Leaseholders have extra ongoing expenses to pay, such as ground rent and service charges.
Leasehold flats and houses
Most flat owners are leaseholders, even if they own a share of the freehold as well. This applies whether the flat is in a purpose-built block or a converted house.
Some houses are also leasehold, especially new-build homes.
You may be able to buy the freehold for a shared-ownership house if you increase your shares until you own 100% of the home.
Right to live in a leasehold property
Leaseholders buy the lease to their home. This gives you the right to live in your home until the lease runs out.
Most new leases are granted for 99 years, but can be for as long as 999 years.
The time left on the lease is reduced as the years go by and eventually runs out unless it is extended.
A lease can be bought and sold at any time, but it can be difficult to find a buyer or to get a mortgage if there are fewer than 80 years left to run. It's usually possible to extend the lease, but you have to pay to do this.
Responsibilities under a lease
The lease is a legal contract between the freeholder and the leaseholder. It explains the rights and responsibilities you and the freeholder have.
Every lease is different, so it's important to check what it says. They are usually written in legal language. Your solicitor should check your lease before you buy it to make sure there are no unreasonable conditions.
Ask your solicitor to explain the conditions of the lease including how:
- much ground rent you will have to pay
- service charges are calculated
- repairs to the structure and shared areas of the building are arranged
- service charges and ground rent can be increased
You should also ask your solicitor:
- if you have to contribute to major repairs that have already been done (such as replacing windows or repairing a lift)
- who has to arrange and pay for buildings insurance
- whether you need permission to rent out your home or make alterations
Problems with a lease before you buy
If you are buying a leasehold property, try to sort out problems with the lease before contracts are exchanged.
This might mean that the seller has to sort out a dispute about repairs with other leaseholders, the freeholder or both.
This could delay the purchase, but is usually much easier than dealing with the problems after you move in.
Leaseholders usually have to pay charges to the freeholder or a managing agent who looks after the property for them.
Charges vary from one property to another and can be expensive.
As a leaseholder you may have to pay:
- ground rent for the land on which the property is built
- service charges for repairs, cleaning and maintenance
- a proportion of buildings insurance taken out by the freeholder
- into a sinking fund to help cover the cost of future repairs
Last updated 08 Feb 2017 | © Shelter
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