Does anyone have experience of buying a leasehold house?

[Tobermory]

We made an offer on a house and a week in we’ve just discovered it’s leasehold. Finding it quite scary and rather off putting having previously owned only freehold.

Having solicitor look at it ASAP but so far we know...
The lease is 1999 years
It’s capped for the first 25 years at £150 per annum
The house is 11 years old.

Have read the lease but even though it’s a year year old document the terminology is pretty confusing! Trying to plough through it now to highlight things we want to talk to the solicitor about.

What do we need to look out for?
Any leasehold ‘goodnews’ Stories?

We have a leasehold property tje lease doesnt run out for over 1000 years. We pay £2 a year ground rent. Other tham that the lease has never impacted us in anyway I dont think we can keep farm animals but to be honest we have never wanted to.

I am also in the process of buying a leasehold house (8 years old). 9 weeks in and solicitors has only just received details from ground rent and service charge companies (two separate ones). Be quite interesting to see if the lease has any restriction - 972 years left on it so hopefully should be ok...  I am also interested to see if there is any additional costs in conveyance resulting from transferring details into my name (do I need to pay twice?.). Not had any info from solicitors so hopefully will get an update soon!

What happens regarding the costs after the first 25 years? It may not impact you if you want to move before then but it may impact future buyers.

Check what kind of restrictions the lease imposes upon you - lots of them have costly fees to get permission from the freeholder/management company to make structural alterations etc.

Does it require you to become a member or director of the estate management company?

Are there service charges on top of the ground rent that's mentioned in the lease? If so, what are they currently, what is the projected expenditure for the next year and you'll need to see copies of at least the last 3 years' service charge accounts.

Your solicitor should advise you about the contents of the lease in detail but that's a rough starting point without seeing the documents or knowing the estate myself 

So many typos in my Op!
Lease is 999 years.

Bunny thanks that classes as good news.

And yes as PP has mentioned, what costs are you having to pay just for the transfer of the property yourself - often there's a fee for a Deed of Covenant, a fee for Notice if Assignment of the lease etc etc payable to management companies/freeholders. This can be several hundreds of pounds so worth checking!

I bought a Leasehold house but arranged to buy the freehold at the same time. Being honest I don't think I would "buy" a leasehold only house. Effectively, although they say you own the property for the period, you are not really buying the house but it is much more like an agreement to rent the house for the period of the lease. There has been so many horror stories over years and it is a hot topic on Radio 4's You and yours consumer programme and other finance and consumer programmes over the years. Some buyers of older properties have had no problems but others have found that after the low rent period, the ground rent increases by such increments as to make the house worthless, others have found that unscrupulous landlords have bought the freeholds and are imposing the lease to it's strictest interpretation in order to try and force re-possession of the property. At one time they were a useful way of sorting out responsibility for communal assets but they do seem open to abuse. I was listening to a programme recently explaining that Scotland have virtually abolished them and placed strict conditions on existing leaseholds and there is a debate in Parliament at the moment considering outlawing their use in England and Wales. If you go ahead make sure you have a good solicitor who explains all the implications and all the small print.

Sorry, can't think of a good news story about leaseholds unless you are buying a property in common buildings like a flat. Think hard.

What does the ground rent go up to after £150?

You need to check what the freeholder can charge you for in addition to ground rent - road repairs, maintenance of the site etc could all add up.

We are in leasehold. Always have been. Flats and central London so that is the norm.

One thing not mentioned that I would be fully aware of is that if you need any work done on your property (you want to extend for instance, or change the internal layout by moving walls) you will need something called a "license to alter" from your freeholder. In our experience this is just a licence to print money (for them, not you!). You will need to pay a fee for this, pay their costs, pay your own surveyors etc. Look carefully at this and ask your solicitor about it. It added hugely to both the cost and timescale of our recent work.

I’d be running away from a leasehold house. I say that as a previous owner of a leasehold flat

I wouldn’t feel in control- you are at the mercy of the freeholder and ground rent could increase exponentially in future/ you may be liable for road repairs if they are not adopted by the council. I think it carries more risk and is less attractive than a leasehold flat, which is more normal.

My biggest fear would be resale and how many potential buyers would be put off. For this reason I would be walking away.

I Understand some of the newer leasehold houses are more problematic than the old ones, where they originally had a true purpose for being leasehold (like being on land owned by the coal board, for instance).
We had a leasehold house (built in 50s), and the ground rent is about £6 per year, which will never increase. I would be wary of any lease where the ground rent can fluctuate.

I don’t think there is any point comparing leasehold houses and flats as they’re quite different.

We had a leasehold flat prior to buying our current house, and to be honest, I don't think I would ever buy leasehold again. We couldn't buy the buildings insurance as we weren't the freeholder. It was a pain when we had a buildings insurance claim (leaky roof) as we weren't the policy holder (who lived abroad most of the time). Also, every time, I saw the owners, they would want money for some sort of maintenance or repair in common areas. We didn't have access to their garden but somehow we had to pay our share of them calling for someone to remove wasps nests in their garden. In brief, no I wouldn't go down the leasehold route again. Sorry.

There are quite a few problems you can have with a leasehold house.

Firstly you will need to serve notice on the freeholder which may cost you around £100 to £250 depending on how much of a rip-off they are. Then there could be a clause in the lease saying you need to get their permission if you want to do any extensions or alterations to the property and again a lot of them charge a lot for this permission.

There's also the problem that with a lot of these modern leases the ground rent can rise quite a lot and in some cases this has caused the properties to become unsaleable so be very careful.

Ask your solicitor to find out how much it is to buy the lease and become the freeholder.
We bought a new build around 5 years ago, and did just that. It added £2500 to the price but has given us peace of mind, we won't worry about any increases in the ground rent AND we can fix the house without needing permission from anyone.

There are loads of leasehold horror stories sadly. Ours won't be one of them.

www.theguardian.com/money/2017/jul/25/leasehold-houses-and-the-ground-rent-scandal-all-you-need-to-know

Bebelle9 for a leasehold house, in my experience, you are responsible for the buildings insurance and there is nothing to stop you doing repairs or maintenance.
So like I said it’s not too helpful to compare leasehold houses & flats.

There is much scaremongering on this post OP.

Firstly it's massively important to understand that leasehold houses are different to leasehold flats so people's experience with flats isn't really relevant.

Then it's important to understand the "horror" stories of leasehold houses and the ground rent scandal. This relates predominantly to "new" leasehold houses (those built in the last 10yrs or so) and the increase in ground rent charges.

Then there is "old" leasehold - depending where you live (for instance I'm in the North West) and leasehold houses (from 1920s/1930s and upwards) are the norm. They have long leases and fixed ground rent without cumbersome lease obligations and are no different, in reality, from freehold properties.

As a pp has said, your solicitor should advice you of all the issues. The length of the lease isn't an issue, but you do need to find out about future ground rent and what restrictions you have (extending, alterations etc). Service charges usually only relate to flats but its worth checking. Also find out who owns the freehold.

It's certainly not a reason in itself to walk away, just check the provisions of the lease carefully.

I agree with NigelGresley on this one. For flats it's not comparing like with like. Flats can benefit from leasehold as they have a shared roof, ventilation, drainage etc but it's not comparing like with like. Leasehold or Copyhold as it was called then, was mainly used to overcome shared ownership problems and sell houses which were originally built collectively by one land owner for use by their workers and so had shared communal spaces and shared services like drainage. Then house builders like Wimpy started using them to keep some control and sold off these controlling interest to large financial institutions who held them as long term investments for pensions etc. Other than owning the freehold ownership they never really got involved and effectively you could do what you like, I heard solicitors then call 999 leases as technically a freehold. Not so these days. Leaseholds have reared their ugly head again over the last decade or so and seem to be being used as a money making scheme. Be very careful.

You need to look out for:

1. Ground rent increase. It should have a clause capping it at £250/£1,000 in London. At the very least it should be reasonable. Theoretically this can be fixed but the freeholder might not agree.
2. Who repairs and maintains the house? It should be you.
3. Alterations- what do you need permission to do?
4. Selling on- does the landlord get a say or require your buyer to sign any extra paperwork.

If the property is relatively new, there's unlikely to be a genuine reason for it having needed to be leasehold. Other than the (often very real) extra expenses, more of an issue is that there is a government consultation on leasehold (houses in particular) and very likely that no new leasehold houses will be allowed. That means that you could well end up finding yours harder to sell down the line.

www.gov.uk/government/news/crackdown-on-unfair-leasehold-practices--2

namechangedtoday15 the OP said in her first post that the house was only 11 years old. So I think she is right to be wary as there have been a lot of problems with new builds and leasehold houses.

I fell into the leasehold trap - my house is unsellable unless I take a huge hit and reduce it massively. One of my neighbours separated from her partner and needed to sell the property - three sales fell through because of the lease - it was repossessed and has now been empty for almost 2 years.
I bought my house in 2011. It has a clause which doubles every 10 years but due to a change in mortgage lending many will not lend when the ground rent is more than 0.1% of the property price - which mine is.
I was quoted between £33k and £43k to purchase the lease. That is almost a third of what I paid for the house and the restrictive covenants remain in place.
Some leases mean that people have to pay to change their carpets, blinds or have a pet.
If the lease starts from around 2007 onwards - run like the wind.

Older leases are ok

Blimey. Lots of things to think about here.
Some were on my list for the solicitor but there are certainly some things we didn’t know about. So Thankyou for your input /knowledge.

Yes the house is relatively new, built in 2007 and this makes me worry more really.

It’s a street of approx 80 houses. All built by the same developer so all (as far as I know leasehold)
The EA assured me that they have bought and sold easily - though I can’t confirm this as haven’t been watching them closely.

The current owner (and houses in neighbouring houses) have had work done. Extensions etc. But of course I don’t know wherther this was costly or painless.