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?

It's a new build townhouse. I need three bedrooms and all the more traditional houses seem to have two good bedrooms and then a tiny little box room. This has great accommodation for all three of us.

From what the estate agent said it's a 999 year lease. The current service charge is £20 per week, but as it's a new build I have no way of checking re increases etc.

Is that right per week? So £1040 service charge per year... Although there are limits they can increase service charges and also pass on costs under other circumstances...
I would be reluctant to buy that. I would also be wary of a leasehold on a new build, even if it is 999 years as my perception would be that its a corporation that will be looking to extract maximum profit on it...

I have a leasehold flat. We have lived here for nearly 20 years. The original lease was 99 years so when we sell we will probably have to add the value of upping the length of the letter our costs. Our service charges are astronomical. We have been promised new windows and communal doors for years. The original windows are wood fittings and rotten, and the communal doors to are not secure by modern standards. They solved the problem of loose carpet on the staircase by raping it down with gaffer tape. The grounds needs refurbishment. Thankfully, no cladding issues to worry about (or se we've been told). We bought as young chumps with no money on a part-buy, part-rent basis, and I can categorically say we have learned our lesson. It might be slightly better with a house, but ask upfront about monthly costs and what you are expected to maintain and what they are expected to maintain. Tbh, I wouldn't.

Also we found it very difficult to find out who the freeholder was once. Apparently it doesn't have to be disclosed. We know who the builder is, who the housing association is, but we have no idea who owns the land. We found a document saying it was one person, but they denied it saying they had sold to someone else and no they were not going to say who. It's dodgy up to the eyeballs.

Depends where you are. I'm in the north west and a huge amount of properties here are leasehold. Usually 750 years+ leases with something like £6 a year lease cost. Wouldn't bother me buying one of these.

New builds are more of an issue. 125 year lease, £200-300 a year initial cost, doubling after 10 years plus inflation. I used to work for a new build developer and it was an absolute scam. On a competitors development, people who had bought in 2004 are now paying £990 a year lease cost and currently taking legal action. Shocking. I would not buy a leasehold new build.

our first house was leasehold...900 years left on lease and ground rent of £8 a year that was never collected..never had any issues...its the new ones i would avoid with the doubling clauses etc.

@fellrunner85

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.

I have a house like this, it's called chief rent or a rentcharge. On the mortgage and Land Registry, it's freehold. But in the title deeds there is a chief rent payment to the previous owner of the land (not the previous house owner), mine is £5 per year. On my deeds it's like a Russian doll, with the payments going to the previous land owner each time the houses were sold as a block for rental, going back to the Bishop who sold the land in the first place. Mine currently goes to an investment firm. The chief rent charges are ending in 2037, 60 years after the 1977 Rentcharges act. You can redeem them before then, if you want to by buying the rent charge owner out. It's about 16-18 times the rent.

More info:
en.wikipedia.org/wiki/Rentcharge

Here's how you can redeem them if you wish to:
www.gov.uk/guidance/rentcharges

Seeing your update, I'd be wary about the service charge, especially if you don't know how much it will go up.

If it's a flat, yes (you generally expect it to be). Subject to the lease being a suitable length of course.
If a house, no. There's been a bit of a thing near us for new-build houses to be leasehold with relatively short leases. Ridiculous!

I had a leasehold flat. It cost me 16k to extend the lease to make it saleable. I won’t go near one again!

Blue, I'm in the same boat as you, except I haven't coughed up the 15-16k yet, but must do so this year.

Wasn't there a bit of a 'scandal' recently about new builds being leasehold and the developer offering the option to buy the freehold - then massively upping the cost of doing so?

I'd be wary of any new house on a leasehold basis - especially with that service charge.

@nc820mc
"Seeing your update, I'd be wary about the service charge, especially if you don't know how much it will go up."

The thing is, yo can NEVER know by how much the service charge will go up. You can know by how much the ground rent will go up, not the service charge. Unless leaseholders have a specific right to fire a managing agent which does a poor job, the risk of the charge going up by some crazy amount every year is very high.

Only buy if share of freehold in my opinion. Had one leasehold flat which was managed by lovely person that was fine. Then one horrendous leasehold flat... my solicitor summed it up by saying you're getting a mortgage and being financially responsible for a property but you don't properly own it really if it's leasehold. We got charged hundreds and hundreds in drip fed bills for 'maintenance '. House had major flaws they didn't want to fix as the freeholder didn't have enough to pay her half among many many many other issues... still gives me nightmares thinking about living in a leasehold property...

I would be wary of the particulars of that house and would want a solicitor to check it out. It sounds like with a high service charge and the leasehold situation you could get hit with rapidly rising costs.

If that’s all you can afford then you have no choice.

But I would be careful for rising ground rent, excessive service charges and extending lease term. So you need to do your homework before you commit.

If you can afford a smaller freehold house then that would be preferable.

Get a copy of the lease and read the service charge proviso. All service charges will fluctuate because the price of the services will fluctuate. There will be occasional one off costs (eg putting in security cameras / road resurfacing) but they should have a provision to be able to build up a reserve to cover them. The issue is what management fees are chargeable and whether you own a share in the management company and can therefore control that. Without a share in the freehold company, I’d avoid as you are at the mercy of the land lot’s associated management company turning whatever profit they want from the management