What's the point of buying a Leasehold property?

diystarter7

SensibleSarah said:

I live in one of the 'good' leasehold houses. 950 ish years left on the lease, no ground rent or any kind of service charge. My local council is the freeholder. 
However, I still wouldn't recommend it and I'll never buy leasehold again because it just makes things more complicated. I am not staying here forever, but if I was, I'd want to make some changes/improvements to the home and I'd have to consult the freeholder first, which costs money each time. 

My council have offered me the freehold for a cost (which I think is a bit cheeky, because it's not like they make anything from ground rent and it costs them nothing as a house currently!) plus legals, which isn't money I have to spend right now, but will consider doing it before I sell just to simplify things. It doesn't seem to make a difference to value round here though (some houses in my street are leasehold, some freehold), only possibly the appeal to potential buyers, so will make a decision nearer to the time. 

Excellent post and something that no one else has mentioned, IE 'makes things more complex' come selling time. It does indeed and the solicitor's fee goes up as well.

diystarter7

Ath_Wat said:

diystarter7 said:

SallyDucati said:

Apologies if it's already been said, but I think the most important point is to not let a lease get below 80 years, as past that point it becomes much more expensive to extend.   And also is the point the property value will drop due to mortgage companies not liking it.  Unfortunately a lot of people don't realise this. 

I did extend the lease on my last flat and tried to tell a neighbour the pitfalls of not doing so, but she didn't see why she should spend the money, until it got to 74 years and she ended up on a standard variable rate on her mortgage as she couldn't get a new deal.  Ended up costing her a lot more than she needed to.

A great post highlighting the massive pitfalls of a lease on a house where you do not really need one.

You "need one" if the house you want to buy has one.  Nobody is suggesting that everyone rush to buy leasehold houses,.  Everyone knows it's not a positive.  What people are saying is that when you buy any house the advantages it has to you can outweigh the disadvantages, even if one of those disadvantages is that it is leasehold.

As with others here, we are just highlighting negatives. As far as I can see, there are NO positives buying a leasehold house,
just negatives.

Megaross

Positives: You might get it a bit cheaper

That's about it, no one buys leasehold out of choice.

Woolsery

Megaross said:

no one buys leasehold out of choice.

I did. My first choice was a house in one of two roads, all of them leasehold in those days and many remain so.

I could have bought freehold elsewhere, but when you know an area well the best proposition is likely to stand out.

I owned that house for 10 years and it sold for 6x what I paid, outstripping the larger alternative I was tempted by and rejected. That came with a different kind of 'problem.' Most houses do, y'know and it's a happy FTB who can say "Everything about this house I've bought is a positive."

Ath_Wat

diystarter7 said:

Ath_Wat said:

diystarter7 said:

SallyDucati said:

Apologies if it's already been said, but I think the most important point is to not let a lease get below 80 years, as past that point it becomes much more expensive to extend.   And also is the point the property value will drop due to mortgage companies not liking it.  Unfortunately a lot of people don't realise this. 

I did extend the lease on my last flat and tried to tell a neighbour the pitfalls of not doing so, but she didn't see why she should spend the money, until it got to 74 years and she ended up on a standard variable rate on her mortgage as she couldn't get a new deal.  Ended up costing her a lot more than she needed to.

A great post highlighting the massive pitfalls of a lease on a house where you do not really need one.

You "need one" if the house you want to buy has one.  Nobody is suggesting that everyone rush to buy leasehold houses,.  Everyone knows it's not a positive.  What people are saying is that when you buy any house the advantages it has to you can outweigh the disadvantages, even if one of those disadvantages is that it is leasehold.

As with others here, we are just highlighting negatives. As far as I can see, there are NO positives buying a leasehold house,
just negatives.

Yes, everyone knows that.  In the same way having a window that won't open is always a negative, but that doesn't mean nobody should ever buy a house with a window that won't open.  It's a negative that can be factored in and doesn't overrule all else.

Ath_Wat

Woolsery said:

Megaross said:

no one buys leasehold out of choice.

I did. My first choice was a house in one of two roads, all of them leasehold in those days and many remain so.

I could have bought freehold elsewhere, but when you know an area well the best proposition is likely to stand out.

I owned that house for 10 years and it sold for 6x what I paid, outstripping the larger alternative I was tempted by and rejected. That came with a different kind of 'problem.' Most houses do, y'know and it's a happy FTB who can say "Everything about this house I've bought is a positive."

What the person you replied to means, I believe, is that if you were confronted with the house you bought and an identical house which was freehold, you'd have bought the freehold.  However, the leasehold was a minor issue compared with the positives of the house and there wasn't an identical one (there never is, of course) so you bought it.  You didn't "choose leasehold", you chose that house which happened to be leasehold.  

Woolsery

Ath_Wat said:

Woolsery said:

Megaross said:

no one buys leasehold out of choice.

I did. My first choice was a house in one of two roads, all of them leasehold in those days and many remain so.

I could have bought freehold elsewhere, but when you know an area well the best proposition is likely to stand out.

I owned that house for 10 years and it sold for 6x what I paid, outstripping the larger alternative I was tempted by and rejected. That came with a different kind of 'problem.' Most houses do, y'know and it's a happy FTB who can say "Everything about this house I've bought is a positive."

What the person you replied to means, I believe, is that if you were confronted with the house you bought and an identical house which was freehold, you'd have bought the freehold.  However, the leasehold was a minor issue compared with the positives of the house and there wasn't an identical one (there never is, of course) so you bought it.  You didn't "choose leasehold", you chose that house which happened to be leasehold.  

What I'm saying is most houses have a number of up-sides and down-sides, both known and unknown, so you buy the one that you think has the most up-sides for you. Freehold or leasehold is at least known, and the devil will be in the detail, but of course it will be factored-in.

Section62

diystarter7 said:

Ath_Wat said:

As with others here, we are just highlighting negatives. As far as I can see, there are NO positives buying a leasehold house,
just negatives.

Megaross said:

...
That's about it, no one buys leasehold out of choice.

Leasehold could be a positive if the alternatives were worse.

The way some newbuild properties are designed a freehold buyer could find themselves dealing with a real PITB situation if the houses were sold freehold rather than leasehold.  From time to time we see examples of that here on this forum.

Given the choice of leasehold or dealing with a complicated flying freehold situation I'd willingly opt for leasehold. Definitely by choice.

TripleH

Where we last rented, the houses were all leasehold. This was a village north of Manchester.

The ground rent was peppercorn (£2 pa??) but hadn't been collected in years. Our neighbour said he sent a cheque off each year to the address he had been provided with but they had never been cashed. The rent might be different but it was something daft like that.

Houses were built circa 1900. I wouldn't want to own one partly as a lot of recent building work on a lot of the properties I suspect hadn't received freeholder permission.

I assume there was a long time left on lease but if not, with an apparently absent freeholder you do wonder what happens when people try to renew otherwise they end up with a worthless house they don't own and can't sell.

user1977

TripleH said:

Houses were built circa 1900. I wouldn't want to own one partly as a lot of recent building work on a lot of the properties I suspect hadn't received freeholder permission.

Did the leases require freeholder consent? There's no implication that consent is required, and generally with that sort of ultra-long lease there are few covenants to comply with. After all, if there's an opportunity to make money by e.g. charging for consents, there's less likelihood of the freeholder losing interest with their investment.

In any event, that sort of thing can generally be insured against, if you're concerned about the risk of a freeholder crawling out of the woodwork and quibbling about past breaches.