Offer accepted but now found better option

[solario]

We had an offer accepted on a property last week. It's a lovely house but not in an area we love.

Today we had the chance to see another property in our first choice area. It's smaller but in an infinitely better location for us and our schools and everything. We are seriously considering making an offer and pulling out of the first purchase. We'd feel bad about it, but if the new offer were accepted, it would be such a better place for us to live.

As FTB, it's all new to us. Would we have to redo our mortgage application from scratch, or could the one we've submitted be amended? The new property is cheaper, so we could put down more and borrow less.

The new property is a leasehold, whereas the other one is a freehold. Is there anything we need to consider with that change?

We're at such an early stage with the first property that we've not accrued much in terms of expenses, but we want to decide quickly so as not to impact the first seller for any longer than necessary.

How old is the leasehold property? If it’s old and it’s a historic leasehold then that’s fine. If it’s newer then I would be concerned.

If new also check there's no ground rent or service charge /obligation

You can change your mind without incurring any costs up to exchange of contracts. Vendors expect this - even if they do not like it. And they may well have other potential buyers lined up.

Do look very carefully at the terms of any leasehold on a house. Most houses are sold freehold and those that are sold leasehold sometimes have strange conditions attached - eg ground rent doubling every year - which makes them a poor investment.

Your lender will be lending on a specific property so will want to be sure they will get their money back if you default so they will value the property you choose to buy. Lenders always do this. They will only refuse a loan if they think you are paying way too much money or if there is amajor issue with the property (eg cladding/subsidence). But the amount they have said they will lend you in principle will not change as this is based on your income.

Leasehold you own the right to live in a property for a set number of years. Extending that period will cost money. There maybe ground rent and service charges that are payable and you have no control over.

Freehold you own the property and the land it stands on. You get to make any decisions about maintenance costs yourself.

It's an older period property (1st/2nd floor maisonette with private garden) in a highly sought-after area. No ground rent or service charges, just a small annual payment towards building insurance. There are more than 150 years on the lease. The ground floor is a small independent business (not sure if they own or rent their space).

If we did want to extend the lease after a few years, how expensive would that be to do?

We'd love a house (like the one we've offered on), but that would mean leaving the area we love. This would get us on the property ladder and allow us to stay in the area. We'd be looking to upgrade to a house in the area in a few years, if possible.

I just sold a leasehold house (not primary residence) and I would never buy one again. It had a much longer lease (994 years left) but there were some terms in the lease that were really restrictive and the freeholder was a nightmare. He tried to block me selling it 3x and even this most recent time he refused to fill out the freeholder form.

i would strongly advise thinking very carefully about leasehold. I would never ever buy leasehold again.

with regards to changing your mind. Of course you can up until exchange.

If you can see you will need to upgrade and move on in a few years, then it's probably not right for you - Moving is very expensive!

You might find it difficult to mortgage a flat/maisonette above a shop. Just something to consider. I'd check with your mortgage advisor as a first step.

^what @Mizydoscape says about getting a mortgage on a property above a business. Can be difficult.

We've currently buying slightly out of the area we want and gone for the bigger freehold property over a leasehold. Most the houses around where we live are leasehold as they were built on what was once a private estate and they were all built by the same developer. Fortunately there were conditions set somehow by the local council so the lease was only £50/year and no other charges, however I know some leasehold properties have absolutely ridiculous charges and there are conditions (although ours was no poultry keeping which isn't something I fancied anyway).

I would stick with the freehold house.

I would stick with the freehold house over a leasehold maisonette over a business any day.

Another one saying go very carefully with a leasehold and above a business. You have no idea what that business could become at a later date and what their operating hours might be.

why anyone would look at a leasehold property and sign up for that hell is beyond me, if you have any choice

Avoid the leasehold wherever you can

Agree with PPs - would go freehold house over leasehold any day. It’s such a pain dealing with the landlord when you come to sell (we are going through this now), and Leasehold will be harder to sell. If you wanted to extend the lease the cost would depend on the ground rent and how long you’re extending for, but (if anything like buying the freehold on a leasehold property) there are also legal fees involved. I have a friend who extended her lease and it cost her £20k - but think her ground rent was higher than yours…

If you think you’ll want a house in a few years, definitely buy one now to avoid being priced out!

Id think really hard about whether you wanted to live above a business and what kind of business it is. Will they be having deliveries early in the morning, open late? I think it would be better to go with the freehold house. Leases can be messy and complicated.

I believe it can be sometimes be difficult to get insurance for a property over a business. Definitely something to check if you do go ahead. I wouldn't.

the house sounds like a much better option. It might not be the area you love but it sounds superior in every single way apart from that

You might struggle to get a morgage on a flat above a business

Stick with the house- sounds like a much better investment

That's not a particularly long lease
Where I live most houses are leasehold but it's a 1000 year lease and only costs a few quid. Still a pain but not worth buying the freehold.
For a leasehold maisonette with only 150 years left I would be wary

I'd definitely stick with the freehold house.

It can cost thousands to extend a leasehold, and there are so many potential difficulties. Buying it will take longer too, the conveyancing will be slightly more complicated.

I'd choose freehold over leasehold every time - I've bought/sold many houses!

Above a business is a huge risk, because they could get a change of use and end up a chicken shop.

There not being a service charge isn’t necessarily a good thing. What happens if the building needs urgent work? Who pays?