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extending leasehold

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  • zagubov
    zagubov Posts: 17,938 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    I'd love to know what freeholders contribute to leasehold home ownership that justifies this rent-seeking money-gouging.

    Is there a crowd-funding service that could raise the funds to loan to leaseholders selling properties, which they have to contractually agree to pay on to the next leaseholders in the same boat, so they can all help each other dig out of the same hole? I'm clueless about this, but I'm amazed there aren't more money-savvy people that could come up with solutions. :angry:
    There is no honour to be had in not knowing a thing that can be known - Danny Baker
  • System
    System Posts: 178,349 Community Admin
    10,000 Posts Photogenic Name Dropper
    Zagubov - technicially freeholders are providing a form of credit much like a buy to let landlord in lending out an entire property for a premium - just that the longer term nature of leasehold means it's cheaper than short term renting.
    And that source of funding is sometimes mortgages, or the assumption that a leaseholder has time to save
    This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com
  • System
    System Posts: 178,349 Community Admin
    10,000 Posts Photogenic Name Dropper
    I've read that investors in freeholds can expect an average total return of 5% unleveraged, which is actually quite modest compared to buy to let - as buy to let is riskier with vacant periods, damage, etc.

    As well as that you'd have to keep a lot of cash by for repairs, heavy legal responsibility, i wouldn't do it (as an investor go for shares)- so likewise a lease extension isn't necessarily a better return than you'd get with other investments, but necessary to sell property
    This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com
  • always_sunny
    always_sunny Posts: 8,314 Forumite
    bozzy18 wrote: »
    yes she will sell the flat with a lease extension on completion. The flat has been valued at £250k to £270k. The location is in Surrey.


    Boz

    That's the worrying part, it means that she could only to an informal extension and usually it's with really bad terms. if in the rush to complete the extended lease is £300 ground rent doubling every 20 years is going to be a problem for a lot of buyers!
    EU expat working in London
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