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Are You Considering Moving To Leasehold Accommodation?
Confused about the differences between leasehold and freehold accommodation? This guide breaks down the complexities of being a leaseholder.
There are 4 million leasehold properties in England with the majority being flats. If you’re considering purchasing accommodation which is leasehold, you may be confused about the legalities of the process and wish to know a little more about what it entails. Speaking to your conveyancing solicitor is job one, to make sure you understand the individual terms of the property you’re hoping to buy. This guide will help you understand more about your rights as a leaseholder.
Who Legally Owns The Property?
In terms of legal ownership, there are two options available in England; either you have a leasehold property or a freehold property. As a leaseholder, you don’t actually own the property, nor the ground it stands on but rather you have bought an extended right to reside there. The freeholder owns the property and associated land, meaning that you’ll need to pay them charges in order to live there.
Leases may seem long, usually much longer than you’re planning to reside in the property yourself. But having a lengthy lease is incredibly important when it comes to the resell potential of your accommodation. Leases are usually between 99 to 125 years, although you may find some as long as 999 years, or some as short as 45. If you’ve got your heart set on a property but your conveyancing solicitors Essex team discovers that there’s less than 80 years on the lease, then you may need to rethink the purchase. Additionally, your mortgage lender may also decide that you’re not eligible to take out funding on a property with this type of short lease.
If you have been living in your property a while and wish to extend the lease in order to increase the resell value and potential, it’s important to be aware that this is not usually a cheap top-up charge. It will often cost you five figures to extend your lease, and the shorter it is, the more the lease cost will be.
Ground and Maintenance Fees
If the lease length is ok and everything else about the property still appeals to you, it’s time to drill down into the financial figures to ensure that you can afford the costs associated with being a leaseholder. You will need to pay a ground rent to the freeholder, which should be reasonably affordable, but be aware that they have the right to increase the rent due. If your leasehold property is a flat within a communal building, then it’s typical for a managing agent to be responsible for maintaining these areas and then charge the leaseholders a split of the bill. You might expect to pay for communal cleaning, utilities, and any repair work that is necessary. Always ask to see a breakdown of the last few months or years maintenance costs to ensure that they’re both reasonable and affordable.
Where leaseholders are unhappy with the managing agent appointed by the freeholder, they can legally exercise the statutory right to takeover the running of their property by setting up a Right to Manage company.
Leasehold properties can represent an excellent investment as well as providing you with a wonderful home to live in for years to come. But due to the individual complexities of such accommodation, it’s essential to seek specialist legal advice from a conveyancing solicitor before you commit to exchanging contracts.