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?

I grew up in a house not too disimilar to this, it was bloody freezing and when it needed repairs it was difficult due to being listed and also skills required. Buildings like that look lovely and they are but they are not especially cheap to run..

I have owned a flat before and the whole management company and getting people to agree etc was a pain. I would never choose to live in a flat again. There was stuff in the lease like the building had to be repainted every 7 years, stump up the money right now.

At the time 30 years ago it was what was affordable for me, it was a beautiful flat in the SE cost 31k and I was earning about 19k a year.

Oh thanks Sleep. I guess I don't really understand the system after all.

We're hoping one day to buy the other flat so then we will own the freehold, if that's what happens.

Thanks for all the advice and examples of what can go wrong, I'm pretty clueless about all of this!

I'd never buy a flat again.

1. no outside 2)no outside
2. no outside
3. maintenance cost more than mortgage 5)neighbours, neighbours EVERYWHERE 6)no outside

My last flat was leasehold and I had no problems with it (although a complete horror show when I came to sell it and the EA asked me to confirm how long the lease was and I casually said, "Oh, about 80 years," and he freaked out... Turns out I was mistaken and it was 100+, so you are not the only clueless one, OP).

Anyway, leasehold issues aside, I wouldn't buy that flat. It is actually v ordinary inside and you're paying a premium for the gorgeousness of the building. And honestly, how long do you spend loitering in the lobby or admiring the frontage of your home?

Piermenator, sounds like you had share of freehold and your example goes to show that it isn't the same as being the same as a 100% freeholder of your residence. It is better than being only a leaseholder but it can still be a PITA because you have to get numerous people to agree to everything to do with the common parts. Where there are more than 3-4 freeholders IME its probably better if a professional management company is used but obviously this increases costs.

Elizardbeth when you own the freehold and are the only occupants of the building of course it is entirely your liability and choice what to do with it. But when you own the freehold 100% and there are several leaseholders you get to decide (subject to the requirements of the leases eg the freeholder must ensure there is buildings insurance in place and certain standards of maintenance are upheld ) - but you select the what insurance company, repairs and maintenance and you get to levy service charges on leaseholders. You also collect the ground rent. All fine if you are straight and fair.

We previously had a particularly notorious landlord who owned an insurance company through which they naturally insured the building at 4X usual commercial rate, owned a law firm which they used for any legal negotiations/letters and recharged, added 15% admin charge on every maintenance charge incurred, must have been giving backhanders to tradespeople because they didn't choose the cheapest quote, charged £12 for every letter they sent, etc etc. Fees for giving permission for alterations to properties were extortionate, it was a nightmare. We (4 leaseholders) took over the right to manage through the legal process available (fairly easy once you have agreement between >50% of leaseholders and they have been leaseholders for >2yrs) and then went on to buy the freehold but that took over a year of negotiation and went up to the day before tribunal (which they knew they would lose and would have had to pay our legal costs).

If you own a leasehold property, a good tip is to see if you can get yourself elected as a resident director. That way, you will have oversight and some control over contractors engaged by the management company to undertake work. You also have a say in how the development/block is managed.

That's a good idea lamiashiro but if you have decent landlords (fair charges, good maintenance etc) you probably wouldn't feel the need to do it and if you don't then there's no way they'd let you do it!

Thanks, Sleep, that's helpful. I still can't work out why we went for shared though!

QOD - our last flat had a 120ft garden, all ours, not shared - our current one has a 58ft garden, also all ours. You have to transverse a little side patch which belongs to downstairs, for the side access, but we have a fire escape down to it at the back so we mainly use that.

I think a flat in a block is a different kettle of fish though. There were just divided houses with two or three flats in each iyswim.

An easy way to look at leasehold is that you're purchasing the right to occupy the demised space for X no of years (the length of your lease). As part of this contract, you also sign up to having an obligation to contribute to the cost of maintaining the communal areas of the building (including the structure). Ground rent is what you pay to the freeholder for the 'use' of the ground and building which they own.

If you buy a share of freehold, you are still occupying the property on a leasehold basis. However, you will also have a share in the company who own the freehold of the building. It is likely at that point that there is no ground rent to pay, and you will all issue longer leases to each flat - as the advantage to the freeholder in having shorter leases (as they make money out of extending them) isn't there any more as everyone has a vested interest.

QueenElizabeth < curtsy >
that's totally totally different then. Omg I almost died (maybe I'm over dramatising here) from no outside
that's unusual round here in a bIg building/block like that as they're made over to car parking or just a general frontage or something
in converted houses you're quite right, the ground floor would generally get the garden, we were first floor (and bitterly jealous of the untended and overgrown shit hole downstairs)
I love my garden. I love OUTSIDE and I'm. Sure I'm so obsessed with being outside or next to an open door after 10 years of living upstairs

Leasehold flats can be a great investment (as well as providing somewhere to live) but you should be buying at a discount if there are fewer than about 90 years left on the lease.

Take a look at: www.lease-increase.co.uk

Personally, if you can buy a house instead, I think you'd be mad to buy a flat.

Leasehold is a PITA & the feeling of not actually owning it & having to request permission to do things is horrible.

Especially with many management companies being complete arses who charge a fortune for very little (mine wanted £500 to give me their permission to put a skylight in. They weren't actually 'doing' anything, the onus was on me to find out about local regs etc). They are supposed to consult us re 'improvements' but they didn't, we just got the bill.

Never again. Never, ever, again.

Our flat is freehold. In our building there are 14 flats. Only three of them are top floor. These three are solely responsible for roof repairs according to our deeds.

Check and double check contracts. Get all searches done and check them.

emem that is insane! Never heard of that before .

Read up here for the downside and the tricks played by management companies, and freeholders. www.leaseholdknowledge.com

Cherry Jones, of Home from Home, told the civil servants: “It seems clear to us over the last 30 years that many leases are designed for no other reason than to benefit the developer and freeholder working with a complicit agent.

Its a minefield and there's no protection when things go wrong. See www.leaseholdknowledge.com/?s=chelsea+harbour+ Where leaseholders got fleeced by Knight Frank and Rutley. It seems the more suited and booted they are, the worse it gets. Its not rocket science, just unfortunately the least regulated and no consequences for theft. Its actually criminal but so far most have been treated as civil matters.

Thats about to change as with Parliamentary group setting up to examine it. The best you can do is ask your MP to support it. If we get it all covered under criminal law, the forfeiture threat removed and criminal punishments for stealing then I'd recommend l/h. In the meantime get busy for a couple of minutes and write to MP and ask him to support this.
www.leaseholdknowledge.com/lkp-submission-to-housing-bill

Its the single most important thing you can do to help housing in London and other wealthy areas. It will help stop all this theft from homeowners. Use this to locate your MP and email them NOW. www.parliament.uk/mps-lords-and-offices/mps/

Ask neighbours to do the same. Peter Bottomley MP has been a champion here. He can't do it alone, we need ALL MPs to support this. They have to override their personal interests and look after leaseholders. Its a scam as its set up.

Don't buy less than 999 years and get them to give you detailed costs going back 5 years plus receipts and detailed forward plans. Ask what commissions are managing agents charging on insurance. Hundreds, sometimes thousands of pounds for making a phone call! (Good agents don't charge)/ Only use an agent accredited by LPK forget ARMA and RICs they are useless bodies, that work for agents not consumers. Its a bloody stupid feudal system. Nowhere else had it, time it was abolished.

Ememem84 - you should check your deeds under the Property Register section where it will say whether your flat is freehold or leasehold. I would find it very unlikely that you own a freehold flat if there are 14 flats within one building. The nearest to owning the freehold would be a 999 year lease but would still be a leasehold flat. Owning a share of the freehold is not the same as owning the freehold.

Don't buy less than 999 years

Then you're basically saying "don't buy 99.9999999999% of leasehold property". Over 100 years is fine. Under 80 is bad times. After 2 years you have the right the extend the lease although it does cost.

We had a share of freehold and our buyers were super annoying about the lease (90 years) and we had to go through the faff of extending it - cost £1 but so much pointless paperwork as all the neighbours together owned the lease so not like the flat was at risk or anything!

(I may have been irrationally annoyed by this at the time as I was I was heavily pregnant/ parenting a newborn at the time )

(and we had to wait til a month before my baby's due date to extend the lease as that's when we'd been there 2 years. Sorry, not even really a helpful post )

Bendydick (love the name), it may not have been annoying buyers but a mortgage lender unwilling to lend on a 90 year lease, though generally it is once the lease falls below 80 years that lenders get jittery. While the flat was not at risk, the value of it goes down if the lease is short and it becomes quite expensive to extend - also some blocks/converted houses prefer all leaseholders to extend at the same time, although not all. The buyer couldn't extend the lease because they would need to own the flat for the required two years first. It does generally fall on the seller to extend prior to completion and unfortunately you only just qualified for the two year restriction, just bad luck on the timing really.

spickle my flat is termed "flying freehold" in our deeds. It's definetly not leasehold. I'm in jersey so things are a little different here.

We wouldn't have bought leasehold here as it's extremely difficult to sell. And getting an extension on leases here is awkward.

sleep. It is insane. But luckily we aren't top floor.

It's fairly common here (jersey), especially in older buildings. I know friends who have top floor apartments where the roof has leaked. They've tried to get the building to pay for it out of the sinking fund and found that they were solely responsible.

In my building the ground floor people wanted us to all pay towards the upkeep of the shared garden. Which only they have access to via their flats. Funnily enough the rest of us said no....

High ceilings and original sash windows, yet still epc c. That's clever.might be worth asking to see the heating bills.

Also it is tenanted. Are you planning to live in it? Have the tenants been given notice?

We are buying a flat with a share of freehold. Just found out the lease only has 74 years to run and there is not a chance we are buying it until the vendor sorts the lease. I think our mortgage provider will lend at 74 years but our offer didn't take into account a short lease given that nobody told us.