The financial knock-on effect of leasehold property
When it comes to buying property there are two very clear types. No, we don’t mean the simple decision of house versus flat; we’re talking about freehold versus leasehold.
It is essential any buyer is both aware of the differences of freehold and leasehold and the financial knock-on effect owning leasehold property can have prior to the committing to the purchase.
When you own a leasehold property, which around three million people in the UK currently do, you have in fact bought a long-term rental. By this we mean you have purchased the right to live in or rent out the property for a set period, typically 99 or 125 years. You do not however own the land on which the property stands and are therefore required to pay a ground rent to the freeholder.
Issues with leasehold property can start to arise when the length of the lease slips below 80 years. This can then lead to problems in remortgaging and/or the sale of the property and would require the leaseholder to either extend the lease or buy the freehold.
As this sector remains unregulated, this can be an expensive exercise. It is therefore our professional advice that landlords look to resolve the issue well in advance of the 80-year milestone.
As a member of the Association of Leasehold Enfranchisement Practitioners (ALEP), Goldsmith Williams can provide specialist legal advice on lease extensions, individual and collective enfranchisement and LVT cases.
Content correct at time of publication