Leasehold properties are properties you own until the lease ends. When the lease ends, you will no longer be the owner of that property and the freeholder will take ownership. Long leases will allow you to resell the leasehold making it a worthwhile investment. This blog will outline the key things you should look out for when buying a leasehold home.
When considering whether you should buy a leasehold home, you should always check the length of the lease with an estate agent or the seller. It is best to avoid properties with less than 80 years left as it can be difficult to obtain a mortgage for it and can impact the value of the property.
2. Watch out for leasehold properties that are cheaper
Leasehold properties that appear to be too cheap could mean that the property requires a lease extension which can be expensive. If you choose to continue with it, it is essential that you take this into account in the offer price.
3. Ensure you check all the terms in your lease
Some freeholders may charge you a lot of money to make simple changes to the property. There may also be restrictions on whether you can sublet or have pets.
4. Be careful of costly ground rents, maintenance fees and insurance costs
Some ground rents can be very costly as they may double every 5-10 years. To avoid this, it is recommended that you seek professional advice from a solicitor before purchasing a property.
Whilst the freeholder is responsible for the general maintenance of the property, you should ask about potential service or maintenance charges because as a leaseholder you will be responsible for paying for the repairs.
Furthermore, you should be aware of any insurance costs because leaseholders are required to pay a share of the building’s insurance. You should ask about insurance costs beforehand.
5. Buying leasehold properties may be more challenging
It may require a lot more time to buy a leasehold compared to freehold properties. The primary reason for this is that solicitors are required to obtain information from the freeholder or management company about the lease. It may take some time for all the information to be gathered as well as additional checks to be conducted.
The information in this post is valid to the best of our knowledge on the date of posting. It is advised that you seek independent advice based on your individual circumstances.
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