Would you buy a leasehold property?

[6079SmithW]

My house is on the market. I've started to look to buy elsewhere (on my own for anyone who read my last thread). I've seen a property I like but it is leasehold. Everyone is advising against buying it. WWYD?

A flat i am going to live in for a few years then yes. a house that i planned to live in for 30 years i would be far more reticent and want to look at some serious details including the number of years left and when increases of ground rent will occur. Eg if its a 999 year lease with a £25 ground year double every 20 years i'd be more inclined. if it's a 125 year lease with a £200 ground rent doubling every five years then no.

They are likely to do away with leases eventually anyway but in the meantime it does make it harder to sell

We missed out on an amazing property because we were put off by it being leasehold... only to find out after they'd already accepted an offer that they didn't know who holds the lease and that there was still over 600 years on it and the payment is only £1 per year as a nominal fee. I would check the terms and conditions before ruling it out.

I live in one. The lease is short and I need to renew to keep some value. It will make it hard to sell. But it has more issues than being a leasehold. It’s a flat on an estate. My solicitor advised me not to buy. I’m ok though. I haven’t known any different. Not sure that I’d buy if I had lived in a house I’d owned.

I would (and have) bought a leasehold flat - it’s not unusual. Leasehold houses are more unusual and I’d be more cautious, especially if it’s a recent build as you hear many many horror stories.

House or flat?

Old leasehold house, probably would. Otherwise no.

Aren’t all flats lease hood? Houses typically free hold.

Totally depends on the lease. Loads of houses up north are leasehold on really long leases and a tiny fee (half the time they don't even know who owns it and it doesn't get paid) the only thing is the sale can take longer to go through and solicitors fees are higher (more work to do)

I would not buy a leasehold house. I would (and have) purchase(d) a leasehold flat.

Some flats come with a share of the freehold - good. Some flats (Tyneside flats), hold the lease for the opposite flat (upper flat owns lower lease and vice versa) - this is my preferred lease type.

Depends on the condition of the lease. A lot of older terraces are and you pay like £5 a year to a parish council. Fine

I wouldn’t buy a flat especially after this ESW1 scandal
A lot of new build houses have very scary clauses written in to their leases

Oh gosh yes steer away from any blocks that are clad.

I've got a share of freehold flat. Seems fine. Wouldn't be so keen on a leasehold flat.

It’s possible to have a freehold flat but highly unlikely to get a mortgage on one.

There is no blanket yes-or-no rule. Read the terms of the Lease and then decide on those specific terms.

Leasehold houses are very, very, common in huge parts of the North. Most terraced houses in cities like Sheffield and Manchester are on long leases of hundreds of years, with a tiny fee to pay. Our fees have been £2 and then £1 a year respectively. I would, and have, bought these types of houses - as I said, they're completely the norm in Northern cities.

A new leasehold house is a totally different proposition and no, I wouldn't.

Seems like a gross over-generalisation to me. There's nothing wrong with leasehold in principle. You (or your solicitor) need to check the terms of the lease.

I currently live in a late 90s leasehold house. I’ve just started the process to buy out my lease at a cost of £7500 because I want to move and I know it’ll put the buyers off. I would buy another with a decent length lease but my offer would be less than if it were freehold

I've had several leasehold flats and no issues with extending the lease to date, taking a slightly short lease and then increasing it for a few thousand (depending on when this is done) has allowed me to purchase properties a lot cheaper.

I don't know anything about leasehold houses, they are not common round here and I wouldn't buy a leasehold house, unless there's some reason they are very common where you live.

@MinnieMountain

It’s possible to have a freehold flat but highly unlikely to get a mortgage on one.

This isn’t necessarily the case. Many lenders are cautious of lending on share of freehold flats where there’s no managing agent / management agreement and a mechanism for collecting a regular service charge to maintain and repair the fabric of the building, because obviously that makes the property a risky asset. Where this has all been formalised and there’s a service charge and clear terms of freehold, there’s rarely a problem.

I own a leasehold house, it’s one of the traditional 999-year leases with a peppercorn ground rent. These are fine. What you don’t want to touch are the so-called “fleeceholds”, where a modern developer has set a doubling ground rent and onerous terms of leasehold which require you to pay for upkeep of the estate common areas and unadopted roads. Walk away if it’s one of these.

I live in a leasehold flat. It's fine. Lease over 100 years, all fees around £700 per year and it has allowed me to live in a pricey town where I couldn't afford a house. Some people are snobby about flats in general not just leases.

I’m talking about actual freehold flats not share of freehold @ComtesseDeSpair. They do exist.

Are you talking about a flat or a house?

The ground rent, and how much it can increase, are set out very clearly. Some ground rents are extortionate but you know that upfront - there is no situation where the lease says the ground rent can go up by x and then it goes up by 10x.

The real problem is the managing charge. In most cases, leaseholders have no control whatsoever. The freeholder is the managing agent, cannot be fired if it does a poor job, gets kickbacks from insurers, and if the charge go up by 10% every year there is very little you can do. Eg see this recent article on the Financial Times: www.ft.com/content/b135b814-dc9e-4abc-bb64-f378d11179d8

Many people say: "charges have been reasonable until now, so nothing to worry about". That's the wrong attitude. The real question is not (only) how much have charges been until now, but how much can they increase in the future? Specifically, does the lease give leaseholders any control over the charges? if the managing agent does a poor job yet keeps increasing the cost, do leasehodlers have any recourse or must they suck it up? These are the questions one should ask a solicitor.

Me, I would never ever ever consider living in a newbuild ike those described in the FT article. The risk of being ripped off on charges is too high. I woud consider another kind of leasehold property only if a solicitor can explain to me why a predatory freeholder couldn't profiteer from me. Also bear in mind that freeholds are sold all the time, so a decent freeholder can sell to a non-decent one any time.

I live in a town with loads of leasehold houses. As long as it's a lease with lots of time left (most have over 900 years), and the maintenance is controlled well, I would consider it. A new build with 80 years left, personally I wouldn't.

There's a big estate been built a few miles from me with leaseholds and extortionate ground rents that go up and up - and the estate is a mere 5 or 6 years old they've not quite finished building. Personally I'd not buy that sort of property

No to leasehold houses. They aren’t allowed to be built as such anymore.

Given large percentages of the population can only afford flats and flats are leasehold, saying ‘never buy leasehold’ is daft.

Yes, to buying somewhere with a decent length lease remaining ...over 90 years and ideally over 100.
Yes, to avoiding high ground rents or those which will escalate over 0.1% of the property value
Yes to being very aware of maintenance charges and how the property is managed
Yes to looking at those with an share of freehold
Yes to particularly considering maisonettes which might be in a building of 2 or 4 which have very low maintenance charges (if any) did to the lack of communal parts.
Yes to being aware of leasehold law changes which are coming (if slowly) and understanding the cost of extending the lease by statutory method which will give a 990 year lease and zero ground rent and essentially remove most of the downsides. Factor that cost into buying and plan to do it.

It's always worth knowing who owns the Freehold if you're buying a leasehold flat.

I bought and lived in a leasehold flat about four years ago that was owned by the local housing association. There was still over 100 years left on the lease and the ground rent was only £10 per annum. Unfortunately, the monthly service charge was variable, which was not picked up during the solicitors checks. It meant that every 6 months the service charge changed. ( From £26pcm when I bought the property to £149pcm when I sold)
Definitely do your research but I would never buy a leasehold property again. They have to much power to do what they like.