Leasehold options
- Thread starter akist
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Wouldnt do it, legal mine field and costly.
I know when it comes to extending a lease to need to have owned the property for at lease 2 years...it might be the same with purchasing the freehold.
If there's more than a few tenants in the block then you can pretty much forget the idea...most residents are clueless about tenure and won't be interested.
I've been there, wasted years trying to get hold of absent owners (landlords) but everything's stacked against you. Heads in the sand ...You'll also be surprised at the no. of leaseholders living in their properties with very low leases...and seemingly unconcerned. I knew many residents with leases of 50 years who were oblivious of the implications.
What's the lease lenght...it's something that agents and vendors do their best to cover up knowing full well the often huge cost and agro to extend.
If there's more than a few tenants in the block then you can pretty much forget the idea...most residents are clueless about tenure and won't be interested.
I've been there, wasted years trying to get hold of absent owners (landlords) but everything's stacked against you. Heads in the sand ...You'll also be surprised at the no. of leaseholders living in their properties with very low leases...and seemingly unconcerned. I knew many residents with leases of 50 years who were oblivious of the implications.
What's the lease lenght...it's something that agents and vendors do their best to cover up knowing full well the often huge cost and agro to extend.
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I was watching one of those property programmes only the other day where someone was buying a flat to do up/sell on but it had a short lease and I distinctly remember the purchaser at the end of the show saying about the fact that it takes two years from when you first apply to extend a lease but the person selling it had applied some time back so she didn’t have to wait the two years as it was transferable. Still cost her something like £50k to extend the lease though.
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Wont get a mortgage on something with less than 80yrs lease remaining, or somewhere in that region. Cost to renew a lease is based on a sliding scale, the lower the lease the more you pay.
Seaside towns..lost me there.
Often the vendor can't raise the money for the lease extension and given the 2 year rule before issuing a section 42? notice to the freeholder the buyer will insist they start the process before exchange and a deal is done.
Of course all the property portals are showing fictitious values with leasehold property...without knowing the lease status the value is meaningless.
It 's the estate agents dirty little secret...hoping the buyer is naive and several months down the line when the solicitor raises the short lease implications the buyer ignores the advice. The whole system stinks but AFAIR it dates back to the Normans and the landowners unwillingness to relinquish land. When do you ever hear Kirsty and Phil mention tenure and lease lenght?
Once you drop below 82 years the calculation gets more complex...to the leaseholder it means yet another method of screwing you over as another set if variables comes into the mix.
The actual calculation is a farce with so many variables it becomes a lottery what you pay (and remember you pay for all fees and costs on the freeholders side too). If you're lucky the longer lease costs will be recovered by a raise the the property value.
Properties with extremely low leases are often found in auctions...they are bought to let out and when the lease expires the freeholder takes back the property.
Mortgages could be had with leases as low as 60 years but there were few companies and you'd pay a higher rate as the property becomes more difficult to sell in case of a default.
Some owners intend to die in their flats and have no wish to extend a lease...that's a ridiculous way to live..in the future you might need to raise finance or move etc.
Often the vendor can't raise the money for the lease extension and given the 2 year rule before issuing a section 42? notice to the freeholder the buyer will insist they start the process before exchange and a deal is done.
Of course all the property portals are showing fictitious values with leasehold property...without knowing the lease status the value is meaningless.
It 's the estate agents dirty little secret...hoping the buyer is naive and several months down the line when the solicitor raises the short lease implications the buyer ignores the advice. The whole system stinks but AFAIR it dates back to the Normans and the landowners unwillingness to relinquish land. When do you ever hear Kirsty and Phil mention tenure and lease lenght?
Once you drop below 82 years the calculation gets more complex...to the leaseholder it means yet another method of screwing you over as another set if variables comes into the mix.
The actual calculation is a farce with so many variables it becomes a lottery what you pay (and remember you pay for all fees and costs on the freeholders side too). If you're lucky the longer lease costs will be recovered by a raise the the property value.
Properties with extremely low leases are often found in auctions...they are bought to let out and when the lease expires the freeholder takes back the property.
Mortgages could be had with leases as low as 60 years but there were few companies and you'd pay a higher rate as the property becomes more difficult to sell in case of a default.
Some owners intend to die in their flats and have no wish to extend a lease...that's a ridiculous way to live..in the future you might need to raise finance or move etc.
OK, the reason I asked is because I was under the (very false) impression that there were new laws allowing leaseholders to acquire the freehold and thus get equal status to freehold owners. But now I see there are no such new laws and also in a building with more than one apartment you will still need to have a management agency and no say as to the fees, as by definition, your fees go to pay for the management agency's expenses, profits, company cars, bonuses etc etc
The right to nanage your own property (and AFAIR) has been a legal right for many years. The legislation is seriously flawed when you come across so many flat owners that are unable to see the benefits. You need a particular % of owners to agree before you can proceed...and that's where it unravels. How are you going to contact and persuade all those landlords who maybe abroad and uncontactble. The managing agents for the rented flats certainly won't help you.
I remember a number of *many* years ago, this girl was in tears, they were hit (each flat) with a £600 bill to repaint the front of the building, they had no say in it, not about whether the repainting was needed or who would carry out the works.
The idea is to give the leaseholders the right to say "no", and the right to assign any management agency they wish, including themselves, wholly or partly. This is the only way to allow competition as in a free market, and drive prices down. That is how it works in Greece, where a huge number of properties are flats and are mostly managed by the residents, including paying for common use electricity, heating, cleaning, lifts, and maintenance. There are management companies that take over the admin and because it is a free market they charge very reasonable prices, and their fees are stated and visible. In smaller buildings typically one of the residents does it for a year and then it rotates. My father had me doing it from the age of maybe 13 and there were no computers then, no Excel, I had to gather receipts and bills and divide by the number of flats and their square footage, then go knocking on doors to collect payments. However a single resident may refuse to pay for whatever expense the powers that be have devised, for example they recently asked us to pay for a brand new intercom system with live video feed etc. We simply said no we don't want it.
Back in the UK, I have just found out, the flats that my son was looking at have service charges of £5500 per year plus £750 ground rent... So it does not seem we are buying a flat after all.
The idea is to give the leaseholders the right to say "no", and the right to assign any management agency they wish, including themselves, wholly or partly. This is the only way to allow competition as in a free market, and drive prices down. That is how it works in Greece, where a huge number of properties are flats and are mostly managed by the residents, including paying for common use electricity, heating, cleaning, lifts, and maintenance. There are management companies that take over the admin and because it is a free market they charge very reasonable prices, and their fees are stated and visible. In smaller buildings typically one of the residents does it for a year and then it rotates. My father had me doing it from the age of maybe 13 and there were no computers then, no Excel, I had to gather receipts and bills and divide by the number of flats and their square footage, then go knocking on doors to collect payments. However a single resident may refuse to pay for whatever expense the powers that be have devised, for example they recently asked us to pay for a brand new intercom system with live video feed etc. We simply said no we don't want it.
Back in the UK, I have just found out, the flats that my son was looking at have service charges of £5500 per year plus £750 ground rent... So it does not seem we are buying a flat after all.
How long is the lease on the flat you son intends to buy? Is the flat in a purpose-built block, or is it a large house converted to flats? My (leasehold) flat has 950 years remaining on the lease - this is known as virtual freehold. All leaseholders are members of the Management Company, and elect from themselves at least two Directors and also employ a Managing Agent to deal with the day-to-day matters. Minor repairs are dealt with by the Managing agents, but anything major (read expensive) goes back to the Directors to bring before the residents if a further contribution is needed.
It is highly unusual for a flat to be freehold, but a flat in a converted house may be freehold, but hold the leases for the other flats. This can open a right can of worms.
Most "dangerous" is where a single property is leasehold. A large housebuilder built a new estate with each property being leasehold. BUT there was a clause that every so many years the rentcharge increased by a percentage, so what starts off as a "reasonable amount" soon becomes unaffordable. And the worst is that the builder sold the leases to one of these financial speculator companies who (it is said) are over-zealously enforcing the terms of the lease. All the affected properties are virtually unsaleable!
It is highly unusual for a flat to be freehold, but a flat in a converted house may be freehold, but hold the leases for the other flats. This can open a right can of worms.
Most "dangerous" is where a single property is leasehold. A large housebuilder built a new estate with each property being leasehold. BUT there was a clause that every so many years the rentcharge increased by a percentage, so what starts off as a "reasonable amount" soon becomes unaffordable. And the worst is that the builder sold the leases to one of these financial speculator companies who (it is said) are over-zealously enforcing the terms of the lease. All the affected properties are virtually unsaleable!
Sorry, missed the last paragraph of the OP's last post. Well, with a service charge of £5500 plus £750 rentcharge, I would be walking away too. Our flats rentcharge is £10 per annum and the service charge is £1200 annually.
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