I need quick feedback on the sanity/insanity of buying a 999 leasehold property (from 1980) in a conservation area in a town. I don't think it is a "listed" building itself, but it seems to be owned by a Civic Association for Conservation.
I don't like the idea that we won't "own" the property......it would go to our children when we died, unless we moved again.
Is Leasehold a drawback for resale?
Thoughts, knowledge and wisdom required from people who know please!
It depends on what you want from it really. If you are planning on living there all your life and then handing it down to children then it could be a problem. If, as was my case, you are a first time buyer getting a small, cheap place and planning on moving on soon then it should be no problem at all.
It also depends on the type and location. For a conservation area it's unlikely they'll be able to change the use of land so it's likely that the house will stay there and the lease will be renewed. For a general housing estate like mine it's entirely possible that they'll decide to do something else there in 80 years so I wouldn't want to be there at the end.
As always, I am not a solicitor, but having just had to ask all these same questions I know a bit about it. If you are moving house you will need a solicitor anyway, so you should ask them to get definite answers.
If it is a 999-year lease, surely that is effectively equivalent to owning it outright?
I used to work for a managing agents that was owned by a freehold property owner. There are many ways that the freeholder can take money from you.
If your are buying leasehold then the freeholder is entiteled to make certain charges of you. Insurance (not house insurance - only realy usefull for the freeholder), Ground Rent (there's a limit to how much this can rise check what current fees are and the maximum that they could rise to), Section 22 Works (if the owner decides you need a new roof he can spring the bill on you, you have the right to see the quotes and get appropriate quotes yourself. Exercise that right), General Maintetance (a regular fee to keep things up to scratch, again this should be limited in how much it could rise, find out what payments are currently being made and how they are limited). You will need to ask the freeholders consent for any building works you might plan on having. (If in a conservation area then this will likely be refused - you may not even be allowwed a satalite dish) There will be a fee for consent if you ask for it. If you have works done and then ask for consent then the fee for retroactive consent will as likely as not be a smidge under the cost of having everything changed back to the way it was before. If you wish to sell your proprety after so many years you may find that you are required to first top up the lease. The price for doing so is set by the freeholder. They will often highball the price and you will need to go to a leasehold valuations tribunal to get a sensible price set.
The leasehodler will appoint a managing agent to collect these fees. The managing agent will also collect a managment fee for themselves. You'll see little or no benefit from this fee.
Depending on your freeholder and the terms of the lease, buying a leashold property can be like handing over a blank cheque. Depednding on your managing agent you may never see any benefit for you money.
If you have a good freeholder there's there risk that they may sell their proprety portfolio to someone more willing to extort you. In that instance you should be offered first refusal on the freehold whihc if you can oaffrd it is a good idea. If you have a bad leaseholder then don't buy it in the first place. I f you have bad managing agents then you do have the right to have them replaced or even run the management yourself.
It can be a minefield. My experience of working for a freeholder/managing agent has convinced me never to by a house I don't own outright I can't imagine a house so good that it's worth that sort of hassle.
Last edited by Matt; 13th July 2007 at 10:54 AM.
Mmmmm....Originally Posted by Matt
I was hoping someone would say that in a leasehold I could demand "mantainance" from the freeholder (if the roof caved in, whatever)! The ground rent in this case is £20 per year. And I think it's owned by a trust.... a conservation trust.
Very informative post - thanks.
I rather felt like Araneus - 999 years is as good as owning - we, as a species, might not be here in 999 years! and I'll be learning stuff in the "Halls of Learning" in the Astral dimension- don't know where you lot will be!
Re: Buying a house
hehe.We, as a species, might not be here in 999 years! and I'll be learning stuff in the "Halls of Learning" in the Astral dimension
I'll strive to live on in my contribution to humanity which I sincerely hope will survive and be prospering amongst the stars by the 31st century.
Anything more might start to get tedious after the first oooh I don't know what's half an eternity?
Not having any idea how these things work legally, I'll steer well clear of that aspect...Mmmmm....
Very informative post - thanks.
I rather felt like Araneus - 999 years is as good as owning - we, as a species, might not be here in 999 years! and I'll be learning stuff in the "Halls of Learning" in the Astral dimension
However, if they're a conservation trust then presumably they have a few more houses in the area. Try asking the neighbours (politely, of course) what the trust are like as freeholders. Can they see where the money is being spent? Do they raise the rates above and beyond what's called for?
See if you can get a vague idea what you may be leting yourself in for
I went to view the property with Matt's post printed out in my hot sticky hand. From the photos it looked wonderful - just the ticket - but in actual fact it was grim! Shows you what people can do with photos nowadays and wide angle lenses!
Thanks for all your thoughts on leasehold - very useful information which I hope others will find illuminating. 999 years sounds good if you don't think too critically - I challenged the agent with all Matt's points - and he couldn't really answer my questions to any satisfaction - he looked dubious and then admitted he wasn't very keen on leasehold himself.
Even if a place is owned by a "Conservation Trust", there is no guarantee that the committee, one day, in the future, might vote to sell the area to a private company who naturally would wish to make money and lots of things could change. We'll go for freehold - sounds safer.
Why don't you enquire whether the Trust that owns the freehold is willing to sell it.
Quite often with these old fashioned leasehold houses the landlord's don't really want the freehold, they are just kind of stuck with it. The amount of money they make from ground rent isn't really worth the effort of collecting it so if they can make a few hundred quid from selling the freehold they will.
Ah, it seems I misread 999 as 99. I don't imagine a leasehold will be any problem at all if you've got a millenium before it runs out.
This is probably the case a lot of the time, but I'd imagine a conservation trust would be interested in keeping the freehold just to ensure that no-one else can do anything there.
I have very strong and probably unusual ideas about land ownership. It could easily be argued that all land belongs to us all over the whole world.
My suggestion would be that the land upon which a house is built should belong to the community in general. There should be a nominal annual tax on this land, say per square metre, and a contract restricted to the plot size required for a house, building or whatever, plus garden, which runs out only when the last of the contracting party have died/left/sold out with the onus of a new contract in the hands of any direct relatives of the community. The land, when no longer needed for the buildings on it would then revert back to the community after having been cleared at the cost of the last 'owner'. The onus of inheriting the building on 'common' land would thus lie in the responsibility range of the possible prospective new 'owner'.
This would allow people to build the sort of house they can afford without rich people blocking off large areas of 'private property' to which they basically have no rights. (See our monarchy).
Communism is all very well as an idea, but it doesn't work in reality. People want to own things and people do own things. That is never going to change. Land is no different from any other property.
Naturally Communism comes to mind when you read my piece. But communism isn't intended to be portrayed with this.
I don't like anything "communal". It usually turns out a total pain in the arse.
Someone always nicks your last sausages
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