Buying a Leasehold Property
Buying a leasehold property can be complicated and expensive – and specialist help from an experienced and highly qualified solicitor can make all the difference.
When you buy the leasehold, you own the property but only lease the land it’s built on for a specific time which means there are a number of potential issues to watch out for including:
- Escalating ground rents – when a new build developer sets the initial rent at one level but with the prospect of it doubling every ten years, for example, making the property possibly difficult to sell on again.
- Extending the lease – extensions get much more expensive after the lease falls below 80 years.
- The importance of checking the small print – the lease between the leaseholder and the landlord must cover things that are the leaseholder’s responsibility like paying an annual ground rent, contributing to maintenance and management costs as well as insurance for communal areas.
The most commonly sold and purchased leasehold properties are flats, often accompanied by a disproportionately large number of problems and delays.
Buying the Freehold of a Leasehold or Extending a Lease:
This is where you own a house but the title to it is leasehold, and you wish to buy the freehold. There may also be circumstances when you wish to extend the term and you have either agreed terms with the freeholder/landlord or require advice on how to proceed, although this is less common. Leaseholders have a statutory right to extend their lease by 90 years once they have lived in their property for two years. If you plan to purchase a property with a short lease, waiting two more years before you can apply to extend it is far from ideal. If the previous owner has lived in the property for two years or more, you can request that they serve a statutory notice to extend the lease as a condition of purchase. This can then be assigned to you as soon as the sale is complete.