There are two ways to own a home in England and Wales, freehold or leasehold. A freehold means you own the building and the land it stands on. A leasehold means you are granted a lease from the freeholder. There are a number of things you need to consider when buying a leasehold and getting it wrong can be a costly mistake. These include:
- Length of unexpired term – The shorter the lease the less it is worth. Anything below 90 years remaining is considered a ‘short lease’. The value can decline dramatically as it runs down. It may be hard to sell as lenders may refuse to lend. You may be able to extend the term but you need to ask the Freeholder before you buy.
- Ground rent – leases with high or doubling ground rents can be difficult to raise a mortgage against so consider the ground rent provisions carefully. You may find yourself in a nightmare scenario where you are trapped in a property that you cannot sell.
- Garden space – With the increase in working from home the right to use garden space whether exclusively or not has become more relevant
- Share of freehold – the option to buy a share of the freehold allows you greater freedom on how the building is managed and the potential to grant yourself a lease extension for nil consideration.
- Covenants – the lease sets out various rights and responsibilities and your legal advisor should check that there are no overly onerous covenants.
Our property lawyers at Bretherton Law have been helping clients with property transactions for over 50 years applying our local knowledge and proactive approach. If you are buying or selling property please contact Osman Dervish on 01727 869293, email email@example.com or use the contact form below.