What happens when a leasehold ends and whats the benefit?

[BetterCallBarry]

After the 900 years what happens to the property?

And why would someone create something that doesn't benefit them or their family in the future?

The property reverts to the freeholder.

900 years is a veeeery long time.

My lease is about 85 years, I'll extend it soon. It's one of those things where I live in an expensive area (South East) and can't afford freehold, so it's the best option with the resources we have.

People don’t generally allow their leaseholds to end - they renew it well before it dips below 80 years so it’s not too expensive. Often a flat lease is extended for another 90 years though there are longer leases too.

House leases are an investment vehicle for the leaseholder. All those modest ground rents add up, and if the payments are missed the penalties are onerous.

The original leaseholder can sell them on. I knew someone who traded in whole streets of leases - just like trading stocks and shares. It’s a grimy way to make a living.

Goes to leaseholder , they are a rip off and shouldn't exsisit
My 88 yer old nan needs to renew hers as dipped below 60 years and they want £60000 to do so , she doesn't have it and now can't sell easily as not mortgageable and only cash buyer will buy and knocks loads of value
How can you own a whole property and someone else owns the land , who does nothing to it ever

Freeholder

Freeholder

the equity reverts to the freeholder, and the leasehold won’t be worth much in value

This had technically happened on a previous house of mine, terrace built 1890 approx - but the freeholder was nowhere to be found!

When I bought/sold the house the solicitor wrote into the contract that as no freeholder had come forward after however many years they’d lost their rights over the house and it’d reverted to freehold.

The "benefit" only really applies in situations where there are a multiple properties in one building (I wouldn't touch a leasehold house with a bargepole).

You don't really get freehold flats as, if you did, there would be no one who is overall responsible for the entire building. A freeholder for a block of leasehold fats usually insures the whole building and organises maintenance and repairs (these costs are recouped through service charges & repair bills to leaseholders).

You do get "share of freehold" flats - but there is both a leasehold and a freehold. I used to own one. We solely owned the leasehold of our flat and jointly owned the freehold with the other flat in a converted house. I used to organise the insurance & our neighbours paid half.

Doing this and collecting the money from one other person was fine; I would not have wanted to sort it out for a block of 12, for example! Luckily no significant work was needed, we did basic maintenance & upkeep ourselves, but I can imagine something like needing to replace the roof could have been a real issue if one flat agreed and the other didn't.

I fell in love with a beautiful flat many years ago that was freehold. Mortgage company said no straight away! To risky to lend on because if say, the roof caved in all residents would be responsible for the cost. Apparently very expensive to insure too.

Presume you mean leasehold?

Scotland is full of non-leasehold flats and nothing bad happens. The responsibility for common areas and the roof is specified in the deeds. Owners split the costs of repairs. Where this is problematic (someone won’t pay) the council can organise common repairs and bill everyone ( a caveat here, this is has been a source of some scandal in the past). Alternatively, the building is “factored” by a management company that organises maintenance, buildings insurance etc. I’ve lived in a tenement with eight flats where we had the roof replaced and everyone agreed and paid quite painlessly, I now live in a bigger factored block where the factor seems excellent.

That's really interesting! I'm only familiar with the English system, sorry, I should have made that clear 🙂
Are the freehold flats easily mortgageable?

I am in England and have a leasehold flat plus own a share of the feeehold company.
My block is 28 flats so we employ a company to run the day to day stuff like organising repairs and gardening and collecting money from leaseholders.

So they work fine if one owns some of the freehold.

Quite right @hattie43 , my apologies.

Yes. I've never seen a leasehold property for sale in Scotland ever.

Buying a home you don't technically fully open seems crazy to me!

That should be own not open

With respect, your Nan should never have allowed her lease to fall below 80 years then she would not have been given this huge fee to extend. She should have renewed it at least 20-30 years ago then would not be in this position now.
Obviously this can’t be changed now but I’m saying it for the benefit of other people buying or owning leasehold properties who may be scared by the high figure quoted which was largely avoidable

The property reverts to the freeholder, and the leaseholder no longer owns the house or has the right to live there.

The whole Scottish property system sounds SO much better than in England. Your buying process seems far more sensible too!

There may be a District Valuer who can set a fair price.

Once the lease ends it's worth nothing as it doesn't exist, and the leaseholder no longer has any rights to the property.

@Twiglets1 unfortunately you can warn people but they can and will ignore you.

I warned someone whose lease was going under 80 years and was told I didn't know what I was talking about.

On the other hand I talked a friend into extending her lease and she got an extra £5,000 plus her costs of extending on her sale price, compared to two flats where the neighbours hadn't bothered. Her bathroom was in a worse state.

@Twiglets1 with respect my nan was unaware and even when she bought it her solicitor never made her aware also she bought it at 65000 she never dreamed it would go up to 300000 in such a short time.
Many many people are not aware of how expensive it is to renew a lease and its based on property price etc
Its wrong and shouldn't exist and goverments need to put an end to it