You may have heard of the various terms when it comes to buying or even renting a property. Leasehold is one that is common with many types of buildings and properties. However, what is a leasehold property? In this article Norwich Home Buyers explore exactly what is a leasehold property as well as the advantages and disadvantages of purchasing a property with this factor attached.
What Does Leasehold Mean?
Leasehold means that you own the property but the land in which it is built upon is owned by the freeholder. Overall meaning you have the right to occupy the property for as long as the lease is valid. Leaseholds are most common in flats.
How Do I Know My Property Is Leasehold?
It is a legal requirement that all homes when being placed for sale state if they are freehold or leasehold. Leaseholds tend to be more aligned with flats due to them being built on leased land. There are around 4.2 million homes across the UK that are leasehold, and this number is growing each year. Particularly due to city centre living and housing developments becoming more and more popular.
How Long Do Leases Last?
Most leases will run for a number of years but also will be dependent on a number of factors. This will be primarily down to what was agreed before the property was sold, as well as the type of property you are purchasing. Most leases will run for around 99 years, but have also been known to run up to 999 years. It is worth asking your solicitor or estate agent to look into it for you prior to purchasing.
What Is Ground Rent?
Ground rent is the annual charges that leaseholders must pass to the owner of the freehold. Within many contracts be that if you are buying or renting a home there will be a clause which states how much you must pay, as well as that the amount can increase year on year.
This is a vital part of the costing factor which you must explore before entering into any contractual agreement. Adding this into your costs also ensures that there are no surprise costs along the way. A conveyancer, solicitor or even your estate agent will be able to obtain the information in which you need prior to moving in or signing for your home.
What Is A Service Charge And Why Do I Pay It?
A service charge is a fee that is payable by all residents which contributes towards the upkeep of the building. This could include the communal areas, upkeep of outdoor spaces, as well as general building maintenance. Ensure that you ask your solicitor or surveyor to get a better understanding of the costs, when it is payable and also what it covers.
The Advantages Of Leasehold
There can be some major benefits to owning a leasehold property, especially those which are renting the conventional flat or apartment block. This is because under the service charge most will be cleaned and also maintenance in the gardens, carpacks, lifts and exterior of the building will always be taken care of.
The Disadvantages Of Leasehold
With a leasehold property most will have to pay an annual ground rent as well as a service charge. This can become costly depending on where you live and what is also included. Other issues can come from also needing to seek permission before making changes to your property as you do not technically own the land it sits on.
One of the main issues facing most owners of leasehold properties is not owning that property past the lease date. Most leases will run for a number of years, however those under 70 years are increasingly difficult to obtain a mortgage on, as well as sell. These are all consideration points that you need to take into account.
To Conclude
As you can see when it comes to what is a leasehold property the principle is very straightforward. There are some disadvantages to purchasing a leasehold, however this should not put you off. Buying a flat in a city centre location may be what you need. However understanding the process is also very beneficial. At Norwich Home Buyers we advise a number of clients purchasing leasehold properties. And it continues to be popular in the local area. For more information please do Contact Us.