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Leasehold property.



pearl

Well-known member
May 3, 2016
12,714
Behind My Eyes
The problem with leasehold is that ground rent can be raised. In my case, it was going up from £9 or £10 a year to over £100 a year. I think buying the freehold was something like a grand, or just over, so when I got the opportunity to buy, I bought it. Yes, the house was sold, so I 'lost' money in that respect, but the selling price was higher, because it came with freehold.
It's much more common in the north, than in Sussex.

This is probably a stupid question, but when you bought the house were you aware it wasn't freehold?
 


Thunder Bolt

Ordinary Supporter
This is probably a stupid question, but when you bought the house were you aware it wasn't freehold?

Yes, it has to be disclosed by law. The problem was that the town I moved to, had large swathes of leasehold properties. It would have been difficult to find a freehold house. The council still owned the majority of the land.
 


D

Deleted member 2719

Guest
I bought a lease hold flat in the 80's cost me and my ex £30,000 worth of debt......yes the 80's!

Worse thing i ever did, having mason judges and a mason leaseholder/maintenance company was probably the main problem:rant:

Advice to anyone buying one make sure you thorough search the leaseholder and management companies out first.........better still don't buy one.
 


AmexRuislip

Trainee Spy 🕵️‍♂️
Feb 2, 2014
33,727
Ruislip
The problem with leasehold is that ground rent can be raised. In my case, it was going up from £9 or £10 a year to over £100 a year. I think buying the freehold was something like a grand, or just over, so when I got the opportunity to buy, I bought it. Yes, the house was sold, so I 'lost' money in that respect, but the selling price was higher, because it came with freehold.
It's much more common in the north, than in Sussex.

My sister used to live in block of 4 flats in Bexhill.
The ground rent was a stupid price.
Luckily she got when the price went up even more, it took ages for the landlord to get someone else in!
 


Westdene Seagull

aka Cap'n Carl Firecrotch
NSC Patreon
Oct 27, 2003
20,938
The arse end of Hangleton
My sister used to live in block of 4 flats in Bexhill.
The ground rent was a stupid price.
Luckily she got when the price went up even more, it took ages for the landlord to get someone else in!

I'm not sure I follow - if you rent you don't pay ground rent. If you are a leaseholder you pay ground rent to the land owner to have your home ( that you own ) on their land. If you're a leaseholder then you just sell your property - no landlord involved.
 




Triggaaar

Well-known member
Oct 24, 2005
49,989
Goldstone
The problem with leasehold is that ground rent can be raised. In my case, it was going up from £9 or £10 a year to over £100 a year. I think buying the freehold was something like a grand, or just over, so when I got the opportunity to buy, I bought it. Yes, the house was sold, so I 'lost' money in that respect, but the selling price was higher, because it came with freehold.
It's much more common in the north, than in Sussex.
You seem to be talking about something completely different to me. I'm saying that people don't have to buy a house that doesn't include the freehold.
 


Thunder Bolt

Ordinary Supporter
You seem to be talking about something completely different to me. I'm saying that people don't have to buy a house that doesn't include the freehold.

As I pointed out in my post 11, I wanted to move to Huddersfield, and most of that town was leasehold (at the time).
 


AmexRuislip

Trainee Spy 🕵️‍♂️
Feb 2, 2014
33,727
Ruislip
I'm not sure I follow - if you rent you don't pay ground rent. If you are a leaseholder you pay ground rent to the land owner to have your home ( that you own ) on their land. If you're a leaseholder then you just sell your property - no landlord involved.

Apologies, she did own the flat, as a leaseholder, which she paid ground rent to the land owner (not landlord). :thumbsup:
 




Herr Tubthumper

Well-known member
NSC Patreon
Jul 11, 2003
59,198
The Fatherland
I'm not aware it is difficult. My brother has brought quite a few on mortgage without issue.

It depends on the area. As I understood it 6-7 years ago mortgage companies didn't like to lend on freehold flats. But if the area has lots of them they will...as they don't want to completely shut themselves out of an area. I believe Worthing has a high number of freehold flats so you might be okay there. Hove is a different story though. Hove was difficult to get a mortgage on a freehold apartment a few years back. This could have changed though. Someone at John Charcole told me this.
 


clapham_gull

Legacy Fan
Aug 20, 2003
25,178
You seem to be talking about something completely different to me. I'm saying that people don't have to buy a house that doesn't include the freehold.
They don't but they may have no choice. A lot of the freeholds in London for instance are still owned by the council.

I think you are stuck between choice and reality.

Sent from my LG-K520 using Tapatalk
 


Triggaaar

Well-known member
Oct 24, 2005
49,989
Goldstone
They don't but they may have no choice. A lot of the freeholds in London for instance are still owned by the council.
And there are plenty that aren't. You don't have to buy a property which comes without the freehold. Now maybe it's cheaper and you're getting a deal, in which case it's good that you've been able to get somewhere you like for less.
 




sully

Dunscouting
Jul 7, 2003
7,824
Worthing
Apologies, she did own the flat, as a leaseholder, which she paid ground rent to the land owner (not landlord). :thumbsup:

In which case she'd still be liable for that ground rent if nobody had moved in, surely? You can't just walk away from a leasehold property until the lease ends, at which point you own nothing.
 




lost in london

Well-known member
Dec 10, 2003
1,780
London
On an estate long leasehold (125 years is common) can have advantages - the terms of the lease of your house set the rules about what you can and cannot do; see it as a way of keeping the estate 'nice' and making sure everyone does what they are supposed to do. Each house owner has a right to enforce the provisions of their neighbours' lease against their neighbour.

The rules could be things like not being allowed to build withing (x) metres of the boundary, can't have satellite dishes on the front wall, have to erect fences, have to contribute towards shared parking upkeep etc.

Those sort of rules are much harder to enforce when they are covenants registered against a freehold title.

Selling the reversion (essentially the right to collect the annual ground rent) to ground rent investment companies is something that has been going on for years and years - once all the leases of the houses / flats have been granted for a premium (ie the price you pay for the house) the ground rent investment company pays a relatively small price, maybe £10k - £50k for the freehold interest in the land on which all the houses are built. By owning the freehold interest, the ground rent investment company become the landlord of the home owners, and with that comes the right to collect the ground rent.

Historically these ground rent investment companies have been less than perfect, charging high costs for consents under the lease (consent to build an extension for example), charging high premiums for insurance of parts of the estate / building shared by all owners etc (I'm sure lots of us have been stung by those sort of fees when you bought your first flat). Legislation has to a degree stepped in to protect the flat owners, but it's still a worthwhile investment for some people who want a steady, guaranteed income (the ground rents) with predictable increases (doubling every 25 years for example).

The way the ground rent companies really make their money though is on lease extensions. Once the lease has about 80 years left to run it becomes increasingly difficult to mortgage, and therefore to sell. The leasehold flat owner then has to approach their landlord to buy an extension to their lease. There is a set mechanism for how this is calculated, but premiums can run into tens of thousands of pounds. A very nice earner for the ground rent company if you're happy to sit and wait for the leases to start running down.
 




HastingsSeagull

Well-known member
Jan 13, 2010
9,237
BGC Manila
I had this situation in Hastings old town. £20 a year ground rent and a lovely leaseholder for a long time and then an utter bitch took over and everything got worse each year. She was blatently just in it knowing the leases were all getting to the time for renewal.

Costs for everything and we all seemed to be paying her little amounts here and there for loads of things none of us wanted and often work HAD to be done to HER shop and we should all pay her mate a quarter each for the work since there were 3 flats and her shop.

I managed to get out with a very good sale price off a Londoner but sadly not before the leaseholder had completely alienated the local who had agreed a price with me previously. We even tried extending the lease and she wanted thousands just to pay her lawyer friend to tell us how much it would cost us...... utter loonacy and feel for the other 2 owners who are presumably still experiencing all the crap.

Vowed never again to consider a leasehold anything, and bought a house without and would advise anyone to do likewise if at all possible.
 



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