Purchasing a leasehold property can be a complex process at the best of times, but that is especially the case at this current moment as the Government looks to overhaul the system to make it fairer for buyers.
In this blog, we are going to highlight six checks you should always make before putting an offer in on a leasehold property.
Should it be sold as freehold instead?
Last year the Government announced a ban on new build houses being sold as leasehold so if you are looking to purchase a brand new house, the first question you should find out if whether it’s being sold on a leasehold or freehold basis, as some properties may slip through the gaps.
How many years remaining on the lease?
Before making an offer you should find out how many years remain on the lease. If there are less than 80 years on the lease it can affect your chances of getting a mortgage or your future sale prospects.
It is widely recommended that you only consider buying a property with a lease with less than 90 years if you have an agreement in place to extend it as part of the purchase.
Can the lease be extended?
Legally you have the right to extend a lease by 90 years once you have owned the property for two years. However, there can be plenty of factors that can delay that process including uncontactable freeholders and disagreements over the price.
Fortunately, the government is seeking to reform the lease extension and freehold purchasing process in a bid to make it better for buyers.
What are the associated service charges?
Flats or apartments under leasehold require the occupier to pay a service charge for the upkeep of any common or shared areas, such as corridors, staircases, exterior walls and the roof.
There is currently no cap on how much you can be charged, although this could change as part of the government’s suite of proposals to reform the leasehold sector.
Are there any ground rent clauses?
Spiralling ground rents played a significant part in the leasehold scandal, with some homeowners hit by ground rents that double every 10/15 years.
The government is now proposing to ban these doubling clauses and reduce ground rents on new leases to zero.
However, you should also ensure your conveyancer checks for any clauses, and don’t commit to the property unless they are removed.
Do you need to pay any permission fees?
When buying a second-hand property that was built in the past 10 years, it is important to look out for hidden clauses in the lease as some properties may be subject to ‘permission fees’.
Under these permission fees, managing agents impose fees for leaseholders to make various changes to the property.
For help and advice regarding leasehold and freehold contact a member of our team today.