While owning a leasehold property is common in England and Wales, most people do not know what that means exactly. You might be looking for a commercial property in Farnham or you might have found your dream home and it is on a leasehold – and you might not know what that means. The first thing to do is not panic. A leasehold is one of the most common ways of owning an apartment, maisonette and flat. The other option available is a freehold where you own the property outright. With a leasehold, you will only have the exclusive ownership of the right to occupy the property for the length of the lease you have. This timeframe could be anywhere between 99 to 999 years.
Do You Have to Pay Ground Rent?
When looking at leaseholds, you will hear about ground rent and there is no way around this. Ground rent is the amount that you need to pay each year to the landlord. This could vary from a small amount of £10 to a more substantial £200 per year. The problem with ground rent is that it can increase a lot over a very short period of time. It is important to get advice from your solicitor if this happens, but you will need to ask how much the ground rent is early in the purchase process. You should also find out whether it will change, when this happens and what the consequences of the increase are.
If You Buy a Leasehold Flat Do Service Charges Apply?
You will have to set aside funds for this. A service charge is your share of the costs for maintaining the building your flat is located in. This will also cover any of the communal areas and services that you can use. You will need to pay these charges annually and in advance, but the amount you have to pay varies depending on the building, its condition and age.
How is the Flat Block Maintained if You Buy on Leasehold?
When you purchase a leasehold, you will become a leaseholder and the lease will set out what your rights and obligations are. The landlord will be the freeholder and they will also have their rights and obligations set out in the lease. As with any building, blocks of flats will need maintenance internally and externally. The building may have communal heating and elevators that need maintenance. This maintenance will be the responsibility of the freeholder, but the costs will generally be passed to the leaseholder in the service charge. The freeholder is also the person who employs the managing agents.
How Can You Check Fire Risks for Buildings You Buy a Leasehold Flat in?
You can find out this information from the fire risk assessment of the building. This is something that your solicitor will need to get a copy of from the building manager. All blocks of flats in England and Wales will need to have a regular fire risk assessment.
Will You Be Able to Adjust a Leasehold Flat After You Buy?
There are some leases that will ban all alterations completely while others will need you to get consent and others will have no restrictions. It is important that you check this before you buy the leasehold. In most situations, you will need to approach the managing agent who works for the landlord.
If You Want to Sublet a Leasehold, Will You Be Able to?
There are some leases that will not allow you to sublet the flat. There are others that require you to get consent from the freeholder and others that do not have any restrictions on subletting. As the lease can vary regarding this, you will need to check with the freeholder or landlord before you buy, particularly if you are already thinking about this.
Can the Leasehold Expire?
A leasehold will have a start date and an end date. This is why you need to check how long the lease has left before you buy because it can become harder to sell the shorter the lease term gets. You do have the right to extend the lease after you own a flat for 2 years, but you need to pay the freeholder for this. These costs can be substantial and will often depend on the length of time left on the lease.