Solicitors specialising in Freehold Purchase for House and Flat Owners Nationwide
You might be surprised to hear just how many leasehold houses there are in the UK. In a government report entitled “Leasehold and Commonhold reform Research Briefing“, which was published on September 22, 2023, it was confirmed that 30% of the 4.8 million leasehold homes in England are houses not flats. That means around 8% of houses are actually owned on a leasehold rather than freehold basis, although the number of leasehold houses in the UK has been decreasing over the past few years, as the government has taken steps to address concerns about the leasehold system and protect the rights of leaseholders. However, if you are considering buying a leasehold house, you may want to consider asking the following questions to ensure that you fully understand the property and any potential issues that may arise:
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Click here if you want to understand more about the differences between freehold and leasehold
How long is the lease remaining lease term?
The length of the lease can significantly affect the value of the property and how much you will be able to borrow to buy it. If the lease has less than 80 years remaining, it may be more difficult to obtain a mortgage and the value of the property may decrease.
However, as with flats, subject to fulfilling the criteria, you will have a right to extend the lease on your leasehold house – but at a price. And if you are thinking of extending your lease, it’s very likely to be better value and much more effective to think about buying your freehold.
Our specialist leasehold team have helped around 10,000 people like you extend their leases or buy the freehold. And we are 1 of very few law firms with plenty of experience of buying the freehold of leasehold houses, whether it’s a recently built estate house owned by the likes of Persimmon, or a much older property.
Click here to read more about Purchasing the Freehold of Leasehold Houses
Click here to read more about how to Buy your Persimmon Freehold or claim your refund if you were one of those people who previously paid a higher premium before Persimmon, under pressure, dropped the price from £3750 to £2000.
Buying a Leasehold House – what are the ground rent or service charges?
This is among the most important questions to ask. Leasehold properties often come with additional costs such as ground rent and service charges for the upkeep of common areas. It is important to understand how much these costs will be and whether they are likely to increase in the future.
But what’s the difference?
Ground rent refers to a set amount which a leaseholder pays to their freeholder each year. Your lease should clearly set out the level of ground rent you will need to pay but watch out for any reference in the lease to increases in ground rent. These are common and can sometimes mean significant increases in the amount you need to pay. And you should be aware that you don’t actually get anything in return for ground rent – that’s why the issue of ground rent has become so very controversial in recent years.
In contrast, service charges are quite different. They are monies due to the freeholder to cover maintenance and repairs to your building. As a result they vary regularly, depending on the work that needs to be done.
This information will all be in the lease – your solicitor should explain it all to you.
Buying a leasehold house – what are the terms of the lease?
The lease will set out the rights and responsibilities of the leaseholder and the landlord, including what repairs and maintenance the landlord is responsible for and what the leaseholder is responsible for. It is important to review the lease carefully and have a solicitor advise if you have any doubts.
Are there any restrictions on the use of the property?
Some leases may have restrictions on the use of the property, such as not being able to run a business from the property or not being able to make certain alterations. Watch out in particular if you’re looking to use the house as a buy to let property. There may be a clause forbidding subletting or restricting the occupation of the house to just one family unit, for example.
Are there any disputes or pending legal actions?
Another of the more important questions to ask is whether there are any disputes or pending legal action that could affect the property, such as ongoing repairs or disputes with the freeholder. You really need to know if you are going to be taking on long-running disputes or, worse still, litigation
Who is your freeholder?
It is important to find out who the freeholder (possibly referred to as your landlord) is and whether they have a good reputation for managing the property.
Buying a Leasehold House – are there any planned major works or repairs in the near future?
This will affect the service charges and the use of the property in the short term. You will want to think twice if you know that some major maintenance or repair project is planned. you will also need to double check whether there is going to be an issue with what is known as a reserve fund or sinking fund – money contributed by the leaseholder and held by the freeholder towards major works. If there is a substantial sum in the sinking fund currently, then the current leaseholder who is selling to you is almost certain to ask for that to be paid to them, in addition to the asking price.
Click here to read more about leasehold property sinking funds
Does the flat come with a share of freehold?
In general terms, leaseholders have the right to join together to buy the freehold of their block in a process known as collective or leasehold enfranchisement. And if the leaseholders have already bought the freehold of the block which contains the flat you want to buy, you may find that if a previous owner of your flat participated in the enfranchisement (it’s common, especially in larger blocks for there to be leaseholders who did not join with the leaseholders in buying the freehold), then your flat may come with what is known as a share of freehold. Although this does involve certain responsibilities, it’s generally a positive thing – it enables you and the people who own the flats in the block to control issues such as maintenance themselves.
Click here to read more about buying a share of freehold
Don’t be afraid about asking questions when you’re buying a leasehold house
If you’re buying a leasehold house, it is important to have an experienced leasehold solicitor review the lease, check for any issues and advise you on the purchase before you proceed.
Don’t be nervous about asking questions. You need to know what you’re buying – and your solicitor’s job is to make sure you understand.
Is the UK government still planning to abolish leasehold?
No. Although there continue to be ongoing plans for reform of the current leasehold system, May 2023 saw the UK government confirm that their plans to abolish the leasehold system in England and Wales had been scrapped. There is no suggestion from Britain’s Labour Party that if they win the next election they will scrap the leasehold system either.