Many people who purchase a property in the UK end up buying a leasehold property, which is basically where you have the right to use the property for a certain number of years, which is specified by the amount of time that is left on the lease.
The land and property is actually owned by the freeholder or landlord, which means that once the lease is up the property and land reverts back to the landlord unless you are able to get an extension on it. Obviously, the longer the lease the better and most are long terms ranging from 90 to 120 years with some being as long as 999 years.
If you are considering buying a leasehold property, it is important to familiarise yourself with what is involved, as otherwise you could end up facing a variety of issues in the future. When you buy a leasehold property, you will have a contract with the freeholder and this should outline all of the legal rights and responsibilities of both you as the leaseholder and the landlord as the freeholder.
There are a number of important things to bear in mind when it comes to the purchase of leasehold property. One of the key things that you have to think about is the amount of time that is left on the lease. As the remaining lease period declines, you may start to experience more problems such as a significant drop in the value of the property, increased difficulties in selling the property if you decide to do so, and the fact that many lenders will not offer mortgages on leasehold properties with shorter leases. This is why it is vital that before you purchase a leasehold home you are fully aware of the time left on the lease.
As a result of various government initiatives, many leaseholders with shorter leasehold agreements do have the right to extend once the original lease expires. However, it is worth knowing that this can be a costly process.
There are ways around this however. For example, a colleague of mine, Matthew, decided he wanted to purchase a flat that only had a lease of around 70 years remaining on it. He insisted that the freeholder extend the lease on the property prior to purchase, which meant that he saved himself the hassle and money of having to do this himself. However, this can also work the other way – for example, you may find that if you want to sell your leasehold property and the remaining lease is relatively short any potential buyers will want you to sort out getting the lease extended before they will put an offer in for the property.
Another thing that you should remember is that you may be given the right to purchase the freehold on your property, a process known as enfranchisement. This can be really beneficial for you as a leaseholder, as you gain total control of your property and the land that it is on. However, it can also be a costly process. One way in which people manage to cut costs when it comes to buying the freehold is getting together with neighbours who are also on leasehold contracts with the same freeholder and clubbing together to purchase the freehold.
When it comes to lease agreements, it is vital that you are fully aware of what is involved so that you can save yourself a lot of problems and headaches in years to come. This is why you need to ensure you get proper lease advice from experts in the field, as this will help to ensure you know exactly what you are getting into. A specialist conveyancing solicitor can go through all of the legalities of your leasehold contract so that you have a full and clear understanding of both your rights and responsibilities and those of the freeholder.