Freehold/leasehold

Benson

Hi
Im looking to buy a house and never even thought of this before I looked on here but what are the imications of buying one or the other and can you fond this out from the EA or does it come up further down the line in surveys?

G_M

Most houses are freehold and flats are leasehold, though that is a generalisation.

With leasehold, obviously you only own the right to live there for a set period of time. You also have to comply with the terms of the lease which may prohibit improvements, enlargement etc, or require the agreement of the freeholder. You may also have to pay a nominal annual ground rent to the freeholder as well as a management fee for maintenance and other costs. Whereas as with frehold you just pay for whatever maintenance you choose to do (or not do).

This site may help a bit.

££sc££

The EA should know, and the vendor cetainly would. You'd need to know this information to put in an appropriate offer on a property. e.g. if a house for sale was leasehold (quite rare admittedly) and only had 70 years left on a lease, it's going to be worth less than freehold.

If you're looking to buy a house, as you say, I'd go freehold everytime, although most adverts for houses for sale won't say they're freehold, as it would be assumed.

Richard_Webster

In most cases where there is a long, say 999 year lease there isn't a lot of difference - but even then a shark property company could own the freehold and try to charge exorbitant fees for giving consent for alterations etc. So if it is leasehold like that it is important to find out the identity of the freeholder.

If the lease is only for 99 years or less then it is best avoided and should be worth significantly less.

Unfortunately it seems that in some parts of the country builders have cashed in on people's ignorance by offering new builds on 99 year leases. They can then sell the freehold to some shark company who will make lots of spurious admin charges and and then the owner will be caught when in 20-30 years time he realises he can't sell without first buying the freehold. Regrettably people don't seem to take this factor into account when they buy a leasehold house with a shortish lease.

LandyAndy

In some parts of the country long leasehold is the norm for all properties. When I was buying my first house in Manchester 30 years ago I don't think we saw a single freehold house.

tbs624

As LandyAndy says, residential leasehold properties can be found across many towns and cities, particularly amongst terraced housing in the north. All those parcels of land owned by ancient Dukedoms....;)

Leaseholder can of course apply to purchase the FH but many don't bother if it's one of the 999 yr jobs on a few quid ground p.a..

poppysarah

Richard_Webster wrote: »

Unfortunately it seems that in some parts of the country builders have cashed in on people's ignorance by offering new builds on 99 year leases.

Really?
That's shocking! Not looked at newbuilds so have no idea of their status. Sounds like a good reason to avoid them!

Richard_Webster

Quote:
Originally Posted by Richard Webster
Unfortunately it seems that in some parts of the country builders have cashed in on people's ignorance by offering new builds on 99 year leases.

Really?
That's shocking! Not looked at newbuilds so have no idea of their status. Sounds like a good reason to avoid them!

This is based on my reading of other forum threds where people are stuck with such houses - I have never seen one myself in "in the wild".

newbie1184

I bought my first house a year ago now and one condition of the sale was for the previous owner to purchase the lease on my behalf as the council still had it. The lease was fairly cheap for them to buy and they wanted to sell as they were divorcing.

My parents have seen the other side of it. They bought a house back in the 1970's - new build and was sold as a leasehold. 10 years down the line they tried to purchase the lease and the owner (a housing association i think) asked for a very large sum, that was stupid in those days. At the same time there was alot of others in the same situation on my parents road, in the end the company were taken to court and ordered to sell the lease to whom wanted to buy at a more appropriate price.

When i was viewing houses i came across quite a few that were lease hold, maybe because i was looking bottom end of the market as i'm only in my twenties and all i could afford. Estate agents are crafty! Try to get as much out of them as you can, also sometimes i found houses had been on the market with other estate agents so i asked the same questions of them too. Some places i went all they wanted to do was sell me a house and took me to all the grotty places that others didn't want! Just find an estate agent that is taking you to places right for you!

Back then i also viewed a repossession which i was told was freehold but then later to find out it was a leasehold and also that there was only something like 90 years left!

I was told that mortgage companies won't touch houses/flats with only short amount of years left on the lease!

80schild

I am confused over this. My own house is leasehold but in 6 years here we have never had any demand for ground rent etc... Looking on some of the documents I got when I bought the house-it mentions a 990 year lease from 1890 on a paper dated 1974!!!!
I am selling the house now but have told the buyers solicitors that we have not had demands for ground rent...
Could it be possible the lease holder has died or just 'forgot' about it?

Richard_Webster

I am confused over this. My own house is leasehold but in 6 years here we have never had any demand for ground rent etc... Looking on some of the documents I got when I bought the house-it mentions a 990 year lease from 1890 on a paper dated 1974!!!!
I am selling the house now but have told the buyers solicitors that we have not had demands for ground rent...
Could it be possible the lease holder has died or just 'forgot' about it?

First get the terminology right - you are the leaseholder. Unless it is an underlease the person that you should pay the ground rent to will be the freeholder.

If the lease dates from 1890 the annual ground rent is probably less than £5 per yaer and therefore not worth collecting. Typically what happens is that some old lady owns the freehold of a number of houses - she gets older and can't cope with writing letters asking for the money. She goes into a home, and then eventually dies, and the family can't be bothered to mess around trying to collect the ground rent - so contact is lost. It is a very common situation.

This situation comes up quite a lot and is no big deal for solicitors used to dealing with it - but if you get a buyer's solicitor who doesn't understand you will get trouble because he will carry on asking all sorts of daft questions and driving your solicitor mad! Where is the property by the way?