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?

Absolutely not. Don't do it.

Sold mine a few months ago on first viewing. Not been an issue in the conveyancing.

For those saying definitely not may I ask why?

Where I live almost all houses are leasehold with 900 odd year leases. It literally makes no difference to it being freehold apart from you have to pay £2.50 a year ground rent.

That lease, yes. That sounds fine. Long life left on it. Anything under 125 years is hard to get a mortgage. My mortgage broker friend says don't go for anything less than 175 years as standard. And be careful to read the T&C's.
Very common in the north west where I am for properties to be leasehold.

But new build leaseholders? Not a chance. I used to work for one. Started off as £250 a year. 10 years later lease it upwards of £1k a year. Absolutely scandalous.

In some parts leasehold with hundreds of years to go is normal.

I had one that had over 800+ years left with ground rate of £2 per year. Sold it with no issues because it wasn't a problem. I think if there only a short while left then it is a problem.

There are a bunch of people here just saying no, but without any other information. It’s always the same on these threads. But anyone who has experience of these historical long leaseholds will tell you it’s a non-issue. Our last house had >900 years left, with £8/year ground rent. The rent can’t be changed, it’s just one of those quirks of older properties.

Personally, I would avoid even viewing a leasehold property.

Most of the terraced streets northern England are leasehold. The leases were 999 years when new. The ground rents a few pounds per annum.

There is major reform going on with leaseholds OP

www.google.com/amp/s/moneyweek.com/investments/property/602614/leasehold-reforms-mean-the-end-of-a-nightmare-for-some-homeowners%3Famp

@Iamtooknackeredtorun

Sold mine a few months ago on first viewing. Not been an issue in the conveyancing.

For those saying definitely not may I ask why?

In the past couple of decades, it has been the case that some modern housebuilders have built and sold houses as leaseholds with high ground rents (that in some cases double every 10 years) and onerous service charges that must be paid to the freeholder for maintenance and permissions included in the clauses of the lease. This has left some homeowners unable to sell or remortgage their homes, particularly in the case of the doubling ground rents. The government has recognised that these leaseholds (often referred to in the media as “fleeceholds”) were missold, and there are plans to address the issue, hopefully in the near future. These are the leaseholds which are the “definitely not” category.

Some people confuse this sort of leasehold with the sort of leasehold the OP and others with 999 year and fixed peppercorn ground rent leaseholds are referring to, which are very common in many parts of the country and are also particularly common where the freeholder wishes to ensure that the land the property is built on is reserved for a particular use in perpetuity (such as where a the freeholder was a philanthropist) or can be subject to particular important restrictions (such as where the property is on glebelands, National Trust or Forestry Commission land.)

Some people also simply dislike the idea of leasehold because of the whole “an Englishman’s home is his castle” mentality and wanting to feel that they own everything about their home and can do whatever they want with it without having to seek anyone else’s permission – even though the reality is that nobody is free to do exactly as they please with their property, even if they own the freehold, because you’ll always be bound by planning consent and potentially by a whole host of other very common limitations, such as conservation requirements, tree preservation orders, and restrictive land use covenants. Saying that buying leasehold is to be avoided, is the same as saying that buying a Listed property, or one in a conservation area, or on a street with a TPO, or with restrictive covenants on the use of the garden is to be avoided: there might be reasons why you personally wouldn’t want the hassle of a Listed property or a conservation area, and you’d definitely want to familiarise yourself with the limitations and requirements it placed on you, but it isn’t a reason to avoid the property outright.

Surprise surprise... It's in the NW. This has been so helpful. Thank you.

I think the agent not being upfront about it just made me panic, when in reality although not ideal it's pretty common

I was just going to ask if it's in the NW as it's fairly standard. Huge parts of the NW still have 999 year leases and peppercorn ground rent. Some areas up to 80% I believe. Makes no odds there.

If it was a new build then I'd probably say no.

The fact that it is common in certain areas doesn't necessarily mean it's good practice or risk free!

If the ground rent is very low, the contract is extremely clear on how much it can go up, if there are no management charges , and if a solicitor puts it in writing that there is no way on Earth the freeholder can try to squeeze more money out of it, it's one thing.

If instead the reasoning is: "oh, most people I know have never had a problem, that's enough for me but I have no clue if tomorrow a new freeholder could increase all the fees", well, that's a completely different story.

Not being familiar with the NW, I am sceptical, because I wonder: what on Earth is the reason for a freehold house? Other than fleecing leaseholders?

If the intention was to ensure that certain rules are respected, well, there is no need for a leasehold for that; take the Dulwich Estate in London, where even freehold houses must respect all those crazy rules (eg no double glazing) set up by a charity which finances the local private schools (like the famous Dulwich college)

Very area dependant - where we live in the NW, all older properties are lease hold with 900 years etc still to go!
I've had 2 and never had an issue

I wouldn't worry about that ... it's an old style lease - hundreds of years on it and pennies.

It's the new ones that double etc that are to be avoided.

Can't you buy the freehold after a few years of owning the property if you want to? We had a leasehold house built in the 90s with a 100 year lease and we sold it with no issues. In your situation I would buy it.

I've had my leasehold house for 20+ years, still got around 900 years left.

Peppercorn rent of around £2. Leaseholders have changed management companies at least 4 times and cost has never gone up. In fact they don't even collect it now as it costs more in admin.

I think a lot of us are on land owned by the Earl of Derby in the NW and that's where the leasehold has originated from.

We could buy the freehold at cost of solicitors fees, but it makes no difference at all to me.

I’m in the NW. Have bought and sold 2 houses and bought and am living in a third. All leasehold. No issues. Very, very common here.

I bought two leasehold houses and subsequently bought the freeholds with no issue.

So normal in Sheffield too, literally every terrace is leasehold. we bought + sold with no problem and it was literally £2 a year plus £75 when we sold as a penalty for not using the leaseholders nominated house insurance provider for the 2.5 years we owned.

Go ahead...you can buy the freehold very cheaply...on line calculator works it all out for you....as lease is so long and rent is very small it will be a few hundred if that !

Really earsup? I'd read £8k-12k online. I'd buy it in a heartbeat at a low price. I have noticed that none of the neighbours haven't, which makes me think it's not that affordable.

I'm in the NW... just sold my new build house with a 992 yr lease and annual rent of £200 for a victorian house with a ground rent of £1.50 a year. My house sold in 10 days.

The leases on my house stipulates the rent review only happens every 10 years and can only be increased by a certain (miniscule) percentage.

I wouldn't worry... there are lots of scaremongering stories in the press but it's very common and most have no issue.

We have the option to buy the freehold and I think it was about £10k but at £200 per year ground rent and the knowledge we were only going to stay 8-10 years, it was cheaper to leave it with a 999 yr lease. We still sold the house at full asking in less than 2 weeks.

No!