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Original poster

Buying a leasehold house, is it worth it?

37 replies

AGreatUsername · 05/01/2020 15:51

We are viewing a lovely house this week that ticks a lot of boxes for us, however it is leasehold. Is that just a headache? According to RM only one other property on the street in leasehold. I’ve read we’d have to live there for 2 years before we could ask to buy the freehold.

Is buying a freehold a nightmare? Is the price based on whatever the ground rent is? (Unknown at this stage) If it’s relatively simple and won’t cost crazy money I can take it into account budget wise but if it’s a total headache it might be a bad idea!

OP posts:
familydramalama · 05/01/2020 15:53

Do NOT buy a leasehold house!! That's only somewhat acceptable for a flat.

Upso · 05/01/2020 15:54

This reply has been deleted

Message withdrawn at poster's request.

ColaFreezePop · 05/01/2020 16:00

Do not buy a leasehold house.

There is absolutely no reason for a house to be leasehold as you aren't sharing the roof or other parts of the building with other properties.

The reason flats are leasehold is so there is one person/company who has a responsibility to deal with the common parts e.g. building structure, walls to stop it falling into disrepair. (Ownership can be more complex than that e.g. share of freehold, one flat having the freehold for the others, but the flat still requiring it's own lease.)

Tigger03 · 05/01/2020 16:05

It depends, if it’s a new build and there’s an extortionate service charge - avoid.

However, leasehold terrace houses are fairly commonplace in the northwest. We live in one with no service charge and ground rent of £12 a year - literally zero issues. We were asked if we wanted to buy the freehold for £1000 but wasn’t worth it with the ground rent so low.

Original poster
AGreatUsername · 05/01/2020 16:05

Yeah that’s what was worrying me. I’ve had no experience with leasehold so don’t really know what’s involved in it. A pity because the house has some great features but I don’t want to end up in a money pit. Is it not worth it even now you can force them to sell you the freehold? Can they just name their price?

OP posts:
Original poster
AGreatUsername · 05/01/2020 16:06

It’s not a new build, it is a Victorian end of terrace in South Wales. Leasehold used to be relatively common but not these days. My grandma refused to buy her lease and when my dad sold the house after she passed he had to give the freeholder 30%! Crazy.

OP posts:
BernadetteRostankowskiWolowitz · 05/01/2020 16:12

If nothing else it will a right ballache to sell when the time comes.

LemonPrism · 05/01/2020 17:41

Our flat is leasehold and it's a £2k a year ground rent. Pain in the arse but necessary - I wouldn't do it for a house

FenellaVelour · 05/01/2020 17:45

The only reason we bought our leasehold house is that it’s a peppercorn rent from the 1880s and the freeholder is probably long dead. We don’t pay ground rent and to all intents and purposes the house is ours (we cover all insurances etc). We just got the seller to provide indemnity insurance, no other issues.

Would I buy a modern leasehold house? No.

Original poster
AGreatUsername · 05/01/2020 18:00

Is that on a super long lease? This house is an old one so I’m hoping it’s the same, a peppercorn rent not even worth them collecting, but I won’t know until we ask the agent on Wednesday. If the freeholder is dead are you able to purchase the freehold? I know legally leaseholders have the right to buy and if that were the case I’d be buying the house with the view to buy the freehold too.

OP posts:
FenellaVelour · 05/01/2020 19:14

We could buy the freehold but at the moment it’s not worth it. If we started thinking about selling, that’s when I’d do it. The lease is 900+ years, so has literally no impact on our property.

Clarabellawilliamson · 05/01/2020 19:26

My last house was a leasehold terrace in Bristol. £2.55 a year on a 1000 year lease! No issues when it came to selling either, so it's not always an issue but worth finding out about before you offer if you like it!

Ardnassa · 05/01/2020 19:28

Leasehold on a flat is absolutely fine, wouldn't do it on a house.

familydramalama · 05/01/2020 19:36

The main issue to me is that they have banned leasehold houses being developed now. It's only going to devalue a leasehold house in a future sale. Freehold can be expensive and timely but they do have to sell it for market value.
On the leaseholder front, they can hold you to ransom.

BlueRaincoat1 · 05/01/2020 19:38

Our house was a leasehold and we bought the free hold simultaneously while buying the house. You will need to know what the lease says to make an informed decision.

The leasehold rent on ours was very low and couldn't increase , and it was a v long lease, but there were restrictive covenants about permissions for extensions or renovations which concerned us. Also a compicated provision about insurance payouts in the event of something happening to the house.

You can offer to buy it at any time, but for the 1st 2 years the freeholder can refuse, or can name their price. After 2 years, you can compel them to sell it to you, but if you don't like their price you have to take them to a tribunal to get a formal valuation. This valuation is done using a set formula (and if it's low rent and a long lease it shouldn't cost much) but the process of getting there will be expensive .

We paid way more than the freehold was worth to buy it simultaneously with the houze - it was really annoying and it stung, but we didn't want to lose the house and we'd only found out about the free hold late in proceedings.
I wouldn't have bought it as leasehold.

jimmyjammy001 · 05/01/2020 19:42

Leasehold houses are just a scam, there is no need for a house to be a leasehold, unfortunately alot of people who have brought new build leasehold houses over the past 8 or so years are having problems buying the freehold and selling because they did not to their research before hand.

foxatthewindow · 05/01/2020 19:49

I think leasehold on an older house needn’t be a deal breaker but wouldn’t go near a new leasehold house. We use to live in a leasehold 1920s house and the benefit there was that the freehold was communally owned by all residents. It meant that there were certain stipulations on things like front door colour and keeping the place tidy, which ultimately added to the property value for that area

WobblyAllOver · 05/01/2020 19:54

I had a leasehold house which was around £3 a year and had over 800 years left on the lease. Had no issues selling it.

Wouldn't touch a leasehold house with a very short time left on the lease.

Original poster
AGreatUsername · 05/01/2020 20:06

Thank you for all the advice. I can’t seem to find online an answer as to how they calculate what the freehold is worth, some people seem to buy them for a few hundred, some for £25,000! I’m going to quiz the agent at the viewing and go from there I think. The house is already a fairly big project so I don’t want to add over the odds on to it.

OP posts:
fastliving · 05/01/2020 20:09

It's all about:

  1. the length of the lease
  2. the cost of annual rent charges/fees
  3. the restrictions - eg do you have to give the freeholder a percentage of the sale price when you sell? Do you need permission to make alterations etc?

I would ask to see a copy of the lease before you put an offer in. I've done this on a flat, then walked away when I've seen the number of restrictions it had on it.

Marshy86 · 05/01/2020 20:13

Can you ask the seller if they would be willing to buy the leasehold as part of the negotiations. My first home was leasehold and when I sold it I did so with two prices one with leasehold one if we were to purchase the freehold for the new buyers as the freehold does add value to the home.

misspiggy19 · 05/01/2020 20:14

I wouldn’t touch a leasehold house with a bargepole.

Forcryingoutloudwtf · 05/01/2020 20:16

I lived in a leasehold house for over 10 years. Ground rent was £16 a year. There were no other charges. There were no other implications. It had a 999 year lease which started the ground rent would be £16 a year for 999 years. By the time I moved out it still has another 950 odd years to go. It was not a concern at all. There is a new scam involving the leaseholds of some new builds but as far as I am aware this doesn't affect most leasehold houses.

Buttonmoonb4tea · 05/01/2020 21:40

My current house was leasehold when I viewed it. My offer had a clause that the vendors would purchase the leasehold and transfer it to me on the sale of the house and I agreed to paying for it through the house purchase. It was £800. Turns out it takes months to trace leaseholders and get them to agree to selling. I ended up buying the house and moving in before the freehold purchase was finalised. It was risky but I'd already sold my property and was living with family so really needed to move in. All was well in the end and the vendors transferred the freehold swiftly when it came through. The vendor and I along with both our solicitors were sick of chasing it all up in the day. It took ages and was stressful.

MinnieMountain · 06/01/2020 06:19

Can you say what town the house is in? Someone might know the area.

Calculating the value under a forced sale of freehold is very complicated. Equally you might find that the freeholder would willing sell it for a few hundred pounds.

I don't think old leasehold houses put off buyers if it's normal for the area.

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