Question about leashold on new home

inacrisis

We are currently looking at moving home and have been looking at new builds in the local area. We have seen a very nice new build home we like built by Bellway. After enquiring further it turns out the homes are leasehold with 999 year lease so that is quite irrelevant, but there is a £250 ground rent per annum and £100 service charge per annum. Although this is only £30 per month we have always said we wouldnt go down the leasehold route. Has anyone any experience of negotiating with developers on selling the property freehold? I guess it would boil down to who owned the lease? If they own it I can't imagine it would be that difficult to get them to include it as freehold. If owned by someone else then that would be a different matter.

What would peoples opinions be on buying a new house with the above leasehold? It also says the ground rent is reviewable! Is there a standard time and maximum increase allowed? or could they increase it to £500 within the next 5 years?

Many thanks

zagubov

Wouldn't touch it with a bargepole unless you get the freehold. They may be offering a discount compared with local houses that are freehold but sounds like a false economy.

TrickyDicky101

The lease will set out the terms of any reviews. Like zagubov, I wouldn't touch it with a bargepole - the developer is trying to get two bites of the cherry (ie when they sell the lease and then when they collect GR/sell the freehold). Greedy.

AdrianC

The service charge will not be for the property itself, but for the common parts of the estate. Even if you purchase the freehold, that is likely to remain.

Kell4life

We were looking at buying a newbuild earlier this year. Nice Persimmon development but walked away once they told us about 999 year lease. Persimmon themselves owned the lease, they would then sell it to a management company. I was told that they wouldn't sell you the lease for at least 2 years and kept telling me it was no problem getting a mortgage, but it wasn't something I was comfortable with. Have since bought another newbuild with no lease or fees. I wouldn't buy with a lease unless it was my last choice. A lease on a flat is acceptable but not a house!

Richard_Webster

As has been said this is simply builders trying to get two bites of the cherry. If the ground rent is set at £250 pa nand is vatraible then it couldgo up quite a but in the future and that would affect the cost of buying the freehol later.

They need teaching a lesson! If more people walked away builders wouldn't do it, but sadly therre are too many out there who don't understand the implications, want the new house so much, and get taken in.

inacrisis

Could I ask who you bought with for the freehold property? Everywhere we look seems to be leasehold. As someone said just greedyness on the developers. We wouldn't buy if it was leasehold. Will have to go back and speak to them about the chances of them selling freehold otherwise will have to look elsewhere. Is this pretty much what all new builds are now? I would have thought new builds would be freehold but this doesn't seem to be the case.

Thanks

London_Town

I would advise anyone to avoid brand new lease hold houses at all costs. There is a huge development near me (over 3000 homes) with a "community charge", or service charge, in addition to ground rent. Their facebook group is full of people complaining about the constantly rising costs.

Over 25 years, you'll clear your mortgage if it's repayment. However, if your house is a modern lease hold with service charges and ground rent, then those costs will rocket over the 25 years and never, ever end. The lease will set out how the ground rent will be increased. It may be a case that it doubles every ten years, which would soon add up. The service charge may be linked to inflation, or simply rise on a whim. They're often kept artificially low as new builds, to fool buyers.

I'm absolutely convinced that most people who buy a new build house that attracts a service charge and ground rent have no understanding of the implications of this. Then, if they want to move, they need a similarly careless second hand buyer.

Never, ever go near them.

inacrisis

Kell4life wrote: »

We were looking at buying a newbuild earlier this year. Nice Persimmon development but walked away once they told us about 999 year lease. Persimmon themselves owned the lease, they would then sell it to a management company. I was told that they wouldn't sell you the lease for at least 2 years and kept telling me it was no problem getting a mortgage, but it wasn't something I was comfortable with. Have since bought another newbuild with no lease or fees. I wouldn't buy with a lease unless it was my last choice. A lease on a flat is acceptable but not a house!

From what I have read you are looking at 10-15k to buy out the lease, so unless they are willing to knock that off the purchase price we wouldn't consider it.

From what I have read you can apply to buy the freehold after 2 years ownership and the owner of the freehold can't refuse to sell. Is this correct?

Thanks

inacrisis

London_Town wrote: »

I would advise anyone to avoid brand new lease hold houses at all costs. There is a huge development near me (over 3000 homes) with a "community charge", or service charge, in addition to ground rent. Their facebook group is full of people complaining about the constantly rising costs.

Over 25 years, you'll clear your mortgage if it's repayment. However, if your house is a modern lease hold with service charges and ground rent, then those costs will rocket over the 25 years and never, ever end. The lease will set out how the ground rent will be increased. It may be a case that it doubles every ten years, which would soon add up. The service charge may be linked to inflation, or simply rise on a whim. They're often kept artificially low as new builds, to fool buyers.

I'm absolutely convinced that most people who buy a new build house that attracts a service charge and ground rent have no understanding of the implications of this. Then, if they want to move, they need a similarly careless second hand buyer.

Never, ever go near them.

Thank you.

tbh I never even thought about service charge for a new house....don't the local council pay for the upkeep of the area?

We pay 50/month at the moment on our apartment and that includes them cleaning the windows once a month all 2 of them and sweeping the leaves form the garage maybe twice a year! never seen them do any repair/maintenance work.

Are all new builds now coming with this service charge? Starting to wonder if maybe we should just look for a older house.

Thanks

chelseablue

Just my opinion but I would never buy a leasehold house