Just found out the house we are buying is leasehold

sitesafe

Is this a new house? Only I saw something on television the other week about where a lot of the new housing developments are selling the houses as leasehold but many people weren't aware straight away as it's usually freehold with a house, and when they did find out and mentioned it, said they were offered to buy the leasehold from the developer but they hadn't factored that into account so put it off until a later date. When it came to them later deciding to buy the leasehold the developer had increased the price of the leasehold quite considerably in a short space of time and that they then couldn't afford to buy it.

da_rule

Given it's got 960 years left on the lease it's unlikely to be a new build. The original lease will probably have been for 999 years, so it's probably at least 29 years old.

AnotherJoe

I read something a few months back,similar situation long lease, the ground rent was really low but they were restricted to one insurer who surprise surprise was about 3 or 4x the cost of an ordinary one so the "effective" ground rent was several hundred pounds a year.

StumpyPumpy

McKneff wrote: »

It will never be totally yours, walk away

On the other hand it might be worth the £7 a year if you can guarantee they will still be around when the lease expires.

SP

Lord_Baltimore

Buy the freehold, reducing your offer by a corresponding amount to cover the cost. Leasing is renting by another name; it is a long lease but the Council might sell its administration to a private company, which might change your costs dramatically.

Rileybaby

I know that there are some horrid stories out there surrounding lease hold houses but they are not all bad. I have lived in one for 15 years pay £80 a year (which has always been the same) and have never had a problem nor have any of my neighbors. As long as you pay your rent it's likely to be fine.

SouthLondonUser

Leasehold is an anachronistic medieval heritage which, AFAIK, only exists in England and in some former colonies; a clear reminder of how classist and polarised this beautiful country is.
I'd be very, very sceptical of a leasehold house; I can think of no reason for it other than to fleece leaseholders.
Read the lease very, very carefully and ask your solicitor what the worst case scenario could be. The things I'd look out for are:

• What restrictions can the freeholder impose? Can it impose restrictions against refurbishment works? I know of cases where the freeholder forbade the replacement of carpets with wooden floors (or viceversa), the installation of double glazing, keeping pets, etc.
• What do you have to request permission for? How much can it cost? The Dulwich Estate in South London is notorious for its draconian, dictatorial and expensive approach - I'd never buy there, not even if I won the lottery!
• Is there a cap to how much the rent can increase?
• Do leaseholders have any say in the appointment of the managing agent, in the choice of insurance, etc? Most likely not. This exposes you to the risk of the freeholder overcharging big time: using its own companies or maybe getting some kind of kickback.

Are there other freeholders you can speak to? They can give you some colour, but bear in mind things may change: the management at the freeholder may change, the freehold may be sold to a greedier company, etc.

I'd generally steer well clear of a leasehold house, unless there are other particularly compelling reasons. It's also worth inquiring how common freehold houses are in the area, and if they command a significant discount.

hazyjo

I wouldn't buy a LH house, nor would quite a few others. I would expect to pay less for one, so do your homework as to whether it's been priced accordingly or whether it's the same price as freeholds.


Jx

Leo2020

Leasehold is pretty common where I live. Our old house was leasehold and it was £10 a year - its never gone up since the day the land was leased. Never had any issues and the lease was 999 years starting in around 1965 ish.

If you don't want to buy the house then don't. If you can prove the house is worth less because its leasehold rather than freehold see if you could try to get a discount. But if its still worth the same then the vendor might refuse to reduce and just put it back on the open market. Depends how desperate they are to sell.

davidmcn

hazyjo wrote: »

I wouldn't buy a LH house, nor would quite a few others. I would expect to pay less for one, so do your homework as to whether it's been priced accordingly or whether it's the same price as freeholds.

As above, it all depends on what the lease actually says. If it's an ultra-long term, with only a token rent, and minimal restrictions on what you can do with the property then in practice it's no more restrictive than freehold. In fact, many freeholds have even more restrictive covenants affecting them.

If it's a shorter term, the rent goes up exponentially, and you need to seek the landlords' consent every time you hammer in a nail, the value will affected accordingly.