To ask about leasehold properties?

The part about ground rent is not correct.

You can buy a leasehold flat (or even house) with increasing ground rent but you are likely to find that many mortgage providers now won't touch it.

There as many other ground rents are peppercorn. In some cases as it is a few shillings and in a building with long leases the freeholder isn't interested in collecting it.

Some of the flats around me regardless of who the freeholder is now have long leases of 900 years. One of the issues with them though is in the smaller buildings is that the freeholder then often disappears. The freeholder does exist, so it hasn't reverted to the Crown, but they aren't interested in their property so this means that when say the roof needs replacing the leaseholders have to sort it out themselves.

I also have a friend who lived in a block of 5 flats were only 3 of them shared the freehold. Their leases were only 99 years and to sell it even though her lease was 95 years and she one of the freeholders, she had to extend it by 90 years. The buyer's solicitor didn't know what they were doing so the sale took months.

Leasehold rules aren't generally to make life difficult or be awkward, they're to enable good neighbourly relations and aim to prevent anything antisocial.

Whilst your friend would be wise to proceed with caution, I think she'd be daft to rule out all flats.

Flats not fists!

Just so you know, fists don't have permitted development rights in the same way a normal house does. Therefore replacement windows may also need planning permission as well as permission from the freeholder.

@SerenChocolateMuncher You can avoid many of those issues by buying a share of freehold property where you buy both the lease and a share of the freehold so you effectively become the leaseholder and the freeholder.

My lease is 995 years because I also own part of the company that owns the freehold.

There are other issues with share of freehold properties though. 😐

A lot of properties come with restrictions - properties in conservation areas, listed properties, properties with restricitive covenants etc.. and there are always planning permissions required for some works even with freehold properties.

She needs to work out what are the red lines, what she can afford etc..

What she needs to understand is these restrictions will be spelt out in the lease she is looking to buy - once a solicitor has explained them she can decide if those restrictions are ones she is happy with or not. No one can say what they are until she gets the lease.

My lease for example says I am not allowed to leave possessions in the communal corridors and stairwells - you could see that as a restriction or as a sensible safety precaution. Only she will know if she is happy to sign up to that.

A leaseholder is basically a tenant that has paid their rent for a considerable period in advance (99, 120, or 999 years for example).

There are many problems with this type of tenure. The leaseholder never enjoys full ownership of their home, although they have greater security of tenure than they would have with a normal tenancy, due to the upfront payment they make when they buy the lease.

If the period of the lease goes below 80 years, prospective buyers will struggle to get a mortgage which will make the home difficult to sell and considerably affect the value. This further complicates what is a longer and more drawn out process than selling a freehold property.

The leaseholder can apply to the freeholder to increase the lease, but it can be a long, difficult and expensive process. The leaseholder will be liable for the freeholder's legal costs as well as their own.

The leaseholder is liable for annual service and ground rent charges which the freeholder can increase every year.

I would not recommend buying a leasehold property unless it is the only way you can afford to buy a home.

One more attempt to explain the terms! If you buy a leasehold property, you are the leaseholder. The landlord is the freeholder. What they own and what you own depends on what it says in the lease.

@IcedupTulip and your conclusion that she would be better off renting is ridiculous.

The majority of flats in London and across England are leasehold!

Yes, there are costs and restrictions but not owning a property isn't the solution.

The leases in some buildings do make them less attractive, but not all are terrible.

@IcedupTulip there is some incorrect info on this thread and I've not read the whole thing.

IME estate agents don't always understand the ins and outs of a particular buildings title so if you have very specific questions getting hold of a copy of the lease from the land registry early (it costs about £5) might be a good plan.

The roles/ responsibilities of freeholder vs leaseholder varies especially in modern buildings.

• can she change windows etc off her own back or does the leaseholder have to give permission? - depends on lease - may be up to individual leaseholders or held as a block wide thing

• are there any situations where the leaseholder will need to give permission for anything? Yes, lease will be specific. In my building I need permission to move internal walls, or punch through external wall (e.g installing air-con) but not to replace the existing kitchen/ bathroom. Some properties forbid installation of hard flooring and specify that properties must be carpeted.

• What happens if the leaseholder doesn’t renew the lease when it needs it? Can that happen? The freeholder can't really refuse to renew a lease. This is enshrined in law. Provided you do it before, I think 85 years, it isn't too expensive.

Yabu.

Gove wants to change the law.

So when she comes to renew the lease in 24 years time she may find that she can have an extra 990 years on it.

BTW even if she buys a freehold house she still needs to do her homework. Lots of houses have restrictive covenants on them.

There’s so much incorrect information here. Tell your friend to look at the Leasehold Advisory Service linked earlier.

OP, it all depends on the flat and the terms!

For most people a leasehold flat is a stepping stone to a small house. And as long as the terms are right, much better than renting! She would have security from being evicted and rent rises. She will build equity and the value may well increase over time (though flats are more static atm).

Almost everyone in London started with a leasehold flat, including everyone in my extended family. And none of us have horror stories to tell.

Anything done by the leaseholder inside their property is not subject to the freeholder agreement

As already stated by previous posters, this is incorrect. Quite often leases place restrictions on what can be done by a leaseholder inside their property - it may be an absolute can't do or it may be that permission is required from the freeholder first. This can include things like removing internal walls or putting wooden floors down or having pets, all examples. It's VERY important to check the details of the lease to understand what can and can't be done. If a freeholder decided to enforce a breach of lease, the leaseholder could ultimately lose their flat.

Leaseholds are nothing to be scared of but your friend needs to do her research so she understands her obligations as a leaseholder and the responsibiities of the freeholder / managing agent. It's also important to understand the service charge and sinking / reserve funds. It is not necessarily as simple as look for a low service charge - that could indicate that insufficient maintenance is being done and/or no/little contribution is being made to a reserve/sinking fund which could mean leaseholders being hit by big bills when a new roof is required or fire standards require updates to the building(s).

Leasehold ownership is perfectly normal and nothing to be worried about. Owning a leasehold property will almost always be better than renting in that the owner has a realisable asset and security of tenure. Renewal of a lease that has 100 years or more to run will never be an issue for the purchaser.

Questions to ask are:

what is included within the “demise” ie the leaseholder’s responsibility. I have flats where the windows are and are not included: if the former then the leaseholder is allowed to do whatever they want, if the latter the Freeholder will be required to do the work or give permission for it to be done.

How much are the service charges and insurance costs. What do these cover. How proactive are the management company (responsible for the fabric of the building on behalf of the Freeholder). The state of any common areas in and out of the building will give an indication of how the block is managed.

How long is the lease - less than around 80 years may spook a mortgage lender, as may a ground rent of over £200

If a leasehold property is all that is affordable / available it would be madness to walk away on the basis of this form of ownership alone. Just go in with eyes open

Not necessarily.

Some flats have leases of 999 years while others have share of freehold.

It just means your friend has to do her homework.

she has an appointment to view the flat and will ask the estate agent in more detail but wants a bit of an idea on a few things. she’s wondering

Waste of time asking the estate agent.

The only thing she should try to get from them is the name of the freeholder and the name of the management company if the freeholder uses one.

She then should research them - Google is your friend - to see if either the freeholder or management company is notorious. If they are then your friend should go no further with that flat.

What she really needs if she makes an offer is a photocopy of the lease sent to her.

She then needs to read it herself, use https://www.lease-advice.org/ and ask people she knows who have leasehold flats showing them her lease wording to understand the basics. (So things like understanding who is responsible for the windows and whether there is a sink fund are basics, more complex questions including queries about specific lease terms e.g. having pets, running a business from home, nuisance terms. )

She should then ask her conveyancing solicitor any detailed questions this is includes finding out if any major works are due.

She needs to ensure she understands everything before buying. She should check whether t She also should be aware like if she was buying a house, about any more developments such as more flats, roads, rail stations etc in the area.

Firstly your friend is not buying a flat, they are buying a lease that gives them the right to occupy a flat for a certain number of years.

Typically the lease will set out the rights and responsibilities that buying that lease brings.

I would advise getting a good comveyancing solicitor that has experience of leasehold.

We live in a Leasehold flat, which is currently on the market. We've had any number of issues, some our fault, some our (crappie, nonexistent) freeholders.

Our flat is what could be described as a maisonette. It's an Edwardian purpose built property. From the outside it looks like a terrace house with 2 front doors, if that makes sense. So the freeholder owns the freehold to our flat and that of upstairs.

We moved in in 1995. At the time, you could do shared ownership on the open market ie you didn't have to go for an estate, you found a property and approached the HA about buying a share. So we went in with a HA, meaning the freeholders were the original freeholder plus the HA.

When we moved in the lease was just under 99 years and the solicitor advised us to lengthen it ASAP. Tbh we were just so happy to be in (in awful council flat before) we didn't really listen to that.

For 5 years we got a demand each year for ground rent which was paid. Then the demands stopped. The upstairs neighbour went to the freeholders address to find out he'd died and we then had no idea who the leaseholder was as noone approached us.

In 2011 my mum died and I inherited some money, which I used to buy out the HA and clear the mortgage. During this process, the freeholders were located, who demanded the back rent but the solicitor reminded them that (a) they were supposed to approach us annually with a formal request which they hadnt; (b) we didn't know who they were for years and (c) legally we were only liable for 6 years. The lease was sorted out showing we were now the leaseholders (ie not us and the HA together as it was initially). However, we never heard from them again.

So last year we decided we wanted to move. By this stage, we had not been approached directly for ground rent in any shape or form, bar an indirect request via our solicitors in 2011. By this stage (and this was our fault) the lease now had less than 80 years on it. We took legal advice and basically we had no option but to increase the lease if we wanted any chance of selling, because it is practically impossible to get a mortgage with than 80 years. So we applied to increase the lease, which cost £55k plus legal to increase by another 99 years. Fortunately we had a second property (holiday let) which we sold to release equity. So now our lease is ok for us to sell but it's been a logistical and financial nightmare.

Would I go for another leasehold? No, not if I could avoid it, unless it was a share of freehold or like our holiday let was a 999 year lease, which do happen. Fortunately we moving out of London and are looking for a house making it easier. Flats are often Leasehold properties.

During our time here we've replaced the windows and boiler and tbh it didn't even occur to us to ask the freeholder! With the amount of contact we've had from them that's hardly surprising! They haven't even asked us for ground rent since the Millennium!

We've had a civil relationship with the upstairs neighbour who has always been the same regarding communal areas, roof, drainage etc and have an informal agreement that up to about £500 we cover any repairs to ground/underground works and he does the same to the roof/guttering. Anything more we go halves. We've never involved the freeholders. Luckily our agreement has worked for us.

We did consider asking the upstairs neighbour if he would consider a share of freehold but he spends long periods away and we couldn't pin him down and needed to do something with the lease asap as the shorter it is, the more expensive it gets especially once it gets under 80 years.

You have your terms and understanding mixed up.

When you buy a leasehold property you are buying a lease: a lease to live there for as many years are on the lease. Generally you buy the lease from the current leaseholder, and one that lease until you sell.

Millions of people in London and other places live in leasehold flats and the terms / risks vary a lot.

It could be a large block with lifts, communal gardens etc with v high service charges.

It could be a converted Victorian terrace where the two or three leaseholders also jointly own the freehold and are in effect the management company with a deed that dictates what structural parts of the building are joint responsibility.

My preferences would be avoid anything with a lift, cladding, high service charges.

I lived in a big converted house, 5 flats, we were all directors of the company that owned the freehold, so didn’t charge ourselves ground rent, did set a reasonable contribution per annum for the sinking fund , and obviously set a v long lease which obviously we would have renewed for ourselves. There was a covenant that said no rentals / sub letting which cut down problems for those of us that lived there but restricted sales from BTL or would-be landlords / investment buyers.