Why would anyone buy a leasehold property?

[Awholelottanosy]

First time buyer here! Am looking at flats and houses to buy and although I've seen some nice flats they all seem to be leasehold. Excuse me if I'm being thick but it looks like after the lease has expired you don't actually own your property? Why would anyone buy a flat on this basis when you can buy a house and own it outright?

You can pay to renew the lease. From extensive Homes Under The Hammer research, you should only look at leases of about 70+ years. It's something to do with only buying part of a building so not possible be own a freehold although some flats are freeholds .

More info here.

All leaseholders have a right to renew their lease once they've been living in the property for a certain amount of time, so in practice leases rarely ever expire.

Also, London. Just London I'd try avoid leasehold elsewhere in the country, but us lot are more or less stuck with it here.

Thanks for your replies. So is a flat with a 99 year lease worth buying?

99 year lease is fine.

Yup, fine. Check what the service charge is though - they vary drastically.

Because if you want to live in a flat, they're leasehold.

99 years is fine. Just make sure its not 99 years from 1979 or something.

We bought a leasehold flat then after a couple of years bought the freehold.jointly with the other flat owner.

I don't think leasehold is always a bad thing. It means someone else will organise repairs to the building, building insurance etc. You have right to extend your lease or to join together with other flats to buy the freehold. In our case the freeholder was useless and overcharged for everything so we got rid.

What about this flat?

www.rightmove.co.uk/property-for-sale/property-57197834.html

Also find out how much ground rent is due - it can vary from nominal amounts to quite a bit.

Depends on how long you want to stay there and the price you can negotiate.
If you only want to keep it for a few years then you should be able to get away with selling it again. If it's a decade then you may face buyer problems and have to take a hit on price or extend the lease.
Lh is a good stepping stone onto the property ladder.
You do need to look into who holds the fh and how the property is managed really carefully. Service charges affect all LH properties and can be expensive and poorly organised. On the other hand my friend's FH is owned by the local authority and they just installed new double glazing free of charge by accident so there can also be perks haha.

Yes, all flats are leasehold. It's because you wouldn't own the whole building in which the flat is situated, but you would be the owner of the flat itself. Make sure there is at least 80 years remaining on the lease otherwise you may not get a mortgage. Leasehold properties are a little more complicated to buy than freehold because there are other parties involved, for example, the landlord and/or freeholder and/or management company. There will be a Lease to sign which sets out all the covenants and restrictions which you have to comply with and obviously there will be service charges and/or ground rent to pay( in addition to your mortgage) for maintenance and upkeep of the communal areas.

I bought a flat rather than a house because I want to live in a flat and anyway a house in this area would be too expensive for me.

The lease on this place had 116 years left when I bought it. I am certainly not going to be here in 116 years, so I don't care what happens at the end of the lease. The future owners will probably negotiate an extension to the lease eventually.

The flat above says this

We have been advised that the property is LEASEHOLD having 90 years unexpired. The ground rent is £200 paid half yearly and the service charge is £1048 paid half yearly. However, you should check this with your legal advisor before exchanging contracts.

Is this reasonable?

The grade 11 listed apartment is beautiful but you will need to make sure your solicitor advises you very carefully on the management arrangements for the property. The stated service charge will only scratch the surface if there are any proper works in the pipeline which there probably are considering the age and stature of the property!

I'm about to complete on a leasehold property.

If you're looking at a flat in a development then watch out for management fees. Most of the developments are managed by an external agency (they look after maintainence, repairs, gardening, collecting ground rent etc) and the hidden costs can be sky high. For example, as a buyer I've shelled out £600 on top of my solicitor fee for transferring deed of title to me amongst other things. The seller has had to buy packs of info to complete the contract at a cost of over £1000. According to my solicitor the management agencies aren't regulated so charge extortionate amounts as when buying or selling there is no choice but to pay.

Check the ground rent and service charges too!

Thanks for the advice. The building and apartment does look beautiful but bit scared about the additional charges I might have to pay. Used to live in London where I couldn't even afford a shoebox so it's all a bit overwhelming to even think about living in a place like that!

Look into the freeholder - we bought a flat in London and the freeholder owned loads of properties and was a right crook. He would use different names and register himself at different properties as he was up to all sorts and no one could track him down. He never did any maintenance and if anything went wrong he said it 'was not his problem'. We met other leaseholders who all had the same problems with him. Once you tried to sell he would wait and wait and delay the sale to the point you were desperate and then invoice you for extortionate 'fees'.

In a larger block it's less likely to be an individual like this and more likely a management co which is safer but look into them extensively. The ground rent seems reasonable but maintenance fees seem high - I echo what others say about checking for anything 'in the works' and maybe ask to see maintenance costs for the last 3 or 5 years to see what people have been charged for.

To be honest if you could possible manage to buy a freehold property I would...

You just need to inquire about what the monthly service charge is, and the ground rent charge. If these are affordable to you then you'll be fine.

Your solicitor will also check whether there are any 'major works' in the pipeline (expensive work to the building itself that would incur a cost to you, ie a percentage of the cost of the work according to the size of your flat).

LH is a great way to get on the property ladder. That's what I did and it was all fine. I did keep a constant check for planned works on the building though, as it is possible (though unlikely) that you could receive a bill for thousands of pounds (though under 10,000) as contributions to major works. That's why it's important to check that there are no outstanding building works to be done.

Thanks again. I would prefer to live in a house tbh even if it's a little terrace, this is the only flat I've been interested in. Sorry to hear about the problems pp have had in buying a flat, it seems v fraught!

Also you might pay a little more for a conveyancer with a leasehold as there is more work, they will need to gather info on the leasehold and the freehold (I couldn't get my head around how the fee for my solicitor for a 1 bed flat is more than my parents who have just bought a 6 bed house)!

That looks like a lovely apartment, but the service charge and ground rent together are £100/month. It looks as if it's well maintained and it's Grade 2 listed, so they can't do substantial works to it anyway.

Compare the GR/service charges with other flats you're looking at. The service charge will cover cleaning of communal areas, garden maintenace, roof and gutter repairs etc.

It depends on leasehold. My house is 950 years leasehold. We 60 houses own a share of freehold and pay £1 as a ground rent. The purpose of our leasehold is to pay for common grounds' upkeep so effectively we hire a gardener and split the cost between the houses. I see absolutely no issues with that.