Buying a leasehold flat. Help needed.

There are leaseholds and leaseholds. DD has a leasehold property in Letchworth Garden CIty. It was originally a 999 year lease, with 898 years to run. The ground rent is £30 a a year and cannot be changed.

She could buy the freehold if she wanted, but, as she says, it will cost her as much as £5,000 and she would have to pay ground rent for about 170 years before the ground rent cumulatively cost more than the freehold, so why bother?

In the OP's case, I would hold off until the new ground rent was confirmed and in place. Currently the price may be advantageous, but as far as the ground rent goes, she would be buying a pig in a poke.

It's not just a question of economics though. My neighbour and myself bought the freehold jointly to the house that contains our two leasehold flats. It means we are totally in control of repairs and maintenance and the costs involved. However in other situations it seems a leasehold flat can be a total nightmare, especially with new(ish) builds and ex local authority flats.

I would not buy a leasehold property because of the future charges and contributions for improvements. Service charges too will increase and are not covered by housing benefit if that’s a factor as you move towards retirement and aging.
These properties are difficult to sell as well.

I am trying to sell my late mothers leasehold flat , as the property has been empty for two years we still have to pay two years maintenance charges already over 14,000 a joke as no one there !!!!

If your mother’s flat didn’t contribute to the service charges on the basis of being empty, everyone else would have to pay more. The development still has to be maintained.

I was secretary and chair of a small management company.

Those management charges that are owing, unless payment is made when requested, will be taken out when a property is sold plus the accrued interest, which is something like 4% above base rate, compounded

I spoke with a guy who achieved the above of changing maintenance company and reducing maintenance to 800pa from over 2k. I remember he said he needed signatures from a lot of residents. And a good solicitor on board. !
Can pay solicitor from the maintenance savings It can be done. Good for him

We have got our service charges reduced in recent years.

A woman over the road to me paid what she thought was reasonable, and flatly refused to pay more, since the cheque had been accepted.

I detailed a letter explaining why I had taken off some charges, and held my gound.

The council said they would take me to court, to which I replied I was very much looking forward to it, to show that they breached almost every part of my mortgage agreement.

They accepted the payments, and the charges were about half, the next few years.

There’s been a lot of publicity about leasehold retirement apartments during the past few years. My parents bought one in 1997 & when I finally managed to sell it in 2022 it had depreciated by over 40%. Mum died in 2019 & it took over 2 years to sell costing thousands in fees whilst empty. They seem to be generally over-priced when new. Be very careful. I wish you every happiness in your new home, whatever you decide to do.

I bought a leasehold apartment in 2011, have not had any problems so far.

My daughter has a leasehold flat she has just received a bill of nearly £6000 for outside decorations! I’d steer clear !

No sinking fund then! Bad management.

I wouldn't touch leasehold with an extended bargepole! You have bought the property for probably upwards of £250,000 and 'you' are referred to as a 'tenant', and the 'freeholder' is your 'landlord'. Much depends on the quality of the Property Management Company, but, unless you are very lucky, at best they are unhelpful and at worst duplicitous and obstructive. Either way they are there to serve their own and the landlord's interests, not yours. Each government has talked about changing the leasehold system but it hasn't and probably won't, there are too many vested interests.
My post has turned into a bit of a rant, probably I'm still raw after having recently managed, after a year of legals and in spite of the management company, to sell a leasehold flat (not a 55 plus).
So my advice would be don't enter the murky world of leasehold, buy a small (or large) freehold house, and have control over your own property. And cash is king if you can manage it.

DMiL bought a leashold flat in a house where the 4 flat leaseholders owned the freehold through a privately limited company.

Right from the start they put a small amount of money into a sinking fund for repairs and agreed on maintenancce. It worked very well.

I would certainly steer clear of any modern leasehold properties, or anything where maintenance charges are involved and management is not in the hands of the flat owners.

Don't do it. Over sixties " retirement flats" are a racket and difficult to sell by your children while they go on paying service charges even when the flat is empty after you die. I almost got sucked into this but escaped to buy a freehold small terraced house in a town centre after extensive searches. I have mobility problems caused by arthritis. Bungalows are beyond my price range, but I had a stair lift installed paid for by the local authority in the little terraced house. Study all leasehold information. This racket is unique to England in the whole of Europe, including Scotland.

Morning Cathy.

I have recently bought a lovely ground floor, with lovely big garden, leasehold flat. I pay £250 per year to the freeholders and that's it, so great.

Before this however, I was going through the process of buying another and like you, didn't get to see the docs on the charges till I was a long way through the buying process. I was horrified when I read them, the charges were horrendous, £250 twice per year for cleaning the gutters, in a ground floor flat you can do that yourself!

The lady I was potentially buying from had been taken to court for not paying all these extortionate bills, thousands! they even charged a fee for the late charge fee, so like double billing everything!

Of course I pulled out, I didn't want to live with these bandits on my back. So please beware!

My leasehold is owned by 2 ladies, the horror story one was a management company so avoid them.

I do believe the Gov. is abolishing leaseholds, as they go back to the 17/18th centuries and are grossly out of date.

When the flat above me is sold [2 flat converted big house] I will look into buying the freehold with them.

Do people in freehold properties not put aside monies reguarly for maintenance such as gutter clearance, external painting, drain clearance, roof e[air/replacement, fence repairs, work in the garden, etc. etc.,?

To me that is similar to the money I pay for my Service Charge.
As our Management Company is voluntary, no salaries are paid, as the Committee who arranged all repair etc work is made up from our own residents, we all have a vested interest in ensuring all costs are kept as low as possible. Also small jobs are often carried out by our residents without any charge at all.
Our block of flats is always spotlessly clean (we have a wonderful twice weekly cleaner), the entrance lobby is a delight with seasonal large faux flower displays done by a resident who is a retired florist. We do care for each other (25 flats), will get in shopping, etc if someone is indisposed. The flat obviously help to insulate each other and all note how much less they pay than they did in their former houses to keep the flats lovely and warm, The leasehold here is 'owned' by our limited company Residents Association and the Ground Rent is one pound per annum, but in reality it is just a book keeping allocation on our annual account. Service charge can only changed by majority vote at AGM. If we ever did (never have to now), to ask each flat for a sum for any very large work (replacement of lift, major roof work), could only do so after arranging an EGM and getting a majority vote for this.

Yes, when flats are waiting sales, service charge still has to be paid, (like Council tax). But that does mean that anyone coming to view is coming to a beautifully kept and maintained building, AND the committee keeps an eye on any empty flat.

I would be wary of a leasehold house or bungalow, and would steer clear of retirement# flats which are often difficult to sell and those sales often have to go through the management company.

With a freehold you have control as to what work is done, when and by whom. In a larger development where works are commissioned by an external management company the residents have little or no control. Yes, they can get together to form a Right to Manage company, but on larger developments with a lot of flats sub-let it usually turns out to be impossible to get enough leaseholders on board.

Franbern You are talking of leaseholds as they are meant to work. My MiL lived in a converted house with similar management schem to yours and it worked well.

DD has a leasehold in our first graden city. It dates back to the 1920s, was originally for 999 years, the ground rent was fixed at £30, and cannot change and she can buy the freehold if she wants to.

The problem is that in recent years, builders have seen leaseholds as a way to milk householders of yet more money after the house is sold by setting high ground rents with regular increases, which they sell of as investments to investment companies.

Quite a separate issue is the charging for the care and maintenance of common areas, whether in flats or the grounds of housing estates. These will continue whatever the changes in leasehold law. Likewise the charges made by management companies for managing blocks of flats.

Then there are the payments demanded by the managers of retirement housing developments, not just for management but also taking a share of the value when it is sold.

GSM (above) has highlighted another problem area. where many flats in a develoment are sub-let.

On the subjectof the difficulty of selling retirement homes. Local to us is a large development of expensive, luxury retirement flats in a very pleasant area of a local village. The development has been up about 10 years. There wa a full page advertin the local newspaper advertising an open day there to see the faciities on offer onthe development, look at different flats and talk to residences. Clearly the first generation of residences are dying off and their families are having difficulty selling the properties, possibly because more and more people are aware that, whatever their advantages, the price of experincing them is very very high.

As a previous manager of this type of property I would advise not to buy. There is a fee to pay every time you want to apply to make changes eg new bathroom. Annual maintenance fees can go up a great deal. This was highlighted on BBC. Recently. I am really sorry to sound so negative but I feel you need to know. Has there been a survey on the whole property or just your flat?

There has in recent years been horrific stories on tv about the Leaseholder selling the leasehold on to foreign buyers who subsequently have raised the leasehold charge by significant amounts. I know they were talking of legislation to stop this but I don't know if it happened.

The ground rent can’t be changed unless the Lease allows it. Service charges can be challenged.

Do not buy it. Leasehold is a minefield. Especially those now owned by Housing Associations that were purchased under the Right-to-Buy. The Freeholder can decided on "repairs", new roof, this and that and the Leaseholders have to foot the bill. I know of four people who have such flats and they have tried to get help from Leasehold Knowledge and similar places but it needs an expert to comb through the Lease. You will feel like a tenant with huge bills.
There needs to be a lot of reform before leasehold flats will be worth the trouble.