Leasehold Property: The Low Down
People seem to have got their heads around freehold property, but here at Luxe Property Group, we often still get asked about the lesser known – leasehold properties. In the past couple of years leasehold ownership has been on the rise, including approximately 95% of new properties in London that are being sold. Leasehold ownership effectively translates to long-term tenancy, the right to occupy and use a property for an extended period of time. Typically, the period is anywhere from 90 years to 125 years, but not uncommonly the period is up to 999 years, making it almost indistinguishable in the buyer’s mind to freehold ownership. Like all forms of property ownership, leasehold properties come with their own set of pros and cons. Here we have listed a few to help you make the right decision.
- Leasehold ownership properties are usually cheaper to purchase than owning a property outright – making it a good option for many as we see property prices rising.
- Often after two years of living in a given property, leaseholders are offered the option of extending the lease by 90 years, although this does come at a cost.
- In apartment blocks, leaseholders occasionally have the opportunity to work alongside other leaseholders in that block to buy out the freeholder, leaving them with a share of the freehold. Responsibilities for maintenance of the property will then be passed on to the given occupants.
- Aside from the initial payment, you will often be required to pay ‘ground rent’ to the freeholder. This can range anywhere from £10 a year for ex-local authority flats to £300 a year for modern luxury apartments.
- You will also be required to pay a fee towards the maintenance of the property, this can be managed by the freeholder themselves or by an outside block management service like us.
- Leasehold ownerships also limit you on the work that you can do to your property, all major works must be accepted by the freeholder first.
- Probably the largest con for leasehold properties is what happens after there is less than 90 years on the lease. Banks will become less likely to offer mortgages on properties with less than 70 years, so we’d definitely recommend cautiousness when faced with a shorter lease.
About Luxe Property Group:
At Luxe Property Group, we offer our clients the very best in property development, property investment and property management solutions. With extensive experience and an unrivalled success rate, we’re always keen to explore new opportunities. Call us on 020 7383 8042 or email us at email@example.com to find out how we can strengthen your portfolio.
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