Talk to me about leasehold..

beardybikeboy

morning all,

so, we've been on the market for a while, finally receiving an offer a few weeks ago. We've also seen a house we like, and after negotiating both ways, we were quite excited about now pushing this forward. Really is the perfect house for the stage of life we're at, and we're all OK mortgage-wise etc.

Anyway, it now turns out that the house we're looking at is leasehold. This is from a 'word of mouth' thing, rather than solicitors looking into it and finding out the details. I hate giving those people money at the best of times, so don't particularly want to for a house we may not end up buying, until I really have to..:)

Now - I know between little and nothing about this sort of stuff, quick googling reveals that you have to pay ground rent, 'landlord' has control over repairs, make sure the lease is a decent length and so on...can anyone give me some more info on the pros and cons please?

As I see it:
pros: more house for your (mortgage) money....and nowt else?
cons: more expense on top of mortgage payments, less desirable at resale, 'landlord' can decide when stuff needs doing to the house, etc?


Now, all 3 parties in this chain are looking for a quick completion, both our 'buyers' and the vendors of this property are not in a chain, so they're looking for things to push through fast. So, I'm likely to be being pestered by phone today about confirming final offers and asking about surveyors and solicitors..

My immediate thoughts on finding this out last night were to get out the bargepole and tell both sides that the deal is off. However, we've done lots of looking around, and can find nothing as nice for our price range, whether free- or leasehold.

Having said all the above about speed, perfect house etc, I'm more than happy not to throw our money away, and just walk away; although it'll be disappointing to miss out on that house (in particular, Mrs BBB is very upset).

I'm very much in the 'no' camp right now, but am I being far too hasty to lean this way without understanding more about leaseholding? I mean, it's just leasehold, right? It's not as if there's a nuclear waste dump in the garden or anything (well, we've not had searches or surveys yet, so that might yet be horribly prophetic..)

Thoughts very, very, very much appreciated. Thanks all

lynzpower

Who has told you that the house is leasehold?

Have the estate agents told you that is is freehold?

Ill be honest, itr is pretty rare that you will find a house as leasehold but is not unheard of.

I would not be walking away from anything until you have spoken to the EA & the solicitor? Have you not seen the HIP - the hip will have alll leasehold info in it if it IS leasehold. If you have not seenthe hip I would not pay for conveyancing - until itas been provided.

beardybikeboy

estate agents mentioned it. Most of the EAs round here seem to go for the 'we don't provide info on tenure, find it out yourself' theme on their websites and house info leaflets. however we have seen quite a few houses in the area which are confirmed as leasehold on EA websites, so maybe it's a fairly local thing?!

HIP - not seen - as with ours and most houses in the area, it's been on the market since before the HIP ruling for 3-bed places came into effect.

mrscruffy

lynzpower wrote: »

itr is pretty rare that you will find a house as leasehold

Not rare in my recent house search. Quite a number were leasehold but perhaps this is a local phenomenon rather than a national trend. It was also common that the lease was for as long as 999 years.
Having said that I was in the same mindset as yourself and even refused to view leaseholds because I was (am still am!) of the stubbon and perhaps old-fashioned opinion that I should at least be owning some of the bricks and mortar that I'm paying for!

It is one up from bog standard renting though as you will gain from any increase in price whilst you live in the house as you would with a freehold but of course things can go up and DOWN! Not sure if you should put this down as a Pro or a Con.

Premier_2

lynzpower wrote: »

... be honest, itr is pretty rare that you will find a house as leasehold but is not unheard of..

There are many, many houses that are leasehold.

Perhaps it's a regional thing?

Troubled_Joe

Premier wrote: »

Perhaps it's a regional thing?

It certainly is. In my area (Lytham St.Annes) the majority of property is leasehold.

It seems to scare the hell out of solicitors acting on the other side from areas where it is rarely encountered.

PS. To teh OP - if it's a big problem for you then get the office copies and find out who the freeholder is. Contact them and ask how much they would sell for. As a rule it'd be between one and five thousand pounds although if you don't plan on breaching any of the covenants I would personally bother.

Premier_2

In response to the OP, the difference is you own the property but not the land upon which it sits. You lease the land from the landowner.

The annual rent is usually small so that's not the issue. A slightly bigger issue is that the landholder can, within reason, dictate terms on which the land can be used. It's not yours to do as you want (although to be honest, even freehold properties often come with multiple restrictive covenants now)

The biggest issue is that at the end of the lease, the landowner can theoertically take back the land (and all that's on it!)

In reality, this is usually not an issue because you'll probably be dead by the time the lease expires anyway. But as the lease decreases (especially from about 70 years remaining and less) the property becomes less desireable so falls in value. Mortgage companies start getting twitchy on lending from about 65 years remaining and any lease with less than the mortgage term remaining would be totally unmortgageable.

You can (usually) get a lease extended, but that costs money (both for the lease and the legal costs involved) and often comes with the burden of a more expensive annual rent.

You might also have the right to buy the freehold - you need to check that if you are interested in doing so.

beardybikeboy

thankyou all. some reassuring stuff.

I've spoken to EA again this morning. They can't tell me length of lease - the solicitors will need to look into that - but ground rent is negligible (£100pa) so that's much less of a concern.

another question - obviously I'm sure all this sort of stuff will come out down the line if we proceed - but, as a rule of thumb, do you have to get permission from the freeholder to do various stuff - whether it be an extension (highly unlikely) or changing the layout of the garden from half patio and half beds to mostly lawn (highly likely), to knocking down a plasterboard wall inside and putting in a new kitchen (highly likely according to my sweetheart although meeting with some resistance from me..she has the ideas, I do the work..;-) )

Thanks tonnes all.

Troubled_Joe

It really all depends on the terms of the lease.

In my experience though garden work and removing a stud wall won't be a problem. The extension may need consent.

beardybikeboy

you're all lovely people. Thanks!

neverdespairgirl

Premier wrote: »

There are many, many houses that are leasehold.

Perhaps it's a regional thing?

It's very common in central London, for sure.