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propertylawyer
propertylawyer, Solicitor
Category: Law
Satisfied Customers: 280
Experience:  Property Solicitor with expertise in commercial and residential property transactions.
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We are selling our house and it is early days at the moment

Resolved Question:

We are selling our house and it is early days at the moment we have seen a property that we would consider buying but it is leasehold is it a risk to buy when it is leasehold rather than freehold which we are in a property at the moment could you tell me what the disadvantages are and advantages the estate agent that the house is with says there is no ground rent on this property still need answers not sure in my own mind
Submitted: 10 months ago.
Category: Law
Expert:  propertylawyer replied 10 months ago.

Hi

Thanks for your question.

There are differences between leasehold and freehold.

1. The lease will contain covenants, I.e obligations with which you must comply. These range from repair, payment of service charges, regulations as to use, whether you need consent to alter the premises.

2. It is a depreciating asset. As the term expires it effects value. Do not allow the term to drop to 80 years or below, it becomes considerably more expensive to extend the term. If the term drops to around 70-75 years or below it is effectively unmortgageable, meaning a buyer's lender will not agree to finance the purchase.

A tenant becomes a qualifying tenant after 2 years ownership and can then rely on the statutory process to extend the lease, generally an additional 90 years but subject to payment of a premium.

I hope this helps.

Any questions or queries? Happy to assist further.

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Customer: replied 10 months ago.
The lease is from 1966 for 999 years
Expert:  propertylawyer replied 10 months ago.

Then the points stated on lease extension obviously do not apply.

However, you will be controlled by the terms of the lease.

The covenants in a virtual freehold lease are generally less restrictive than a standard 99/125 year lease.

Customer: replied 10 months ago.
would you in your opinion not consider buying a house that has leasehold with these restrictions
Expert:  propertylawyer replied 10 months ago.

One would need to see the lease and explain the implications of the covenants to you. It is down to you to form your opinion after being advised of the covenants/implications.

The covenants in a virtual freehold lease of a house should be very minimal.

Ask the agent for a copy of the lease. Alternatively you can buy it for between £3 and £6 from the Land Registry.

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Customer: replied 10 months ago.
Thank you will have to look in to this