What would you do? Leasehold

[Amerimoon]

We have to make a decision and I’m just wondering if others have bought leasehold properties and what their experience of them is? This is not a very old/ new build property - just a bog standard 1960s three bed semi.

Context: we live in a small, very desirable school catchment area where houses don’t seem to come up that often! When we bought our current house, there really wasn’t any other option in this area and although it’s a really beautiful house (tiny Victorian town house) it’s also small and there’s no drive which isn’t ideal. One of our children is in the school now, one more to go so we really don’t want to move areas. A couple of months ago, a dull but practical semi came up for sale just round the corner and we put in the highest bid for it - we were very pleased! We asked straight away if it was Freehold and we’re assured it was. We’d like to do it up over time but it offers us more space and the right area. Ours had an offer within days too from a lovely couple hoping to move ASAP. They have a child applying for school (deadline mid January) and really wan our house. They offered a low amount, not the asking price but the bare minimum we’d need to move to other house so we just agreed for the speed! We knew everyone was up for a quick move.

No we’ve just had the searches back and they’re showing that the house is in fact Leasehold - we’re really frustrated that we were lied to. The vendor says the freehold is owned by a lady who owns the whole street and won’t sell, she’s apparently very stubborn on the issue. They’ve offered to lower to price by 10k if we continue and we all complete at Christmas. It’s a 500k house so as a percentage isn’t really a big drop, not that we were hoping for a drop at all really, we’d rather pay the full price and have a freehold tenure.

We are awaiting a copy of the lease to read but really put off it now. Do not want to let our buyers down at all and there’s nothing in the catchment to even rent, bar a few very very tiny flats we couldn’t make work.

Can anyone tell me their experiences of leaseholds? We are minded to pull out at this stage and really don’t want to.

@titchy you seem annoyed that I don’t want a leasehold property?!

Not at all - it's your money! You just seem to be making decisions based on assumptions not facts.

[quote Amerimoon]@GiantKitten how is it effectively freehold? It isn’t freehold at all. It has a long lease, possibly covenants - no idea yet, and is beholden to another person. It isn’t a freehold property however you look at it[/quote]
Because in 900 years we and the houses will all be long gone!
We’ve lived in ours close to 40 years, & apart from the annual ground rent request from their agent we’ve had no contact with the freeholder & there are no covenants or other restrictions.
If there are restrictions on the house you’re considering then that’s different, but if not, you’re only subject to council planning (like everybody else) & paying a few pence a day in ground rent.

@titchy

If you had the choice of two identical houses in the same street and all is equal, except, one is freehold with no covenants, and one leasehold, which would you choose?

@titchy not at all, I’m trying to learn as much as I can as quickly as possible. I’ll admit though, it’s not solely a decision with the head - we also just simply don’t want a leasehold property and don’t like the idea of it. There are elements of worry about charges / rising charges/ permissions/ resale value etc too

I don't know why you are so pedantic about it - if it's not common for the type or area, then of course it's a negative.

That's exactly the point - it IS common for the NW. If you're not in area where its common perhaps it is difficult to get your head around. BUT here, it absolutely doesn't make your property niche or restrict an onward sale at all.

@GiantKitten whether or not the house will be here at the end of the lease really has nothing to do with me owning or not owning it and the land it stands on.

@Africa2go from what I can gather, it seems to be common round here for older terraces and new builds.. not this type of property in this area. That’s part of my worry.

Leasehold isn't a problem on its own but that fact the owner will never sell raises big alarm bells. A family member had a leasehold newbuild and when they came to buy the freehold it was very simple. If it had been a case of getting the freehold alongside the purchase I'd of said go for it but I think you're right to be wary.

How do you feel about continuing your sale whilst looking for an alternative property?

@Africa2go

I completely get that it might not be an issue for me if leasehold was common in my area, I was brought up with it, friends & family had no problems, etc.

But the world changes, people move areas, people have different expectations, leasehold houses have now got a terrible reputation thanks to unscrupulous new build developers creating houses as leasehold through greed and on-selling leases on terrible terms , etc.

That's why many people not familiar with the area / model won't consider them as good buys if there are more certain alternatives.

It's common here. The agents tend to advertise them as 'virtual freehold' as the leases are so long and ground rents minimal.
Ask your solicitor to look very carefully at the lease. Find out if you can buy it (normally the difference between the price of a leasehold house and freehold house). Find out the provision for increasing ground rent, and if you need permission for alterations.
If it's common for the area then it should not be hard to sell on.

@Amerimoon - like I said we've had 5 houses now - new build semi, 1960s semi, new build detached, Georgian end of terrace & 1930s semi in various places across North and South Manchester and all have been long leasehold. Current property in a street of 40, some semis, some detached. All leasehold.

You absolutely have the right to walk away and feel frustrated that an aspect of the house has changed in your view. However going back to your original post, in circumstances where you've outgrown your house and nothing much comes up in your tiny catchment area, just wait to see the lease and hear your solicitor's advice before you write it off. As a few of us have set out, leasehold doesn't automatically make it bad / niche / reduce the value.

We spent a decade in a long leasehold house. During that time the ground rent was £10/year and there was a small service charge (£250/year) which paid for the upkeep of the street (gardening/mowing verges/repairs to communal land). We also extended it and converted the loft, with minimal fuss. I can sort of get why you feel funny about the lease, especially with such negative press about newer leases which are very unfair, but it doesn’t have to be a big deal at all. We sold our house for well over £500k and they are going for even more right now. It’s a street that is always popular. I would say that one of the benefits is that you tend to get neighbours who care about their houses, don’t want to make big changes to the street scene, and have a big community appreciation. It was a nice place to live. Take a look at the covenants, many old ones are unenforceable these days (ours said things like not hanging the washing out on sundays, and things about not using it as a medical operating theatre - very much of its time). Ultimately, if you like the house I wouldn’t see this as a dealbreaker. I’d gratefully take their £10k off - they don’t have to do this. I don’t think you will have a problem selling it in the future.

@Africa2go thank you very much, we will wait and see the lease

@MyGazeboisLeaking

*But the world changes, people move areas, people have different expectations, leasehold houses have now got a terrible reputation thanks to unscrupulous new build developers creating houses as leasehold through greed and on-selling leases on terrible terms , etc.

That's why many people not familiar with the area / model won't consider them as good buys if there are more certain alternatives.*

I agree entirely about new leaseholds and agree that I wouldn't buy a new leasehold property now. But as I said upthread, new leasehold is very different to long leasehold which is why "All leasehold is bad" type advice is irritating. The terms of the lease are fixed, ground rent cannot increase, no additional charges can be imposed. Even if the freehold is passed to another entity (ours is with a management company) it doesn't make any difference as legally they can't change the terms of the lease.

The OP is trying to understand what it means for her & her family. What I'm saying is that it's the norm here, but she needs to see the lease and get legal advice before she makes a decision.

@Flamingolingo that’s interesting to read! I wouldn’t want to be paying a service charge to live in my own house to be honest, the area really isn’t that interesting around this house and nothing that requires upkeep beyond the usual council upkeep. The thought of paying fees to and requesting permission from a freeholder really annoys me for some reason.

@Amerimoon it doesn’t sound like you would have a service charge then. On our old road we had perfectly manicured lawns and communal grounds, all of which kept the place looking amazing and desirable.

I think you just need to check the details with your solicitor. Asking permission for an extension for us was just a formality - sent in the plans (they adhered to pemitted development guidelines) and got a letter of approval. Might be worth looking at google Earth to see if there are other extensions in the street.

It’s quite hard to get your head around - that on some level you own the right to live there, rather than the house/land itself, but the freeholder can’t do anything else with the land other than inspect it every X years if desired (most don’t bother). You could buy the freehold, but many people don’t because it’s way more expensive than just paying the ground rent.

I wouldn't buy it

They can inspect the land?!

@Flamingolingo it does sound like yours was the exact sort of property I would expect to be leasehold, what with the maintained manicured gardens.

[quote MyGazeboisLeaking]@titchy

If you had the choice of two identical houses in the same street and all is equal, except, one is freehold with no covenants, and one leasehold, which would you choose?[/quote]
Where I live these properties would be priced the same. The listings often don't specify if leasehold or freehold, as it doesn't make a difference to most buyers.

When we offered we didn't know if it was Leasehold or Freehold, we only found out when our Solicitor requested the deeds later.

For leasehold you would just have the small hassle of remembering to send the fixed very small ground rent, and for the formality of writing if you want to build an extension, which the freeholder can't refuse. So to avoid that slight hassle a freehold would be slightly more desirable, but not a factor to affect the price in more than a token way.

@opionatedfreak yes very bad adviced as if she has bought soon after purchasing she could of bought for about £6-7000 now valuation is over £60,0000 and she doesn't have it not that she will need in her lifetime but she is concerned re : inheritance wise as will not only be worth £60000 less but also be hard to sell as cash buyers only , she may need to sell of she couldn't live on her own longer etc

@Amerimoon - it depends on the terms of the lease, but for example ours stated things like that we would repaint the external woodwork every x years and redecorate internally every y years and that the freeholder had the right to inspect the property if it wasn’t being maintained. I don’t know anyone who ever experienced that though - but that particular covenant isn’t to make the householder’s life miserable it’s a mechanism to ensure the house is maintained.

You will find that even without a leasehold that many houses have restrictive covenants laid out in the deeds.

Don’t overthink it, ask the solicitor for advice.

It very much depends on the length of lease remaining, ground rent and terms of the lease.

I would be concerned that if they have lied about this what else will there be to be underearthed.

[quote GiantKitten]@MyGazeboisLeaking

But it’s clear from several posts here that it is common in the NW, isn’t niche & isn't a restriction on onward sale.

999 year leases are effectively freehold. The only possible drawback to the house in OP is the allegedly peculiar freehold owner [/quote]
A 999 year lease isn't anything like the freehold since you still need to abide entirely to the terms of the lease which may include massive restrictions on what you can or can't do. Wanting to carry out building works would require permission (potentially at cost) of the freeholder, you'd be responsible for the cost of their surveyors / lawyers, a deed of variation, amending title plans etc etc. It's a massive massive money making exercise for a freeholder and massive pain in the area for the leaseholder. The freeholder can make the OP's life difficult