Leasehold - should we withdraw?

Sandwich567

We’ve had an offer accepted on a house which we somehow had originally thought was freehold (nothing was stated on the initial ad, we’ve been asking about it everywhere we’ve viewed as we were very wary of leasehold but somehow seem not to have asked for this one), but has now only after we’ve had the offer accepted turned out to be leasehold. The estate agent has said it’s nothing to worry about, over 900 years left on the lease, rent is about £6 a year. There is nothing on HMLR website as house is unregistered. 

What is there to consider and check? We are wondering why the current owners never bought the freehold. How easy would this be for us to do?

Should we withdraw? We’re basically very nervous, but equally have been struggling to find a house as everywhere is getting lots of offers above the asking price where we are. 

user1977

Sandwich567 said:

We are wondering why the current owners never bought the freehold.

Because there's little point, assuming there are no significant covenants (which tends to be the case with this sort of ultra-long lease). You'd be shelling out hundreds of pounds in fees in order to save yourself £6 a year rent. It's nearasdamnit freehold. Nothing to panic about.

canaldumidi

Read the lease then decide if there's anything within it you don't like.

davemorton

user1977 said:

Sandwich567 said:

We are wondering why the current owners never bought the freehold.

Because there's little point, assuming there are no significant covenants (which tends to be the case with this sort of ultra-long lease). You'd be shelling out hundreds of pounds in fees in order save yourself £6 a year rent. It's nearasdamnit freehold. Nothing to panic about.

What they said! ^^^^^^^^^^^^

AFF8879

The only thing I would say is there are a LOT of people who would run a mile at hearing the word leasehold, no matter how equivalent it is to freehold in actuality. Those few hundred £s legal fees would probably be worth it when you come to sell just to avoid that hassle.

NameUnavailable

Ultimately it means you are buying a lease, you are NOT buying the property. The property belongs to the freeholder and there may be restrictions on what you can or can't do to the place or charges to pay if you wanted to make any changes to it.

Read the lease!

Gentoo365

I would try to find out the cost of buying the freehold (including legal costs) and see if that could be done at the same time.  

propertyhunter

As others have said, it's not the financial burden, but the rights you have as a leaseholder vs a freeholder. What restrictions come with the lease? That's important, as you might not be able to do certain things to the property that you would like - such as building an extension or knocking down a wall. Legally with freehold you own the land, you don't with leasehold.

You say it's £6 per year. How does that increase over time, and by what amount? 

tryingmybest99

I would ask your conveyancer to check the lease carefully and fill you in on if and when the ground rent increases. 

I don't know the situation with leasehold houses but with flats service charges have a big impact on your finances. Maybe ask your conveyancer about that? They should detail all of this in their legal report anyway.

Also, I would try to work out rough costs for buying the freehold in case you ever want to in future. I think if I was ever able to afford a house rather than a flat I would really want freehold as I feel you have a lot more rights and control as a freeholder, but that's my own opinion.

SavingPennies_2

My house was leasehold (900+ years on the lease) as are many houses in my area. Didn't put me or my subsequent buyer off, houses in the area still sell like hotcakes because it's a desirable place to live. Almost every house on my street had some form of extension, all sorts of styles so it wasn't restrictive. In most cases leasehold is not a problem and I don't see the big deal as long as it's peppercorn rent and no major restrictions on modifying the house. Are you a ftb?

Sandtree

tryingmybest99 said:

I don't know the situation with leasehold houses but with flats service charges have a big impact on your finances. Maybe ask your conveyancer about that? They should detail all of this in their legal report anyway.

Service charges are somewhat independent to if a property is free or leasehold, though more common on the later. There is an element of "be careful of what you wish for" here though as statutory protection on charges for freehold properties are much less than leasehold