It used to be the case that buying a leasehold property was much cheaper than buying a freehold home because of the reduced time until the lease expired. However, following changes in the law which have made it easier for leases to be extended, and the continuing upward trend in house prices, in many areas there is now little difference in purchase cost.
Out of 14 million home-owners in the UK, around 2 million are leaseholders and therefore technically tenants that do not actually own their property. They own space within a building, usually a flat out of a number in a block, while the freeholder, who owns the land on which the building sits, will be responsible for organising repairs, maintenance and insurance.
Finding, choosing, financing and buying a leasehold property is identical to the procedure for buying a freehold property apart from the additional aspect of signing a lease detailing the responsibilities of freeholder and lessee.
In the past, it was often difficult to borrow money to buy a leasehold home but nowadays mortgages are granted usually on the same basis as buying a freehold property; i.e. dependent on the property’s valuation, the amount of deposit available and the mortgagee’s ability to repay within a specified period.
The extra financial aspects of buying a leasehold home are the regular payments of a service charge and ground rent. The service charge is payable by all leaseholders and is to cover the upkeep of the whole building, such as cleaning and repairs of communal areas and the exterior.
Ground rent is a fee payable to the landlord/freeholder and is usually paid annually. Details of the amount of both that and the service charges will be detailed in the lease.
There may also be financial provision for long-term building work, sometimes known as a sinking fund, to which leaseholders contribute.
These extra financial considerations as well as potential legal difficulties with the freeholder, if there are disputes, means that using an experienced conveyancing solicitor is essential when buying a leasehold property.
A lawyer who specialises in residential property will fully check the two contracts involved, the purchase from the previous owner and the new lease which is issued to the buyer. The purchase contract will be similar to that of buying a freehold, while the lease will detail the duties and rights of lessee and landlord.
Leaseholders now have a good degree of protection from unscrupulous landlords and it is easier for leases to be extended and for leaseholders to buy their freeholds, if they wish to act together and do so; but this is still a specialised part of property law which is complex and requires the services of a solicitor to protect the rights of the residents.
Buying a leasehold property through Healys
Healys has a dedicated and experienced team of conveyancing solicitors who offer an efficient cost-effective service for buying and selling leasehold property throughout the UK.
Although buying a leasehold home has an extra dimension in terms of paperwork compared to buying freehold, our high standards of expertise and efficiency will ensure your transaction will be conducted as quickly and smoothly as possible while protecting your interests.
Healys’ conveyancing professionals can advise at all stages of a leasehold purchase from initial inquiry through to contract signature and, should there be any later issues such as service charges, maintenance problems or buying the freehold, colleagues in our Property Disputes team will be happy to advise.
For more information and advice on costs of Healys’ conveyancing services, please contact us.