Buying and Selling a Leasehold Property – what to check
When you buy the leasehold, you own the property but only lease the land it’s built on for a specific time which means there are a number of potential issues to watch out for including:
- Escalating ground rents – when a new build developer sets the initial rent at one level but with the prospect of it doubling every ten years, for example, making the property possibly difficult to sell on again;
- Extending the lease – extensions get much more expensive after the lease falls below 80 years;
- The importance of checking the small print – the lease between the leaseholder and the landlord must cover things that are the leaseholder’s responsibility like paying an annual ground rent, contributing to maintenance and management costs as well as insurance for communal areas.
The most commonly sold and purchased leasehold properties are flats, often accompanied by a disproportionately large number of problems and delays.
Buying the Freehold of a Leasehold house or extending the Lease
This is where you own a house but the title to it is leasehold, and you wish to buy the freehold. There may also be circumstances when you wish to extend the term (i.e. length of your lease) and you have either agreed terms with the freeholder/landlord or require advice on how to proceed, although this is less common.
