Facts to Note About A Leasehold Property

Sales agent do all it takes to sell leasehold property to home buyers. It’s sales, so it’s positive. Part of the pitch is enticing new home buyers with the idea of owning their own home. A very emotional appeal, and great too. But truly the advice here will be that perspective home buyers should ensure they carry out their own research to ascertain reality complete ownership of properties before further talks and commitments. Only when the home buyer has done due diligence will he be able to either re-sell, renovate or have free access by seeking permission from the freeholder. Even when these changes are minimal like changing the door bell or bringing in a pet, they still need to obtain permission to carryout these changes.

Most home owners who take time to educate themselves about procedures, ownership and other relevant matters avoid future issues. One of such is buying properties with ground rents doubling every 10 years. Care, if taken, helps to avert piles of bills to pay in the near future. While controversies may, although not usual, arise from the leasehold agreements, knowledge and renegotiation are tools for resolution. A leasehold scandal in the late 2016, showed that home owners must shun ignorance of the law and relevant matters to avoid being victims. This can not be overemphasized.

Three Major Facts to Note;
  • Terms and Condition of Lease: One needs to know the type of restriction on the property as permitted by law by the land owner. Is it one that prevents you from bringing in a pet or making changes to the house generally? Or one that allows you to make minimal changes without having to seek permission? Bear in mind that any violation of the laid down rules on the property can lead to a legal action against you.
  • The number of lease years on the leasehold property: Most properties have been resold a couple of times to different leaseholders. Thereby reducing the specified years of lease as agreed by the land owners (freeholders). When these years fall below a certain number of years, it becomes difficult to obtain loan from most mortgage companies.
  • Ground Rent/Service Charge: This is the fee paid to the land owners to offset the cost of maintaining the building. Also, the leaseholder pay fees for the land where the building is built as a ground rent. These charges vary and can be incremental overtime. The leasehold scandal of 2016 revealed loopholes which serve as a lesson to real estate stakeholders and the Government.

Before you commit into paying for a leasehold property, ensure you understand these facts or seek legal advice on grey areas.