Would you buy a leasehold house?

[floofycroissant]

Victorian property, over 900 years left and annual ground rent of £4.

I know ideally I would buy freehold, but I've already blown thousands on rent trying/waiting for the right property to buy in the current market craziness. On paper this seems as good as a leasehold can get - right?

Have I missed any potential red flags?

No.

I wouldn't.

See with the leaseholder whether they would sell the lease.

That said, as an estate agent, I would say that leases with that amount left on them and a peppercorn rent don't usually cause big problems to sell on again in my experience.

It depends where you are. This is very standard in some cities, I've owned one before with no issues.

Check the service charge provisions, if there are any. And ask for details of the service charge for the past 3 years. You should also ask if the ground rent has been demanded and if yes, has it been paid. Provided there is no index linked or unreasonable service charge and the ground rent isn't in arrears you should be okay. There are places in England (eg areas around Manchester) where this was a fairly standard arrangement.

that lease then yes I would

Yes, and I did. The main things to be careful of are whether there are any restrictive covenants in the lease which would prevent you from doing anything with the house such as an extension or outbuilding (and these are just as common with freehold titles) and what the arrangements are for buildings insurance.

The problematic leaseholds are those with doubling ground rents and covenants which force you to pay for the upkeep of communal areas - and these tend to be new builds on estates.

Maybe if it was a short term thing but not if I wanted to be there long term and establish myself. I'd like to think if own something outright eventually

This is super helpful, thanks all.

I don't see it as a forever home, and I would consider buying the leasehold at some point it's just not financially possible along with the purchase.

@Grumpycatsmum

Check the service charge provisions, if there are any. And ask for details of the service charge for the past 3 years. You should also ask if the ground rent has been demanded and if yes, has it been paid. Provided there is no index linked or unreasonable service charge and the ground rent isn't in arrears you should be okay. There are places in England (eg areas around Manchester) where this was a fairly standard arrangement.

Would you ask the estate agent these questions Grumpycatsmum?

They've not been particularly helpful so far, it wasn't advertised on the listing or discussed. So we purchased. Once we raised it they did reveal that the ground rent has never been collected. Not sure if that's a bad or good thing

*purchased the title plan from HM Land registry

Your solicitor will request all the detail during conveyancing, but I’d definitely ask the agent to provide answers from the seller before proceeding any further - if they’re obstructive or unwilling to provide any information or vague then that would indicate that the lease is more onerous and restrictive than they’re suggesting. The agent probably isn’t much use as they won’t know much but unless the seller has something to hide they should be happy to assuage worries.

On the uncollected ground rent: you’d want your solicitor to check the status of the lease and what, if any penalties are due if ground rent isn’t paid continuously. It may well be just a formality of paying up the arrears. My leasehold house has a fixed ground rent of £20 per year into perpetuity - a nice little bit back in 1947 when it and the five other houses with the same freeholder were built, but not even worth the admin nowadays. I send a cheque for £5 each quarter, as per the terms of my lease, by recorded mail to the address in my lease. My next door neighbour hasn’t paid hers for the last 8 years because she initially forgot and just hasn’t done it since. The freeholder I doubt thinks it worth the bother of chasing, if they’re even an actual entity anymore.

Nope, never.

Even if the ground rent and management charges are reasonable now, what sucks about freehold is that you have no control over them.
If the freeholder sells the freehold to another company which then doubles the management charges, your options are very limited. If it is really outrageous you can take them to court, but it's expensive, time consuming, and you have no guarantee of winning.

For a flat, you have no option - freehold flats don't exist. But a leasehold house makes no sense.

There are thousands of houses like this in the North. Of course you should by it! There will never be management charges or ground rent collection It is just a "figure". Your solicitor would explain all of this to you . This is nt remotely a modern lease and virtually no different to freehold. Thousands of streets are like this in Northern cities.

OP - you can ask the agent but you would want your solicitor to check. If it's an old Victorian house then there may be very light service charges , eg to pay for road or water costs that are now paid for by the local authority or via water charges. Needs checking out but I wouldn't dismiss out of hand.

That's good to know ComtesseDeSpair so as long as there's no penalty stipulated, we could just request proof of arrears payment or alternatively to know the value (roughly £400) off the purchase price and we then pay the arrears? Is that what you mean?

*knock

OP, MN is really the wrong place to ask as you'll get negative responses from people who don't understand the difference between long leasehold and the newer (bad publicity) leasehold properties.

As others have suggested, in lots of places, leasehold houses are absolutely the norm (e.g. NW). Properties aren't advertised as leasehold or freehold because it makes very little difference if they're long leasehold. We've owned several houses now and they've all been leasehold. Current house is a 30s semi - 999 year lease from 1939, £4 a year ground rent, can't be changed. No problem. No service charges, no escalating issues, no management charges. No problems buying or selling, houses round about on a similar leasehold basis selling for upwards of £1 million.

Just ask your solicitor to explain it to you & to go through the lease to check exactly what it says.

I inherited one - it’s an old house in the north and my neighbour apparently owns the freehold. If she ever wants to sell it I have first dibs. Doesn’t bother collecting it and my solicitor said not to worry about it. Wouldn’t buy a new one though.

This is very normal where I live. My house has over 800 years left on the lease. My annual ground rent is £1.25. The land owner is a huge country estate. It’s fine. Pretty much all houses round here work like this, with the exception of new builds.

It’s the new leasehold houses you want to watch out for. Old ones like that are fine.

Where a neighbour is the freeholder this isn’t remotely like a 999 year lease!

Definitely don't be swayed by the early responses suggesting that you'll suddenly get a demand for thousands. Where are you in the UK? I'm in the NW and in a 999 year lease property. It's £1.50pa rent. I could buy out the freehold for c£150 but have never bothered because it's never an issue.

Long leases on Victorian houses are incredibly common and don't be put off. Speak to your solicitor.

Affects re-saleability