Leasehold v freehold

adonis10

Thinking of buying a place and would personally rather live in a flat at this stage. Found one that I like, 165k eith 118 years on the lease. I can afford to put down just over half as a deposit.

From experience, could you give me the pros and cons of leasehold. I'd want to rent out the second room to help with the mortgage but have been told that this is not always allowed with a purpose built leasehold, true?

Anything else to consider?

drummer_666

yes you need permission from the leaseholder to rent out the other room.

also, if there's a chance you might relocate for work and keep the flat bare that in mind as you may not be able to get consent to let / buy to let on leasehold.

i think you also may need permission with doing alterations, i.e. knocking a wall down etc but i'm not sure on that one

118 years is long enough I'd say as you want at least 80-90 years remaining when you come to sell

someone else out there prob has more experience of leaseholds than me but thought I'd try help

G_M

drummer_666 wrote: »

yes you need permission from the leaseholder to rent out the other room.

also, if there's a chance you might relocate for work and keep the flat bare that in mind as you may not be able to get consent to let / buy to let on leasehold.

i think you also may need permission with doing alterations, i.e. knocking a wall down etc but i'm not sure on that one

118 years is long enough I'd say as you want at least 80-90 years remaining when you come to sell

someone else out there prob has more experience of leaseholds than me but thought I'd try help

No. You will (almost certainly) NOT need permission to rent out a room. You will be a resident landlord, with a lodger. If you rent the entire flat, to a tenant, on an AST, THEN you would (probobly) need permission.

adonis10

Thanks for the replies.

Just an add on, house or flat, do you think? My situation is:
- buying alone
- salary ~24k
- deposit 80-100k

I know the sensible option would be house say 200-215k and have a higher mortgage but i am the kind of person who doeant like too much hassle in his life and doesn't really want to work solely to pay the mortgage especially when the inevitable base rate rise ups the mtge payment, hence the 165k flat with just 65-85k mortgage, pay off as quick as poss etc.

drummer_666

from my experience you can usually get a 2 (or 3 bed) freehold house for the same price as a 2 bed flat

what area are you looking to buy in?

propertyman

G_M wrote: »

No. You will (almost certainly) NOT need permission to rent out a room. .

drummer_666 yes you need permission from the leaseholder to rent out the other room.

Well sorry members but you are both wrong, and right.:eek:

Whether you can rent out a room or not depends solely on what your lease says

adonis10

drummer_666 wrote: »

from my experience you can usually get a 2 (or 3 bed) freehold house for the same price as a 2 bed flat

what area are you looking to buy in?

Bournemouth area.

The problem is I don't really want to live in a family type area, rather be near a town/city as I'm still young at heart, hence why considering a flat.

happycamel_2

I'd take freehold every time, it's best to own and have complete control over the land and the property you own. They you can't get with maintenance hikes, unexpected repair charges etc. you'll find it easier to let or sell if you want to, less noise, no communal areas to get in to disputes over. How about terraces and townhouses, not all houses are owned by families.

Fire_Fox

It's worth running an advanced search, you should get the measure of the benefits and pitfalls of leasehold. Also read http://www.lease-advice.org/publications/

On the upside you don't have to organise the maintenance of the structure of the building and communal areas, it's done for you, on the down side costs of service charges and standard of service can vary widely. I wouldn't touch an ex council or housing association property, the long lease often says they can do improvements (not just repairs and maintenance) which can run to tens of thousands of pounds per flat. You MUST have money set aside for major works: providing the landlord has properly consulted (a few months) or sought dispensation in an emergency, you are contractually obligated to pay.

I own in a city centre upper floor flat in a converted office block and would far rather live here than a terraced house. Burglary is very rare, benefit from the heating of four neighbours, quiet block and street at night, solid construction so sound does not travel unless it's a party at top volume, area is better maintained and being improved all the time by the council, no need to run a car. The nearest terraced houses to the city here are in the university area (mix of students and families) so not quiet and rather run down.

IMO look at blocks that contain larger apartments, it's the one bedrooms that seem to attract the youngest, potentially noisiest/ least considerate residents. The blocks I know with more two bedroom flats or luxury apartments are more often a mix of young professionals, young couples and people whose children have left home. Also try to find out how many flats are owner occupied and how many tenanted, this can affect how the buildings is treated and how quickly leaseholders are on the backs of the freeholder if things are not done right.

HappyMJ

A leasehold property means you are buying something which can only depreciate in value. At the end of the lease it's worth nothing. If you buy a freehold property the building on it may depreciate in value but the land will appreciate in value as long as it's in a reasonable location.

Then there is insurance and management fees on a leasehold property. If you have a freehold you can shop around for the best/cheapest buildings insurance or opt to not have any insurance (assuming no mortgage). You can also take on the cheapest tradesmen or a family member/friend to replace your rotten windows where a freeholder of a leasehold property would make that choice for you and they may not be the cheapest option although they are required to get multiple quotes they can fix it so an associated company of the freeholder will get the work at a high price.

Fire_Fox

HappyMJ wrote: »

A leasehold property means you are buying something which can only depreciate in value. At the end of the lease it's worth nothing. If you buy a freehold property the building on it may depreciate in value but the land will appreciate in value as long as it's in a reasonable location.

:rotfl: Leasehold flats/ houses DO NOT only depreciate in value they are subject to similar variations in the property market as freehold houses, there is only depreciation as the lease gets short. Leaseholders have the legal right to extend the lease, a shorter lease is often valued at the market value of a longer lease place minus the cost of extending (few £K upwards). You can't easily mortgage under 80 years, many new builds are 125 years and most people don't hold onto a leasehold property long enough to worry about the end of that!