Should I buy a leasehold house?

jwwhitworth

Dear MSE forums,

My partner and I are first time buyers looking Bristol. We have been looking at a lot of houses and noticed that there are quite a few that are leasehold rather than freehold. I thought this was something that was common only with flats/new builds and was initially put off. But doing more research into it, the only places we've been interested in have been 999 year leases with >900 years left, £5 a year ground rent, no service charge and sometimes the option to buy the freehold. So if these are all the case what potential disadvantages are there?

Any advice would be appreciated, I'm still a real novice at house stuff.

bowlhead99

The downsides are things like not being to able to extend or change the property without the freeholder's consent because it's not "your" land. And when your come to sell it the solicitors have to deal with an extra party (the freeholder) and potential buyers may be put off by lease rather than free if they (like you) have been "warned about" leaseholds.

The ones to be particularly wary of are where the lease is short and/or the ground rent is more than a nominal peppercorn amount. For example if your rent was £500 a year plus and doubling every 7 years, it will compound up to being an extremely large amount of money because it will grow more proportionally than the value of the house itself and ultimately the house becomes unssaleable.

Some people say "I would never buy a leasehold" but in practical terms if the lease is 900 years and doesn't really cost anything (and you don't forget to pay it), rhere is no day to day interaction with the freeholder unless you need his permission to do something.

flashg67

Many of the Victorian terraces in my area are 999 leases with peppercorn rent. I have two and it didn't delay my purchases at all. In fact one of them had been paid up, or whatever the legal term is, meaning no ground rent was payable.
When they were built 100+ years ago, the income of several hundred a year was worth having, nowadays, it's often not worth the expense in collecting it, so they don't bother.
The recent lease 'scare' that I've read about is around new builds where the lease is sold to a third party who vastly inflate the value to purchase, or where the rent doubles every 5 years or so.
A 900+ year lease wouldn't worry me at all, nor should it affect the mortgage provider.

Davesnave

bowlhead99 wrote: »

Some people say "I would never buy a leasehold" but in practical terms if the lease is 900 years and doesn't really cost anything (and you don't forget to pay it), rhere is no day to day interaction with the freeholder unless you need his permission to do something.

Indeed, they may not even bother to collect the ground rent if it's a peppercorn sum.

I had a leasehold property down the road in Bath during the days when no one raised an eyebrow about such things, and for the 10 years I was there, I'd no contact whatever with the freeholders.

Typhoon2000

If you decide to but th freehold, it shouldn't cost much more than solicitors fees. If the ground rent is just £5.

Brexit_Fan

As soon as we see the word "Leasehold" we walk away. If buying a flat I can just about understand it, but not when buying a house.

getmore4less

if there are options to buy the freehold then the vendors should have done that by now.

Davesnave

Brexit_Fan wrote: »

As soon as we see the word "Leasehold" we walk away. If buying a flat I can just about understand it, but not when buying a house.

So you would pass up a good house, where you could buy the freehold for a modest sum?

OK, fair enough, but I'd find it very hard to understand that!

Katgrit

My house has 862 years left on the lease, and the ground rent is £1.20 a year. I haven't paid since I moved in because for £1.20 a year the leaseholders solicitors couldn't be bothered doing paperwork to change the name the bills were addressed to, and the demands were coming addressed to someone who moved out over 40 years ago. By sheer chance on day last month I was working in the part of the country there offices were based in, so I nipped and paid £12, covering my £3.60 arrears and putting me in credit until 2024. To say they were confused would be an understatement!!

IMHO you'd be daft to turn down a house that had similar conditions.

Davesnave

Brexit_Fan wrote: »

As soon as we see the word "Leasehold" we walk away. If buying a flat I can just about understand it, but not when buying a house.

I looked up my old 1977 leashold purchase on Rightmove today.

It's was still leasehold when it sold last year for £350k.

I paid £9251 for it.

ReadingTim

If it's an issue (real or imaginary) for you when you're buying it, it'll be an issue (real or imaginary) for someone else when you're selling it.

However, tenure (freehold/leasehold) is unlikely to be considered in isolation so unless it's out of the ordinary compared to similar properties in the local area, or takes the form demonised by recent 'scandals' then it's unlikely to be a deal breaker.