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?

To those of you who keep repeating "all flats are leasehold" Rubbish!
In Scotland they got rid of that archiac feudal system a long time ago. I have no idea of the situation in Wales or N Ireland but I know that England seems to be holding on to it's old fashioned and out of date legislation.

It all seems so backward.

Not so backward that you decided to go it alone...

The flat is in england. The law in scot - topia or anywhere else is of no relevance.

What happens if you don't renew your lease when it runs out e.g. if you can't afford to? Do you have no property then?

Do you always have the opportunity to renew?

How much does this typically cost? Does the expense of renewing the lease go up if house prices go up?

My only experience with leasehold properties is the problems my cousin had when she was selling her flat. It was a conversion of an old hospital, she'd only been there about 2 years, but the company who originally owned the leasehold had gone bust since she bought the flat. No one out of a hundred or so neighbour had any idea who now owned the leasehold, no payments had been requested or collected, and several buyer backed out after waiting ages for the owners to be traced. They even put notices in local newspapers trying to trace who owned it. It all got resolved eventually but it took a very long time when she was desperate to sell.

Ememem84 ok I understand now - flying freehold means essentially a freehold property but one which either has another building on top of, say, your lounge, or alternatively you overhang someone else's property, in which case there are obligations on owners to maintain their structures, i.e. fixing a leaking roof or supporting the property above. These also are used if properties are built into the side of a steep hill where your balcony could be someone's roof as well as maybe a passage way/right of way beneath someone's bedroom.

This would of course be another option for the OP as there are flying freehold properties in the UK.

hopelessly, yes the property reverts to the freeholder. Cost of extension or purchase is a very complicated calculation which uses market values at the time of the transaction and length of lease remaining. It gets much more expensive the shorter the term of the lease, once you get below 80 years. That is why you often see incredible flats in places like Regents Park that appear to be massively underpriced until you see that there's only 15 years remaining on the lease.

In some cities nearly all houses and flats (from £300k up to £2m+) are leasehold for various reasons.

Check ground rent - ours is about £10 a year so not exactly a problem
Check how many years left as that will impact whether you can get a mortgage or sell it afterwards. Ours is 960 years I think, so reckon we'll be okay...

Once a lease has less than 80 years to run, you will have to pay marriage value to renew (marriage value to the freeholder). I think the calculation is based on the value the lease extension would give to the property. But the trick is, never let your lease run down passed 80 years. You're legally entitled to renew, the freeholder can be taken to court if they refuse and you don't have to pay marriage value if you renew promptly.

And I'm assuming not all freeholders are money grabbing arses but I could be wrong. ( I hope I am)

Should say, I hope I'm not wrong.

Not all kirinm, but too many definitely are. At least there is recourse through tribunal if you can't agree a value between you though, and then freeholder has to sell or extend the leasehold at a price the tribunal holds is fair.

The flat I bought 25 yrs ago now only has 60 yrs left on the lease. The woman who owns the other flat in the house somehow managed to buy the freehold, without my knowledge, after she had moved elsewhere in 2007 (prior to this the flat had had an 'absent landlord'. I would now like to buy 'my share' of the freehold. a) I was never given the chance to buy the freehold b) how can she have bought the f/h without my knowledge/consent c) when she did buyit, she did not send me any papers/or even her new address. Do I have a right to buy my share of the f/hold? I have a solicitor lined up... The flat is worth c. 200k. Any advice warmly welcomed!! Thank you.

Start your own thread?

There may be a management co that owns the freehold and to whom you pay the service charge - the model there should be they maintain a surplus from which larger spends (Eg roof replacements) may be funded. As noted above you need the 3yr accounts so that you can see the surplus but also the level of service charge increases that have been applied

I think some LH flats can be a good buy. We have a purpose built Edwardian maisonette - there are lots of these in London - one of just two in the building, and bought it LH but have now bought the FH of both - the other owner didn't want to buy her share. There were never any communal parts - each has its own front door to the street and its own garden, so there were never any service or maintenance charges, and the ground rent was a trifle.

However I don't think I would even consider any flat in a block or building with hefty maintenance service charges (in any case liable to be whacked up) or hefty ground rents, or any with faceless management companies who are only out to rip you off. It's true that leaseholders can apply to buy the FH, but if there are several,or many, it might be impossible to get them to agree.

Find out who the managing agent is we had Peverel as ours now trading as First Port truly awful and have such a bad reputation. Ground rent can double in ten year increments. After owning our listed flat for ten years the service charges had doubled and they wanted each resident to pay 5K for urgent work. The building may be lovely but I would never buy a listed building it's just too expensive.

I love our flat - we have our own garden (ground floor), period features, great neighbours. No way in hell could we have got all this in London in a house. We're buying the freehold with our neighbours at the moment but for us it was leasehold or renting and the security is so worth it.