Considering buying a leasehold property? Let us highlight a few things you’ll need to consider…
When you buy a leasehold property, because you don’t own the property outright, you may have to ask the permission of the freeholder if you want to make any major changes to the property, such as building an extension, or installing a new bathroom.
There may also be a clause written into the lease which prevents you from keeping a pet in your home, or from subletting the property. This may be something you haven’t considered but it could become an issue if (for example) you wanted to move elsewhere in the future, but not sell up. It’s therefore vital to read the small print of the lease extremely carefully, so that you know exactly what you’re signing up for.
Leases can be hundreds of years long, but some can be much less than this. As a general rule, the shorter the lease is, the less the property is worth, so a flat with only 50 years left on it will be much cheaper than the same property with a 125-year lease.
Shorter leases can be much harder to sell on, and mortgage lenders will often be reluctant to offer you a mortgage if you are buying a leasehold property with a lease that is less than 80 years long.
Buying the freehold or extending your lease?
You will usually have the right either to buy the freehold of your property, or extend your lease, but the costs involved in doing this can be significant.
Rules vary depending on whether you own a flat or a whole house. If you own a house, provided you have held the lease on your home for at least two years, and it was originally leased on a long lease, you should normally have the legal right to extend your lease by 50 years.
If you own the leasehold of a flat, and you have also held it for two years or more, you will usually have the legal right to extend your lease by 90 years.
Whichever type of property you own, the costs of extending the lease can be expensive and your landlord could decide to reject your offer, in which case you can challenge them in court.
Buying the freehold or extending your lease can be complicated, so it’s a good idea to seek professional advice before you proceed.