Ringpeas

If you buy a lease hold property and the lease expires, could the owner of the land reclaim the house without any compensation to the property owner?

Old_Fart

Yes, you don't own the property, you own the right to live on the land. HOWEVER you do get an opportunity to purchase a futher lease period, and it will be at fair market rates, this is a regulated process, with rights of appeal against blatantly extortionate lease fees.
This is why you can't get a 25 year mortgage on a property with a 10 year lease (for example)
Rgds
C

Harry_Boy

Yeah - when the lease expires, the property reverts to the landlord. However, as Chuck points out, there are statutory seafeguards that allow you to negotiate a fresh lease as a 'sitting tenant' if it's a residential lease.

As Chuck says, no lender would consider lending on a property with only a few years term remaining on the lease, as expiry of the lease before the mortgage is repaid would put them in a difficult position if the property was repossessed due to default.

As such, it's more a theoretical question in the residential sector. Unless you're daft enough to buy for cash with only a few years left.... That's why many older leasehold properties were originally granted on 'Three Nines' (ie 999 years) leases.

Ringpeas

I see, thanks.

I was just wondering if the property boom would see landlords refusing to extend their lease, then selling the lot as a freehold and making a quick 100k or so.

speedking

Our buyer was refused a mortgage on a property with 59 years lease remaining
We had to purchase the freehold before the sale could go through adding several months to the process Purchasing the freehold from Manchester City Council was relatively cheap though.