Should I buy a leasehold?

chrishar

I am looking for a property up to £150,000 and found this one near me in a location I like with a park and station nearby, however it's only got 51 years on the lease.

http://www.rightmove.co.uk/property-for-sale/property-44746208.html

I think if this had an extended lease it might be worth around £160k, but I don't know how much it will cost to extend and I can't afford to do it right away if I bought it.

I can't really find anything else in the same area suitable, so just wondered if I would be making a mistake buying a short lease?

AndyGuil

If you need a mortgage that many years may be an issue. Discount the price by the amount the lease extension will cost if it has not already been discounted. If the current owner has owned the property for at least 2 years you can ask them to start the process of the extension and pass it to you. You can add 90 years to the current lease and have £0 ground rent by law.

yoshiyella

I would find out how much it costs to renew the leasehold before I made an offer however as there is only 51 years to go you would probably looking at another £60-80,000 to renw the lease!

gordonbennet

yoshiyella wrote: »

I would find out how much it costs to renew the leasehold before I made an offer however as there is only 51 years to go you would probably looking at another £60-80,000 to renw the lease!

On a 150-160k flat I doubt if it would be as much as 60k to renew. My uninformed guess would be nearer 10k. But it's a fair point that it's an unknown quantity at the moment.

So yes - you really do need to get something in writing which at least gives you a guide price before proceeding.

Maybe even look at buying the freehold some way down the line instead of renewing the lease?

pcgtron

Well, assuming an annual ground rent of £50, with 60 years left on the lease MSE's own calculator suggests 17000-19000 to renew. Deduct another 10 years from the lease and it will be expensive

Alberthewolf

Be extra careful with a leasehold property, make sure you ask the neighbours and the sellers very specifically if they are aware of any legal disputes or unpaid bills of which they may be aware, and check every clause in your lease and ask or amend the lease before you buy the flat if you do not like the binding covenants, chose a friend if you can as a conveyance solicitor if you are lucky enough to have a solicitor you can trust. I trusted my conveyance solicitors and I feel in a horrible trap. Google about conveyancing and learn the hidden traps and issues of conveyancing before instructing a conveyance firm.

chrishar

Thanks everyone. I am just trying to understand the reasoning behind leasehold. I understand that it cannot be freehold because there are maisonettes on different floors so you cant own the land underneath. So, there must be a freeholder who owns the land, who will charge ground rent, which isn't a problem as it's usually low. Also with communal areas and building maintenance, I can understand a charge for going into a pot to keep on top of these things.

What I can't understand is why there is a lease term, other than to de-value the properties and make the freeholder money by the process of extending leases? Why can't there be leasehold properties with an infinite term? Ground rent and other charges could rise with inflation or some index. Is there any good reason for a finite lease term?

cattie

There are leasehold properties with leases of 999yrs, such as my current home. A lease of this length is considered virtual freehold. Properties with such a long lease are usually marketed as share of freehold.

These are fairly common when all leaseholders agree to purchase the freehold collectively & then either self manage or appoint managing agents, with there being directors & a management committee that consists of residents that live in the building/development. Each resident owns one share of the freehold & everybody has an input regarding costs & expenditure & anything to do with the upkeep of grounds, common parts etc.

chrishar

Glad to hear you have a 999 year lease cattie, this is how they all should be. What other reason is there, except to make the freeholder money, for leases being any less than 999?