To ask about leaseholds?

[Auramigraine]

Hi all

Found a house I really like but it’s leasehold, contacted estate agents who said it’s a 999 year lease and £75 a year. Would you be put off?

Any advice as I’m a first time buyer and haven’t a clue, can you buy a leasehold with that amount of years left? Is it even possible? And I assume that £75 can and will increase?

X

You’ve got two separate issues here:

1. The length of the lease. 999 years is pretty much the longest you can get so I wouldn’t say it’s a problem and it certainly wouldn’t put me off - I bought my flat with 120 years remaining. Essentially, someone else owns the plot of land your property is sitting on and at the end of the lease period, the land and anything on it (including your property) goes back to them. Mortgage companies get sniffy if there’s a relatively short period of time left on the lease because it affects the value of the house if - effectively - someone else will own it soon. They want to know that you’ll have paid off the mortgage well before the lease expires - I know mortgages come with longer terms these days, but I’m sure 999 years will be plenty ;)

2. The ground rent, which is what I’m assuming the £75 is. You need to check with your solicitor exactly what this is, when and how it increases (it’s not uncommon for it to double every 10 years which doesn’t sound much now but it may be in the future). You also need to check any service charges. Go into this with your eyes open because some people have been trapped in unsaleable houses because of the ground rent charges.

The other option is to ask to buy the freehold, ie the land the house sits on. Then there will be no ground rent or service charges.

Honestly, I’d be put off by a leasehold property, especially a house. What if you decided to extend or do extensive work, you’d have to pass it by the lease owner (that’s if you can actually find them). I’d personally feel it wasn’t fully my own home.

Do you know who the leaseholder is if you were going to make an offer to buy it off them? It’s a lot of ifs and buts with much legal wrangling. That’s a lot for a first time buy.

Thanks all, I usually don’t look at leasehold properties but it didn’t say on the advert and by the time EA got back to me I had fell a little bit in love. I would rather ask to buy the freehold than continue paying ground rent, I wasn’t sure if it was possible to buy a 999 year lease so maybe I will contact EA and ask if this is a possibility before viewing and looking into it more. X

It’s not just the ground rent you should worry about as that is minimal. It is the maintenance charges. There will be a maintenance company as the landlord will be responsible for the upkeep of shared areas, possibly the road, gardens and some external features of the property.
When you have lived in the property for a certain amount of time (I think 3 years) you will be eligible to buy the freehold and should enquire as to the cost of doing that

Donelikeakipper makes a very good point - leasehold properties often have requirements that you can only do things with the freeholder’s permission, and they sometimes charge for it. Leasehold houses are a big thing at the moment because there is really no need for a house to be leasehold, but they’re a cash cow for freeholders (which are often companies).

Heard recently of a case where the leaseholder wanted to fit new windows and it all had to go through the freeholder’s solicitors, with all the solicitor fees. Again, check with your solicitor as to what rights you do and don’t have as a leaseholder. If in doubt, walk away because it could be a nightmare

Great advice thanks all, will enquire if can buy the lease instead and make it freehold, if not think I will walk away. Too much of a gamble and I have noticed a massive increase in leasehold properties going up for sale, don’t want to end up trapped paying extortionate fees x

Yes.
Take it it's a new build, there are a lot of stories in the papers at the moment about the developers selling on the freehold to private companies and then charges going through the roof.
That said, you might be able to negotiate buying the freehold with the property.

Is this a flat or a house? Makes all the difference. I wouldnt buy a leasehold house. A flat it is a very normal set up.

It’s a house x

Check out the national leasehold campaign (nlc) on Facebook. You'll only hear the bad there but might give you some things to think about that you'd not realised regarding a leasehold property