4 Things to Know Before Buying a Residential Leasehold Property

When you’re purchasing a home, one of the most important facts your solicitor will establish is whether the property is leasehold or freehold. Purchasing a leasehold property can be more complicated, so it is vital that your solicitor carries out thorough checks before you exchange contracts.

As conveyancing specialists in Burton on Trent, we provide professional conveyancing for homebuyers across the country as well as in our local area, and we can help you to negotiate the challenges of purchasing a leasehold property. What is the difference between a freehold and leasehold property, and what should you be aware of when making a purchase?

• The Difference Between Freehold and Leasehold Property

If you purchase a freehold property, then you legally own the entire building and the land surrounding it. It is yours until you decide to sell it or transfer the title to someone else.

In contrast, when you purchase a leasehold property, the freeholder grants a long lease to you, allowing you to use and possess their property, or part of it, for an agreed period of time. You would need to pay (usually nominal) rent over a period of the term of the lease (typically 99 years but can be as long as 999 years). Your right to apply for a mortgage on the property is unaffected, although the lender will need to know if the property is freehold or leasehold.

• Can A Leasehold Owner Purchase The Freehold?

Changes made to the law now mean that it is possible for a leaseholder to purchase the freehold. This can be done informally by enquiring with the freeholder whether they are prepared to sell the freehold and negotiate a fair price directly, or formally if certain criteria are met.

Seeking professional legal advice about your options is the most appropriate way to explore how to purchase the freehold and ensure that you don’t enter into any unsustainable or unaffordable agreements.

• How Long Is Left On The Lease And Can It Be Extended?

Before you make an offer for a leasehold property, you must find out how long the lease is and how many years remain. This is not something that should be overlooked or forgotten. If there are less than 80 years left on the lease, the chances of securing a mortgage are slim. Cash buyers should also exercise caution because they may find it difficult to sell the property in future.

You do have the legal right to extend the lease once you have owned the property for two years. Further, steps can be taken by a seller of a leasehold to extend the lease before they sell. However, this process can be complex and time-consuming and, if you cannot agree upon a price with the freeholder, you may have to take the case to a tribunal.

• Are There Any Service Charges Or Ground Rent To Pay?

When purchasing property, it’s important to have a comprehensive overview of your finances, as there are many expenses involved. Leasehold property may cause you to incur additional fees to which you will be committed in the long term, such as ground rent or service charges (these are particularly common in apartment blocks that have communal areas).

Find out what charges there are, how much they will cost, and whether they will increase in future.

Contact Astle Paterson for Professional Conveyancing Services

At Astle Paterson, our expert conveyancing team can help with all aspects of your home purchase, including carrying out all necessary checks on leasehold properties.

To find out more, or to request a free, no-obligation quotation, please call us today on 01283531366.

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