Leasehold property's - good or bad

tauran

hey all, i'm looking to buy my first property and it will be buy to let.
I've seen one, which is a leasehold flat - i've been brought up that leasehold is bad.
It doesn't seem so bad to me, can anyone tell me if they have bad experiences of such?
e.g. unreasonable maintenance costs or problems extending lease?

seems to me, as long as I don't let the lease drop below 75 years (currently 95 years) i won't have difficulty selling at a later stage.

thanks in advance.

Yolina

It all comes down to how good (or not) the freeholder/management company are.

Been in a leasehold flat for over 14 years without problems but we (by that I mean the 80-odd flats collectively) also have the freehold so we can and do change management co if we don't feel they're doing a good job for the money we pay them. And obviously extending leasehold is no issue for us (which actually we need to get round to doing at some point!)

G_M

98% of flats in England are leasehold.

Mortgage lenders will not lendon the other 2%.

Leasehold is the standard legal mechanism to arrange ownership by more than one Title owner on a single piece of land (ie a block of Ex flats all within a single buildingon a single plot.)

Provided the lease is of sufficient length there is noproblem.

Richard_Webster

It all comes down to how good (or not) the freeholder/management company are.

Been in a leasehold flat for over 14 years without problems but we (by that I mean the 80-odd flats collectively) also have the freehold so we can and do change management co if we don't feel they're doing a good job for the money we pay them. And obviously extending leasehold is no issue for us (which actually we need to get round to doing at some point!)

This gives some of the flavour - although it is about the particular situation that applies where the flat owners directly or indirectly (through a company) own the freehold.

The main point is that there is a lot of detail to look at and it is unfortunately ever so easy for a non- conveyancer to get confused at it all and therefore important that you use a good conveyancer/solicitor.

propertyman

That said, those building owned or controlled by residents can be just as fractious & poorly maintained as those owned by freeholders.

Extending a lease in these residents owned blocks can also lead to significant problems for the flat owner as well.

Richard_Webster

That said, those building owned or controlled by residents can be just as fractious & poorly maintained as those owned by freeholders.

Extending a lease in these residents owned blocks can also lead to significant problems for the flat owner as well.

Exactly - some people will tell you that a flat owner owned freehold is better than having an outside freeholder. That may be true in most cases - but there are enough exceptions for Propertyman's point to be valid and again you need a good conveyancer/solicitor to check all this.

Yolina

We're doing ok though like everything, your mileage may vary. The way we are set up is that each leasehold has 1 share in the company that owns he freehold. The directors of that company are residents and appoint, after consultation of course, an external management company - this is due to the size of our development (4 blocks) which would be a bit much to self-manage.

What I find slightly puzzling is that most people seem not to care - it's quite common to have less than 10 people turn up at the meetings, despite most of the flats being owner-occupied.

propertyman

You also have to bear in mind that just because the hallway is clean and the grass cut, that there are not myriad of hidden problems with money, tax and the raft of heath and safety compliance that resident owned/controlled blocks are unaware of or think don't apply, or the random and often dictarorial nature of these committees.

One of the silent traps is whether the building is adequately insured, too often they add the sale values together and insure that (if at all) which has little to do with re building costs.

While the lender's valuer will suggest a figure for the flat that does not mean that the block is adequately insured or that the block wil be replaced.

Richard_Webster

We're doing ok the way we are set up is that each leasehold has 1 share in the company that own he freehold. The directors of that company are residents and appoint, after consultation of course, an external management company - this is due to the size of our development (4 blocks) which would be a bit much to self-manage.

That can be fine - my son bought a flat in London with just that kind of set up - but it still needs to be looked at. I googled the managing agent company and didn't find any adverse comments about them - unlike some. So you always have to get all the details checked.

Yolina

propertyman wrote: »

You also have to bear in mind that just because the hallway is clean and the grass cut, that there are not myriad of hidden problems with money, tax and the raft of heath and safety compliance that resident owned/controlled blocks are unaware of or think don't apply, or the random and often dictarorial nature of these committees.

One of the silent traps is whether the building is adequately insured, too often they add the sale values together and insure that (if at all) which has little to do with re building costs.

While the lender's valuer will suggest a figure for the flat that does not mean that the block is adequately insured or that the block wil be replaced.

We're good Our directors are quite on the ball actually - some of them are solicitors, accountants etc.

As for choosing and appointing the external managing co, they get invited to do a little presentation first, then our lot does some digging

Health and safety/insurance assessments are done (it invariably triggers a letter to all residents saying something like "personal effects in this or that area need to be removed before X date or they will be disposed of" )

G_M

A friend bought a flat last year. Block of around 200 flats with each owning a share of the freehold. There was an active group who ran things and appointed a management Co to do day-to-day maintenance, insurance etc.

But the 'group' ran it as their personal fiefdom. They dominated meetings, and made others so unwelcome that others just stopped turning up, thus guaranteeing this group re-elected themselves each year.

My friend suspected all sorts of back-handers (the accounts showed payments for oil even though the block's boiler had been converted to gas!), and huge, vaguely-explained costs for other items.

The last straw was when they applied for council funding for a 'free' bike shed, which was ear-marked to be installed outside her ground floor bedroom window, cutting out light and view of the river + inevitable noise. Her objections were ignored as the clique had total control.

She managed to get it delayed by involving council Planning Dept, and the clique then employed solicitors AND a barrister, at great expence (whose expence....?)

Although the bike shed idea was cancelled, they then went for revenge, making her life a misery with petty rules (she even overheard them planning ways to 'get at her'.

She ended up selling after 9 months there.

So the moral of this story? Don't just assume self-management works!

If she'd knocked on a few doors before buying, the other residents would have warned her(though they were all so wimpish they'd given up themselves, even though well-aware what was hapening....)