What do I need to know about leaseholds?

[Blondiie]

I am considering downsizing, although probably not for at least 18-24 months. Currently living in a 5 bed (“the family home”) but for various reasons want to move and want a 2 bed.
Options are mostly 2 bed vic terrace type freehold house of leasehold flat in a block. We are looking in city centre locations with a death of modern houses.
I’ve only ever lived in a leasehold as a tenant and don’t really understand them. Does the service charge cover all the building maintenance and you don’t have to fork out for anything else? What happens if there is a big problem (like the cladding issue)? Does the service charge go up and up? (would quite like to enter retirement “mortgage free” so not keen to take in spiralling service charge costs).

We aren’t seriously looking - just rightmove scrolling, but the flats we see all look so easy compared to houses. DH in particular keen to avoid high levels of maintenance (and damp, which we’ve had in old houses we’ve had before). What do we need to look at in terms of lease length and service charges? What should we avoid?

Sorry just scrolling but do not buy a flat in a block at the moment. There are still a lot of issues with fire safety legislation and until this is sorted I would not recommend buying one.

Small houses are always a better option, ideally share of freehold or freehold.

You need to get a solicitor to check the lease to see details on service charge etc.

Leasehold is fine (ish) as long as it is over a certain length (over 80 years ideally)

There are plans for further reform but until this is enacted I would be cautious of a leasehold property.

Lenders will also be wanting a lease of a certain length and some are being very carelful of lending on blocks of flats at the moment.

I agree don't buy a flat. One of these 999 year leaseholds are OK on a house. IMHO. Where its just a few pounds a year, These are older houses usually.

Service charges cover the day to day and put a bit aside for future works. The lease will tell you somethings, my last flat for example had to be repainted on the outside every 5 years, I had to sell it as my share of the bill was 14k and I couldn't raise it. 1930s mansion block only 3 stories but the scaffolding costs were wicked.

I think it's only blocks over 8 stories you need to be concerned about re cladding. Ideally the lease needs to be over 125 years for mortgage purposes and many many firms won't lend on flats above shops or over 3 stories so bear that in mind from a resale pov

"We are looking in city centre locations with a death of modern houses."

Does it absolutely need to be in the city centre? What would the trade-off look like by looking outside of that area where there are more modern houses?

My experience of leasehold on a house is there is still 956 years left on the lease, it costs me £2 a year in ground rent and other than that it is no different to freehold. Also because the lease is so long I could buy freehold for £700 if I wanted. No service charges no restrictions no interference from whoever holds the freehold.

Unfortunately there is a lack of clarity and confusion on a lot of the provisions of the Act, so I would proceed with caution.

Join the National Leasehold campaign on FB, you can read about the horror stories on there. Never, ever by leasehold, your property is never your own.

I have just downsized and bought a small leasehold house. It's got 130 years on the leasehold and I lay £170 a year.

I'm going to look into buying the freehold, I'm not sure how much it will be but I think it will be about £5k

You’ve all convinced me to concentrate on small houses. Neither of us are from the UK and where we are from flats are very common and I’m not sure if these issues come up because neither of us adult-ed in our home countries. They don’t seem to though. Where dh is from the vast majority live in social housing though. There are so many things I like about living in a flat but not up for randomly paying £14k for painting.
We don’t “have“ to live in a city but we compromised massively on area to provide space for our family when they were growing up and we are both desperate to get back. Very reluctant to compromise on area again

This is too simplistic. All leaseholds are not equal.

Ground rent is a massive issue at the moment, especially for leases granted in the last 10 years or so, with leases including clauses that they could be doubled every ten years or so.

If you see a property you like make sure the solicitor reads the lease properly and reports on it accurately. Recommend freehold if possible.