Leasehold

There is a lot of discussion about it on the moneysavingexpert House Buying, Renting and Selling. Seems to be a very good change!

Leasehold on houses, not flats or apartments are being sold to owners, there is a cost, you will have to contact the owner and negotiate how much
It’s now difficult to sell a leasehold house, unless a big discount.

Ah, OK. The property in question is a flat. I enquired about extending the leasehold and the whole process is very cloak and dagger. You have NO idea how much it is going to cost until you have forked out for your own solicitor AND are liable for the leaseholders legal fees.

So I could start the process, owe several thousand pounds in fees, only to find out the cost of the extension is too much. I can't afford to do that.

Hello Gagajo, We were in the process of considering a lease extension for a flat we let out. We have delayed due to C19.
Bear in mind, you will pay your own conveyancing solicitor & a valuation surveyor. Ask both to quote first before engagement. They usually provide conveyancing "packages" Just email or ring some up. You will also possibly pay legal costs & valuation/survey costs for the freeholder. Ask in advance what their costs are likely to be. I believe there is a formal letter you can send requesting that information.
After you've gathered all those details, ascertain the likely capital cost to extend the lease. This will be based on your flat's valuation so will be an estimate, and, how long there is currently left on your lease. Check out some websites like Rightmove & Zoopla for flats like yours that have recently sold. This could be a guide for how much yours is worth.
Based on all that you can then make a better informed decision before you pay anyone anything! I think the Gov.uk website has a lease extension calculator link which might be helpful. Search on Gov.uk for "lease extension" at least then you'll know the link is Government approved.
I thought at first it was all a bit Secret Society but to my surprise discovered that research is key & actually it might not be as "cloak & dagger" as you think.
I hope this helps?

Leasehold is a lot more varied than just these modern exploitative leases used by developers.

DD has a house which originally had a 999 year lease, although it is now down to about 970 years and a fixed ground rent of £30 a year. She could buy out her lease but cannot see the point.

DMiL had a lease on a flat where the leaseholder was a management company, whose sole members were the flat owners, so she had a lease, and owned a share of the freehold.

Gagajo Depending on how many flats are in your block, I think there is already an Act that says if all flat owners agree you can buy out the freeholder and set up a company that owns the freehold and for whch the only share holders are the flat owners. This was the situation for DMiL. here is a link hoa.org.uk/advice/guides-for-homeowners/for-owners/should-i-buy-the-freehold/

Yes, leaseholders in flats can buy the freehold, if they are upmarket places and not too many, maybe that is practical because residents would be able to agree and have the cash to pay the charges.
Getting everyone to agree and pay on a large block is difficult and someone has got to manage the maintenance of the building and grounds, so in most cases it’s not practical

Daughter owned a leashold flat and bought out the lease. She thought this would make it easier to sell on.
Not all that complicated or expensive. Except the owner of the lease can always refuse to sell.

The process for me would be as Nonogran has laid out above. I got in touch with the freeholder last year and asked. Fortunately, once I tracked down the right department, I reached a very nice man on the phone.

I would be responsible for paying my conveyancing and valuation AND the free holders. And the freeholder won't tell me how much the cost will be for the extension of the lease until the process is started.

Like most people, I don't have limitless funds. My savings have been built to try to fund a bit of retirement for myself, because I get no state pension until 67 and I have no occupational pension. Therefore I can't enter into a process where I don't know what the final cost will be before I decide to go ahead. It seems totally archaic to me that I would have to commit to that.

I am going to look into it more later in the year when I return to the UK. The flat is a very good location, and with an extended lease would be a really good investment to hold onto. As it is right now, it is in all likelihood only landlords that would be interested, because the rental income could be great, due to the location.

Last week on radio 4 the question of renewing the lease was raised; the expert advised to leave it for 4 years as the rules are changing. In Scotland the rules are different and I have a feeling they're ahead of us in the changes?

I’ve been looking at buying a place for a few months and have decided leasehold is something to be avoided if possible. The problem is that the agreements are often open ended, service charges can be increased at any time, even if you challenge them if the freeholder can justify the charges you are stuck with them.

If apartment leaseholders buy the freehold they have to administer and carry out any maintenance, on an older property major work would need financing long term. My thinking is the biggest difficulty is getting everyone to agree what needs doing, there will be savings, with that comes a lot of admin and hassle.

One of the worst examples of leasehold are retirement apartments, where service charges are very high, with restrictions on who can buy when you need to sell, in many cases your lease is virtually worthless.

Most of us want to own our own place, if you get a mortgage on a leasehold and pay service charges, you are never really sure and may be better off renting.

Katie59 If you buy a flat, a lease is almost inevitable because there has got to be a way of handling care of the block as a whole and the shared spaces like halls and stairs.

The main thing to avoid is any flat development where the freehold is not owned by a company owned and run by the leassees only. Yes, it means a certain amount of hassle, but how else can it be organised?

The main thing is to ensure that flat leassees have an obligation in their lease to make a monthly payment into a maintenance fund owned and run by the leassees through the leassee run company.

DMiL had a lease that worked like that. It was quite some time ago, but the flat leassees paid the current equivalent of about £100 a month into the fund and when they had the outside of the house redecorated and later the roof renewed, there was no demand for extra payments because there was enough in the maintenance fund to meet the bills.

The government is looking into changing the law and rightly so.

We live in a small block of flats, 9 in all. We purchased the Freehold between us in 2016. We got rid of the useless management company in 2019 and now run the block ourselves. We set up a limited company and all the freeholders pay a service charge every month and out of that we pay for things like communal cleaning, window cleaning etc. My DH and I are directors of the company, I do all the admin, pay bills etc, he sorts out tradesmen as and when they are needed.
We have agreed that we will never ask the other freeholders for more money. Things like decorating etc will only be done when there is a enough money in the bank.
It works for us. The accounts are certified by a qualified accountant once a year and filed at Companies House. If anyone has a problem they speak to us about it.

Katie59 I think it's unlikely you will be better off renting if security of tenure is important to you though - unless of course you are fortunate to rent via a council or housing association.

The stress involved in rental - invariably short term these days, can be horrendous.

I do take the point on expenses though.

Sar53

I’m glad it works for you, presumably you get an allowance for managing the company to cover your time, how much better off per month do you think you are.
It would be nice to know in general terms what is cost to buy the freehold.

Katie59 I will pm you.

The rental problem was why we bought the leasehold flat in the first place. 3 moves in 3 years.

Thanks Sara that fills in the uncertainties