With an estimated 4.3 million leasehold properties in the UK, buying this type of home is certainly not unusual.
Indeed, although generally perceived as less preferable to owning a freehold property, most leasehold homeowners are very happy.
If you’re still wondering whether to take the leap, it’s worth thinking about your own circumstances.
Ultimately, buying a leasehold home needs to fit within your own needs and aspirations.
Also, from a practical standpoint, it’s a case of knowing what you’re getting into. Working with a good conveyancer will also ensure you’ll have no problems after the purchase.
Below are just some of the main reasons why buying a leasehold property can be a good idea…
Although it’s not always the case, leasehold properties tend to be cheaper.
Many young people, for example, buy a leasehold flat to get a step on the property ladder. A lot of properties under the Help to Buy first-time buyer scheme, for example, are sold as leasehold.
In larger cities such as London and Manchester, buying flats is actually more common than traditional houses.
After separating or divorce, others want to live in a smaller space.
This is the same for older people, who want to avoid the extra hassles and costs of owning a house that they’re entirely responsible for.
It’s also common to own leasehold properties for those working in city centres to save on commuting times.
Typically, as a leasehold homeowner, you’ll pay service charge will go towards a ‘sinking’ or ‘reserve’ fund.
With all the other leaseholders contributing to general maintenance costs, you’ll avoid the often significant expenses like roof repairs, painting/decorating of communal areas and, sometimes, even things like window replacement.
Shared electricity and water usage will also be covered by the service charge.
Overall, you’ll have less of the homeownership ‘overheads’ to worry about. These costs can often be a heavy financial burden for freehold property owners, especially if the property is old and/or listed (see some tips on assessing the age of properties here).
Furthermore, as there should always be money in the pot, other leaseholders will be just as interested to get matters resolved.
The result is often a friendly and cooperative environment to live in.
Part of your service charge will go towards paying for buildings insurance.
This will be another weight off your mind as the divided premium will work out cheaper compared to what freehold homeowners generally pay.
We would usually recommend taking out a contents insurance policy (which, these days, is often quite reasonably priced).
Many developments have gardens and other shared areas for residents to enjoy.
Regular visits by local tradesmen, to cut the grass or remove weeds for example, helps keep things nice and pleasant.
We’ve seen leasehold developments with lovely private lawns, children’s play areas and even allotments for residents to enjoy.
Some of the higher-end developments have facilities like swimming pools and gyms (although expect to pay a higher service charge).
Many leasehold properties have designated off-road car parking spaces and sometimes garages.
This isn’t always the case with freehold properties, especially ones close to town and city centres.
Although unscrupulous freeholders / management companies are out there, leaseholders have the power to get together and dispute issues of concern.
As a leasehold property owner, you may be invited to fairly frequent meetings – the minutes of which can be sent to the freeholder / management company.
If things get difficult, you can get together with other leaseholders to seek legal advice collectively.
The legal concept of collective enfranchisement provides leaseholders with the right to buy the freehold from the landlord.
There does need to be an agreement of 50% of leaseholders to move forward with such a plan.
Despite the legal process being quite complicated (and costly), it provides a glimmer of hope that your legal entitlement becomes more secure.
Some leasehold homeowners owners worry about their ability to extend their lease.
However, as long as you’ve owned the property for at least 2 years, you can add 90 years to your lease for a fair market price.
Note that you should be cautious about buying a property with around 80 years left on the lease as the extension costs can be extortionate. The property may also be deemed as unmortgageable by many lenders.
Also there are some legal loopholes that some freeholders abuse which your conveyancer should flag before you buy.
Leasehold properties are also popular amongst buy-to-let landlords.
As mentioned above, with many of the issues with the fabric of the building dealt with by the management company, tenants are happy and don’t have to make direct requests.
As they are generally cheaper, landlords can buy properties in good locations and benefit from long term capital gains.
Flats within in developments tend to be more secure as there are often gates, CCTV and other security measures.
If the flat is also high up (i.e. above the ground floor), the chances of getting burgled are also lower.