Buying a leasehold property is quite different to buying a freehold property. There are a number of things to consider, so here are our top tips.
Leasehold v Freehold
Firstly, its important to understand what a leasehold property actually is. A leasehold property is a home that’s owned for a fixed period of time under a legal agreement with a landlord called a lease. With leasehold, you only have the right to occupy the property for that period of time, and do not own the building outright. Leases tend to be long term – and can be anything up to 999 years.
Leasehold generally applies to flats which form part of a larger block and contain shared facilities or communal spaces but can also apply to houses.
Read the lease
The lease will set out the detailed terms on which you are entitled to live in the property. This will include your rights and responsibilities as a leaseholder. Therefore, it is crucial that you know and understand what is contained in the lease. If you are buying a leasehold property, your solicitor will advise you on what is in the lease.
Watch out for ground rent increases
All leases include a ground rent, which is payable to the landlord. In some cases, this is a nominal amount or “peppercorn”. In others, however, there is an annual rent of typically £250 – £350. You may have read in the press recently that there is concern that roughly 12,000 leaseholders are facing ground rents that double every 10 years (or more frequently in some cases).
A ground rent that doubles every 25 years should not be an issue because of the effects of inflation. However, reduce this to every 10 years and it becomes problematic. The Government has begun ushering in reforms to help alleviate the problem, although there are calls for more to be done to help those affected.
What does the lease say about alterations?
Owners of leasehold properties are restricted in terms of the alterations they can make to the property. Some leases will allow leaseholders to make internal alterations as long as the landlord consents (the landlord to not unreasonably withhold this consent). This contrasts with a lease that expressly prohibits alterations. Further, there are other leasese where the landlord will require payment in return for giving consent.
What will the landlord do?
One of the benefits of leasehold ownership is that the landlord will take care of various issues. Depending on the terms of your lease, you will often find that your landlord will deal with:
- The upkeep and repairs of any communal areas in and around the property.
- Issues between you and any noisy or anti-social neighbours.
- Buildings insurance.
In addition to this leasehold properties offer a home for people who need short-term accommodation. You may also be able to buy your home outright if you meet certain criteria. So, being a leaseholder can be a stepping stone to taking full ownership of your home.
Ultimately, there will be advantages and some disadvantages when it comes to buying any kind of property. If you would like a quote for our covneyancing services for your leasehold property, you can visit our instant quote calculator. If you would like some advice about leasehold properties, our conveyancing team can assist. Contact us on 0800 988 7756 for a FREE initial discussion.