Beware the leasehold property trap

Over the last several years, there has been an increase in demand for affordable housing in the United Kingdom. As a result, some builders are building residences for purchasers on a reduced budget.

This is clearly excellent news, but it may come at a cost.

Keep an Eye on Things:

It's nothing new to sell a house as a leasehold, and it's not always a negative thing. It all depends on the leasing conditions.

Some property businesses, on the other hand, have sold leaseholds to other property companies. These businesses, according to The Guardian, have offered to sell the homeowners the freehold rights to their house for a premium sum. If the owner refuses, they can keep paying the ground rent, which increases every 10 years.

The lease on a new-build leasehold property is typically 999 years long, with a ground rent of roughly £295 each year.

Our lease extension experts can guide you through with efficiency.

Make sure you Receive Legal Guidance before Extending your Lease:

When a leaseholder is uninformed of their statutory entitlement to an extended lease, they may be forced to accept a terrible bargain from their landlord. The Landlord might give a lease period that is shorter than the statutory term, require the leaseholder to pay a higher ground rent that is often changed, or simply demand a payment that is substantially greater than what is could be if the leaseholder had proper professional advice.

In Fact:

As a result, some homeowners might find themselves between a rock and a hard place. They may either pay the escalating ground rent payments or a higher price for the freehold.

When one buyer acquired a leasehold house, they were informed they could buy the freehold for £2000 to £3000, according to Guardian Money. However, they were informed a few years later that the leasehold had been transferred to a new property business, which then requested £40,000 to purchase the freehold.

In conclusion:

When purchasing a home, read the fine print on all of your contracts with the seller. If you're buying a leasehold property, make sure you understand the contract's provisions and question your lawyer about the lease's long-term cost, the option of purchasing the freehold (and how much it would cost), and if your leasehold might be transferred to a third party.

For further questions related to lease extensions and property, contact one of our experienced chartered surveyors at Leasehold Valuations.

Lear More Information & See Our Leasehold - Freehold Service

Leasehold Vs Freehold

I commonly favor freehold properties to leasehold ones as ground lease installments, administration charges and the expense to expand the rent and additionally purchase the freehold, before long adds up. This regularly implies taking a gander at houses as opposed to pads, yet lately houses on new-form destinations have been falling into the leasehold possession type as well. Once in a while this is because of the landowner's inclination and some of the time the developer is getting themselves in a position for monetary benefit - either by means of the ground lease installments or by offering the freehold to an outside organization.

Ground lease charges can twofold at regular intervals

While some new-form houses accompany 'for all intents and purposes freehold long term leases', there is a snare for the unwary. Envision a statement in the rent that says you need to pay £200 each year in ground lease. Sounds sensible? Yet, imagine a scenario where it says this charge will twofold at regular intervals. Really innocuous? Well in fifty years' time the ground lease would be £6,400 every year! What's more, an additional fifty years after that (when maybe your incredible grandkids will claim it) there will be an obligatory £204,800 to pay every year! I don't have the foggiest idea what expansion will do by then, at that point, however I wouldn't need that commitment around my neck.