Leasehold Property?

[girlfriend44]

Does anyone else not fully understand Leasehold?

I know Freehold is better as you own the land. All flats seem to be Leasehold though?

Is it so bad? Does anyone have a Leasehold property and can explain the pros and cons please?

I used to work in leasehold housing and personally wouldn't touch it with a barge pole.
Make sure you spend time with your solicitor going through the terms of the lease so you know in advance what you can and can't do.
Also ask them to explain the terms of your ground rent or sinking fund and if this is paid monthly, annually or a % of the price when you sell the property again. It might be worth noting that if a major renovation is required and there isn't enough money in the funds, the owner may be able to put the % you pay to this fund up with very little notice.

The number of years remaining on the lease is also really important to discuss with your solicitor because if you need to extend the lease, it can cost a few thousand pounds and you may also need to pay the owner a fee before they will give you permission to extend it.

I owned a leasehold flat and it was a nightmare. Before I bought it the leaseholders had taken over the management and set up a company to do this. This company had to sort out the building insurance, repairs and general maintenance etc, look after service charges and keep up with all the legal necessities of being a company. I think it was a “common hold” rather than a freehold arrangement.

But people move on. One of the two new directors (flat owners) didn’t like paying the service charge so didn’t for years and did sod all else and the other director did sod all either, so the insurance didn’t get paid on time, company accounts were not prepared or filed, no repairs or maintenance done apart from routine stuff carried out by the other owners. The company was stuck off and it was a nightmare and expense to get it all up and running again. Luckily no disaster took place when the building wasn’t insured.

Having owned a leasehold flat I would not recommend it to my worst enemy. They are increasingly difficult to sell and mine was only part of a 2 flat building.

Flats in England are leasehold, it is not true that flats in England are becoming "increasingly difficult" to sell. Why would it be true, the situation has not become any worse since leasehold flats were first built. On the contrary, recent granting of rights to acquire a share of the freehold and to self-manage must mean that leasehold is more attractive now than it has ever been.

The more flats that form part of the lease the more complex the whole situation is

I would say the exact opposite is true. It sounds like your problem is that you were in a small converted property. The more flats there are, the lower the overhead per person of paying for facilities, including good management. Had you been in a 300-flat purpose-built development, there would several full-time staff maintaining, cleaning and securing the building, there would be management committee of residents, some of them lawyers and accountants giving their time for free, with the committee holding the managing agent (who organises day-to-day maintenance) to account, getting the most work for the least money, and ultimately sacking and replacing them if not up to scratch

Then there's the people who bought ex local authority flats and suddenly are presented with large bills for structural repairs or stuck being unable to sell a flat in a building with unsafe cladding.

It's the only way to get on the property ladder as flats are cheaper but all are leasehold.

Its not the only way- for the same price as my 2 bed flat in zone 3 north london (£400k), there are 648 results for houses in London. Most of those results wouldn't actually be in inner London, but in surrounding areas like croydon, essex, romford (which are part of the greater london authority). However, it is the only way to buy in a desirable/expensive area on a typical FTB budget (and this is often the case outside of London as well!)

Its all priorities though. I prioritize being near work, good schools and near my DH's family. Location above tenure as I am buying to live in rather than as an investment. If you were buying to make money, buy a house.

To the person who asked about shared ownership and leaseholds - generally while you only own a share (I.e anything less than 100%) it’ll be a leasehold as the housing association retain overall ownership. If you staircase and buy the lot it then becomes your freehold.

I think there’s some confusing information on this thread. By no means all flats are leasehold, in many cases owners have bought/own the freehold and neither situation is necessarily problematic. I certainly would not let leasehold put me off buying, OP, and I’ve owned a number of leasehold properties. As others have said, you’ll need to check there’s no conditions like no pets or no subletting (though you may not be bothered about either) and in the case of either leasehold or freehold I would want to check that there is a decent agent in place to manage the maintenance of the property, which will involve all flat owners paying an annual service charge to ensure sufficient funds for this.

I've looked at one bedroom flats in my area and houses are more expensive.

share of freehold flats are technically still leasehold- www.homeviews.com/blog/what-does-share-of-freehold-mean/

'If you buy a property with a Share of Freehold, this means you own your property leasehold plus a share of the freehold for the building your property is in and the land it’s on. This usually applies to apartments. So owners of the apartments in a building each own their apartment leasehold, as well as holding a share of the freehold for that entire building and the land it sits on.'

yes its a technicality but it also means that on rightmove, i have seen share of fh flats still listed as leasehold esp in the past. its only when you ask,then you find out. Rightmove is improving on this front, i have seen it included in the ad nowadays.

yes of course, flats are cheaper than houses in the same neighbourhood. Also if you are comparing a 1 bed flat with a 3 bed semi-detached, thats not quite a fair comparison because the house is much bigger. there are not many 1 bed houses! You would have to compare the semi-detached with a flat of similar size- such flats do not exist in every area! I have found that the flats are still cheaper but this may not be the case in every area- in a lot of suburban areas, such flats would be marketed at wealthy downsizers and be far more expensive than any FTB property or even an average family home.

What I was saying is usually people move to a cheaper area in the same city/county to buy a house and they get on the housing ladder this way. Of course you don't need to do this, i stayed in my area but this meant getting a flat instead of a house.

I live in a privately-owned flat which is leasehold; I own the bricks and mortar outright but the land the flat sits on is owned by someone else. The deeds of the property clearly state the responsiblilties of the leaseholder (the person or organisation who owns the land) as well as your responsibilities as the property owner. If you're considering buying a leasehold flat then you could ask to see a copy of the terms of the lease before you sign on the dotted line, so that you're quite clear about what your responsibilities are.

Before I bought my present flat I had made an offer on another flat in the same block but which was freehold; as there was a flat below this one I as the potential freeholder would have had the responsibility of arranging buildings insurance & inspections and I didn't want the responsibility of that. My present, leasehold, flat has more cupboard storage space and a bigger & more private garden than the first flat anyway.