In his latest article, Beach Hut Specialist Richard Ramshaw discusses how much a beach hut is likely to set you back, why some are so expensive and the process involved in buying.
It has recently been reported that about 40% of all new builds in England and Wales are leasehold (Scotland is excluded because their system is different). In addition, 90% of the new build property sold in London is leasehold. Strangely though, it isn’t just flats that are being sold like this.
Land Registry numbers show that thousands of houses are now being sold on long leaseholds as well.
Strictly speaking, this means that the homeowners are actually tenants under long leases. You have the right to occupy the property for the length of the lease (usually 99 years, 125 years or 999 years). However, the building itself and, vitally, the land on which it sits, remain the property of the freeholder. Your lease is important and you should make sure you have a copy as it sets out who is responsible for maintenance, insurance, and contains restrictions on how the property may be used.
Frettens' Conveyancing Executive, Jennifer Smith, comments on this, saying “This is difficult for a number of reasons. Firstly, it can be inconvenient. If, say, you want to add a conservatory, you might need planning permission and building regulations approval, but you would also have to ask the freeholder for consent. Secondly, it is expensive. The value of the leasehold (and therefore the price of your home when you sell it) falls as it nears the end of its term. Finally, you’ll also have to pay ground rent to the freeholder plus service charges for any expenditure the freeholder makes to the building.”
There are some safeguards. Leaseholders can extend their lease at will after two years, or buy the freehold. Leaseholders can also challenge service charges at a tribunal, if for example the quality of work is inadequate, or that a charge is not reasonable. However, the fundamental problem of owning a leasehold remains: you are effectively a tenant and are responsible for all the costs that come with the lease. This is bearable in a high-volume and rising housing market, but be fearful in a falling market.
If you are buying a new build property be aware of the difference between leasehold and freehold and make sure you understand everything your conveyancer is trying to explain to you. If you have already moved into a long-leasehold property, you might want to consider your options in taking back control – our lease enfranchisement page might be a good place to start.
Our Conveyancing Team, based in Christchurch, also cover Bournemouth, Poole and the New Forest. If you have any questions, you only have to ask us at Frettens. Please call 01202 499255 and Jennifer Smith or her team, will be happy to chat about your situation and you particular requirements.
