fatscoobyfella

What are the main disadvantages of buying a property that has leasehold tenure instead of freehold?

Any info appreciated

Tia...

P1-Brad

Talking from recent experience it can be a ball-ache when you come to sell (have to get all the relevant info. from the management company etc).

Also, I assume there's usually ground rent / service charge payments for upkeep of communal areas etc. Not sure if this is the case for all leasehold properties though

fast bloke

you have to pay ground rent on leasehold properties... usually fairly nominal. Technically you are supposed to gain approval from the freeholder before you carry out any work that would require planning permission or building control, but that rarely happens.
Make sure that you have a long lease left. If the lease ever falls below 21 years the value of the property can be reduced dramatically

salsa-king

as above.
leasehold u pay management company to look after the building, check what the yearly charges are and have been. make sure they already have a 'slush' fund incase there are any major works needed, then they would have the money without asking owners to cough up!!

free hold.. its all yours

douglasb

How long is left on the lease? If you (or your buyer when you come to sell) can't get a mortgage then you're up a certain creek.

C_B_B

Down in Sussex buyers are getting their knickers in a knot if the lease is getting down to 70 years. The cost of an extension to a fairly average flat here seems to be anything from £9000-£15000.

fatscoobyfella

ta guys...Just noticed that a certain house i was looking at was leasehold.But cannot find any other details at the moment.

So SK,if anything went wrong with the house(structural,roof etc etc).The leasholders would have to pay?Even though you have purchased the property?

fast bloke

there is a big difference between leasehold flats and leasehold house. My house has 989 years left on the lease and I pay £10.00 per year ground rent. Technically, in 989 years, my house becomes the freeholders again.
With a flat, the freeholder(s) form a management company to look after shared areas and responsibilities. This can get expensive, so you need to get someone to check the leasing contract on the flat before you sign it. Loads of people get stiffed by management companies.

CBB - If you have at least 21 years left of the lease you can extend it (unless the freeholder wants to use it as his main residence or demolish and rebuild it) - new ground rents and costs are set at the time the lease is extended. The maximum it can be extended by is 50 years. When you have 60-70 years left, it can make more sense to extend the lease now than at some point in the future, at the associated costs will be at now prices. If I was to extend my lease now, the ground rent might double and remain that way for 1039 years, so there is no point in extending a lease with longer to run. When the remaining lease drops below 21 years you do not have the right to renew it, so your property would effectively have the value of 20 years rent, decreasing with each year, as the time approaches that the land and property will revert to ownership of the freeholder

salsa-king

yep, i am on about flats. I've 5 flats i rent out with leasehold, £900 a year service charge each.. and if they serve you with a SECTION 20!!! you have to pay up before the 'work' gets started! I've had this last year 2004/05 in them. nothing you can do either.

the Apartment i live in is leasehold but only £400 a year service charge, but its anew build.

the studio flats i have are in a building that was bui;t om 1870.. so its older and need more looking after.

C_B_B

I know.

(I should of said i'm "involved" within the industry on a nearly daily basis.)

The point i was trying to put across was that the general publics perception of leases regarding the remaining term seems to vary from area to area and the misinformeds view of the terms can differ from those of you and i.

fast bloke

Sometimes I think that I would be better off selling clients a slice of the moon.

Conversation.....

Client: "I have only 200 years left of my lease... what should I do"
Me: "Don't worry about it"
C: "My neighbour had only 200 years and he paid 25 grand to have it extended. He is a doctor. He must know what he is doing"
Me: "erm.... he is throwing away 25 grand???"
C: "OK - he is a doctor and you are only a financial advisor, so I will do what he does. Can you organise for me to extend my lease"

Can't wait until he comes to see me when he can't sleep and is depressed due to the debt he has racked up. I'll give him some wormers - that is what my neighbour did when their dog wasn't sleeping