Would someone please explain?

[Morbyd]

... the reasons for this strange behavior

No, seriously, property question.

Why is it that leaseholds - this peculiar Brittish thing where you buy a property but it's not really yours - cost as much as freeholds or shares of freeholds?

I've been looking at London property and the prices are insane enough, but then I realize that a listing is only for a leasehold, I can't help but wonder why anyone would bother

 

[Drew]

It's only the land you don't own, not the building.

Leases are rarely a problem, usually something daft like 999 years at 25p a year or something daft like that.

There are sometimes restictions as to what you can do with the land e.g. erecting fences etc but it's usually quite relaxed. If it's ok with the council, the landlords usually don't mind.

Our communal building is leasehold and we have to pay quite a lot because of the large grounds divided by the number of apartments.

 

[Morbyd]

OK... so if you buy an apartment on a leasehold that ends in 10 years or something (I've seen some short ones listed), then you've got to pay for a new leasehold when your time is up? Does this restrict your mortgaging power? And what if the owner of the land has some bright idea for the property?

And a separate question - why do people insist on such crappy interior design for apartments they're putting up for sale?!?! I'd rather have the place bare and fill it with Ikea

 

[Drew]

And a separate question - why do people insist on such crappy interior design for apartments they're putting up for sale?!?! I'd rather have the place bare and fill it with Ikea

Cos, unfortunately, you can't buy taste

When we first bought property, we looked at some older houses and yes, there were some real horror stories

It was great starting with a blank canvas this time.

Re: the lease, i'm not really well up on all the in's and out's but it would be fair to say avoid 10 year leases or anything less than the remainder of your life on this earth

 

[Morbyd]

Re: the lease, i'm not really well up on all the in's and out's but it would be fair to say avoid 10 year leases or anything less than the remainder of your life on this earth

Ya, well that's exactly it. Even if you get something longer, presumably you'd want to leave the property as inheritance to someone and they might have to deal with an expiring lease. Even worse, you could try to sell it in later on but it turns out the remaining lease time is less than the life expectancy of the buyer, and they won't want to deal with it

It's just a wacky system all around.

 

[Drew]

Why are you wanting to buy in London anyhow?

To rent out?

 

[Morbyd]

Why are you wanting to buy in London anyhow?

To rent out?

If you can rent the space on your sig, then why not?

No... just thinking about. I've got to own some property at some point. I'm not a spring chicken anymore

 

[Barbie]

Morbyd basically avoid anything with less than an 80 year old leasehold, it's difficiult to get a mortgage on it and when you come round to selling it most prospective buyers won't touch it and you'll have to stump up £1000s to extend the leasehold before you can sell it.

A lot of places in London are built with a 999 year old leasehold so they're fine.

 

[Fronty]

Hi Morbyd at last something i can help you with,
No mortgage company will lend on a property woth a lease under 85 years(well 99.;9% of lenders)

You can still have a share of the freehold and the property still have a lease.

It either works to ways the freehold is either held by a property maintainance company - some are very good some not so good they charge you xxx amount per month/year for the upkeep of all comunial areas stear clear of the ones with lifts etc as they are muchos £££'s

To extend the lease you would need the permission of the freeholder.
Theya re normaly good at this and down this way costs about £2,000
to get a new 99 , 120 , 199 year lease.

Some maintainance company thou charge you lots of money and just let the places rot so be carefull of that !!

The other way is a share of the freehold or right to manage which is where everybody in the block chips in per year the money goes into a pot and when things need doind comunial halls roof etc then it comes out the pot.

Only danger of this is if there any big repairs you may have to pay out almost straight away if buildings insurance doesnt covert it.

You may also still have a ;ease even thou you have a share of the freehold but to extend it you just need the permission of all the other freeholders who have shares which to be honest is never a problem

in all these cases aswell you will need to pay ground rent and sometimes buildings insurance is also extra.

You should buy in the south east the prices are a lot better than london and you get a good return on your money

check http://www.parklandestates.co.uk for an idea of whats avalible


Any more question or mortgage advice needed give us a call as being in the buisness if i cant help you i will know somebody that can !!

Fronty

 

[Morbyd]

Thanks, Fronty. That's basically how I understood it but you've put into words (therefore clarifying) some of the little points that I'd just assumed.

I have a friend who bought in Chelsea and share of the freehold ended up costing him big $ because the building needed repairs. Not pleasant.

That said, I'd rather have a freehold or share thereof. I guess it's just coming from a country where when you buy property, it's yours

 

[Buckley]

Hi Morbyd at last something i can help you with,
No mortgage company will lend on a property woth a lease under 85 years(well 99.;9% of lenders)

In the process of selling my old flat to my friend Tim. Lease has 73 years to run and his mortgage was rubber stamped by high street bank without problem. Admittedly the loan to value ratio means he's a low risk - He's only borrowing £80K of the £150K he's paying. (And yes that's a bargain for a two bed flat in London, even in the suburbs).

 

[Morbyd]

Hi Morbyd at last something i can help you with,
No mortgage company will lend on a property woth a lease under 85 years(well 99.;9% of lenders)

In the process of selling my old flat to my friend Tim. Lease has 73 years to run and his mortgage was rubber stamped by high street bank without problem. Admittedly the loan to value ratio means he's a low risk - He's only borrowing £80K of the £150K he's paying. (And yes that's a bargain for a two bed flat in London, even in the suburbs).

You're selling a 2-bedroom flat for 150k? What part of town????

 

[Buckley]

Hi Morbyd at last something i can help you with,
No mortgage company will lend on a property woth a lease under 85 years(well 99.;9% of lenders)

In the process of selling my old flat to my friend Tim. Lease has 73 years to run and his mortgage was rubber stamped by high street bank without problem. Admittedly the loan to value ratio means he's a low risk - He's only borrowing £80K of the £150K he's paying. (And yes that's a bargain for a two bed flat in London, even in the suburbs).

You're selling a 2-bedroom flat for 150k? What part of town????

N11 - New Southgate - it right out in the surburbs. 15 mins walk to a tube station. But's it nice and quiet - next door to a graveyard in fact.

Leasehold flats are ok. The freeholders are required by law to let you by the lease back up to it's full term. I enquired about buying my mine back up before I sold and it would have been £4K to go back up to 125 yrs. Not to bad when you consider I bought the place for £45K nine years ago.

 

[Robder]

Sorry, couldn't be bothered to read the whole thread so I'm probably repeating something here...

Rent on property can be more expensive than a mortgage - the same applies to a freehold. If you're renting the freehold (paying ground rent/maintenance) then you're going to pay as much as if you own it.
NEVER buy a property with a lease of less than 100 years because it will be really hard to sell.

(State the obvious Robder. )

 

[Morbyd]

Rent on property can be more expensive than a mortgage - the same applies to a freehold. If you're renting the freehold (paying ground rent/maintenance) then you're going to pay as much as if you own it.

OK... now you've confused me... just when I thought I had it all under control.

I thought a freehold MEANT that you owned it.

 

[Robder]

Sorry I should've stayed quiet!!!

Leasehold = renting freehold
Freehold = owning the building as well as the interior.

I'll shut up now before I confuse you any more.

 

[Fronty]

Thats true but
to confuse things even more

you can have a share of the freehold but still have a lease on your property as your sharing the freehold and not owning the whole free hold

 

[Buckley]

Sorry, couldn't be bothered to read the whole thread so I'm probably repeating something here...

Rent on property can be more expensive than a mortgage - the same applies to a freehold. If you're renting the freehold (paying ground rent/maintenance) then you're going to pay as much as if you own it.
NEVER buy a property with a lease of less than 100 years because it will be really hard to sell.

(State the obvious Robder. )

I am in the process of doing just this with consumate ease. And I bought with less than 100 yrs on the lease myself.

As above the freeholder is legally obliged to let you extend the lease so if buying simply enquire as to costs and allow in your offer calcualtion.