice! We are in the NW and I know it’s more common around these parts but we’re still very wary of it. The lies have annoyed us too, we feel tricked. The lease is for 900+ years I believe and only £10/ year. We’re worried because we don’t want to be subject to someone else’s permission if we want to extend in the future and why won’t the freeholder sell if they’re not benefitting in any way other than£10/ year?! They must be charging for permissions or something. Plus to be honest I just really don’t like the idea of it and suspect others will feel the same way in which case it could be a pain to sell on. Why else would he lie about it to begin with?