Things to Consider When Buying a Leasehold Property…

Okay, so your home is your castle, and with the housing market, not to mention the world being so unstable in the present climate, your desire to own your own home has never been so powerful.

The UK property market is going through strange times when the stamp duty holiday about to end, house prices are swinging up and down, and unemployment is rising daily…

And if you are buying a property, it can be a complicated business at the best of times because you need to find out whether it is leasehold or freehold as there are significant differences between the two.  Paul O'Shea Homes in Croydon will be able to advise you about a properties details. 

Freehold property and the land on which it stands is owned outright and is yours to do what you choose with. Still, a leasehold property can come with restrictions on alterations, service charges, ground rent, and possible extra charges.

So, it is best to do your homework when it comes to buying a leasehold property, in particular, to ensure you aren’t one of the homeowners who have been left with unsellable properties that are saddled with punitive clauses.

So, Exactly What is a Leasehold Property?

A leasehold property is usually a flat or maisonette and is a property that is owned by an individual, but the ground beneath it, which is called a ‘freehold,’ is not.

 The freeholder is the landlord issuing leases to individual parties.

 You’ll have a legal agreement with the landlord, who is also known as the freeholder, which is called a ‘lease,’ and tells you how many years you’ll own the property.

 And you can only own a leasehold property for a fixed period of time – the ownership of the property returns to the landlord when the lease comes to an end.

How Many Years Are Left on the Lease?

Before you decide to go ahead and make an offer on any property, you must find out whether it is a leasehold or a freehold property.

If you find out it’s a leasehold, then you must find out how many years are remaining on the lease.

If you have less than 70 years on the lease, this could affect your chances of obtaining a mortgage for the property, and if you do manage to buy the property, you may struggle to resell it in the future…

Not a great prospect.

The ideal thing to do then is to consider buying a property with a lease of fewer than 90 years if you have an agreement in place for the freeholder to extend it as part of the purchase.

Extend That Lease!

You actually have the legal right to extend the lease by 90 years after two years of owning a property, but a word of warning – lots of things can go wrong to delay this, including absent freeholders to squabble over the price.

But, if you are successful, it can give you peace of mind all around.

Service Charges

If you buy a leasehold property, you’ll have to pay a service charge for the upkeep of shared or common areas, which include corridors, staircases, the roof, and exterior walls.