999 years leasehold house vs freehold house

dinoman

Hi all,
We recently went to see a an old mid 1950's house and it happens to be a leasehold house. Not freehold.
We have been told there is a small fixed annual ground rent to pay to the landlord of £5, which is negligible and not an issue to us. No other charges.
The lease was 999years. So over 900 years left on it. 
We've been told by some people that it's technically as good as a freehold due to the length of the lease.
We ideally wanted a freehold but we do like the house - so considering this leasehold property. 
We wanted to check if everyone agrees that this is technically as good as a freehold? or do you see any other cons which you think we should be aware of?
We know one downfall is that we may need to check with the freeholder, each and every time we want to do any major works to the house such as an extension etc. But other than this do people have any other things we should be aware of?

Thanks!
Dino

MovingForwards

Get a copy of the lease from the land registry, read it to see what it says and come back with any questions.

A lease on one property may have different restrictions / obligations to the one you are interested in.

If it is £5 a year, low increase or no increase then it is as good as a freehold property (even freehold properties have covenants)

princeofpounds

In terms of security of tenure, they are generally right. But as MovingForwards says, there may be terms in the lease that are an issue. However, freeholds can have covenants and rentcharges, so are not necessarily free from unwelcome obligations either; it's just a different legal framework.

Furthermore, don't immediately discount the leasehold just because there is something in the lease that doesn't sound ideal. Some of these things can be addressed by enfranchising (buying out the freehold) which you are very likely to be able to do after living in the property for two years*. Some can't however - usually obligations to third parties that are neither freeholder or leaseholder. Also, some conditions in leases may not be practically enforceable anyway.

Sorry there isn't a simple answer, but generally speaking you should figure out which property you prefer on a comparative basis, then investigate these things in detail. Usually downloading the title deeds and/or lease agreement and reading it is a good start, then confirming with your solicitor.

*ETA: this will be relatively cheap, probably a low four-figure sum given the length of the lease and low ground rent, including legal costs.

NameUnavailable

Just be aware that when buying a lease you're buying just that, the lease. A very long lease may seem 'as good as freehold' but you don't own the property or the ground it's on, just the right to live there subject to paying ground rent and meeting your other leaseholder obligations.

saajan_12

Basically there's a few factors between a lease vs freehold, and a 999 year lease resolves some of them. 
1) Length rolling down and cost of extension - not an issue with 900+ years left
2) Ground rent - the current £5 is negligible, but check how fast this increases eg doubling every x years? inflation linked?
3) Covenants and requiring permission - for a share of freehold in a block of flats, you still have to ask permission from the group of other flat owners, so doesn't make much difference. In your case, there wouldn't be other co-freeholders, so you do need to ask permission and abide by the freeholder's covenants. To determine how this will affect you, (a) read the lease and (b) decide whether you think the freeholder is likely to care about this. Eg an absent freeholder may be harder to track, but also may be more willing to agree to changes you want. 

ss2020jd

Personally I would always choose a freehold property over a leasehold, no matter how long the lease. But my experience was a decade ago with a leasehold flat, that, at the time, had the nicest freeholders and minimal ground rent. However, that all changed when the freehold was sold and a professional ‘freeholder’ took over. We were unable to buy it as a collective at the time so he bought it at auction. Years of stress, complicated and confusing letters, and exorbitant charges followed. We had great help from the Leasehold Advisory service and in order to sell my flat I had to buy a share of the freehold, with the other two flat owners, at an increased price. It was worth it as I believe I wouldn’t have been able to sell otherwise. 

I believe the law may have improved in relation to protecting leaseholders, and it may be different with freehold houses now, but i think the peace of mind in owning the whole house and freehold is a much safer bet. 

ss2020jd

Edited to correct: Personally I would always choose a freehold property over a leasehold, no matter how long the lease. But my experience was  [ edit ] decades ago with a leasehold flat, that, at the time, had the nicest freeholders and minimal ground rent.          

flashg67

I'm in the North West and there are 000's of 999 year leasehold houses from the old mill days. I've bought/sold a number over the years with no issue - on many they didn't even bother collecting the ground rent - often costs more to collect than they get.
I guess because it's normal where I am, it doesn't worry people that they don't own the land. Most of the covenants probably relate to not drinking mead after 10 pm, or not keeping your horse outside etc. Yours maybe more recent but I doubt a lease of that ilk will stop you doing what you want with the house, within reason. It wouldn't worry me, I'd buy the house I liked the most