Buying a property is one of the biggest investments you are likely to make during your lifetime, so it is vital that you get the right advice and understand the legal status of what you are buying.
One of the most confusing aspects of property is whether it is freehold or leasehold, and exactly what that means. Fortunately, a complete explanation of leasehold property can be found online via the government’s own website.
Recently, there have been raised levels of concern about leasehold properties, particularly new builds that developers are selling with complex leases. Recent investigations have suggested that up to 90% of leaseholders have not received the correct advice about properties they have purchased and did not understand the difference between freehold and leasehold properties.
The government is currently seeking to ensure that new builds will be freehold properties, but this merely highlights the need to understand the status of the property you are buying and any annual costs that might apply to it. Currently, these will include ground rent and service charges, and they may be subject to annual reviews.
Alongside legal advice, it is important that prospective buyers carry out an accurate and complete survey of the property. If you are searching for a new home in the Home Counties, whether you need a home buyers survey Hertfordshire, Oxfordshire or Bedfordshire you will be able to find advice online at sites such as home buyers survey Hertfordshire.
Extension of the lease
Your legal advisor and surveyor will establish whether the property is freehold or leasehold. Put simply, if it is freehold, you own the building and the land it is built on. A leasehold property will revert to the freeholder to whom you pay ground rent at the end of the lease.
When the lease has less than 70 years to run, lenders will be reluctant to offer a mortgage, and you may have to negotiate an extension of the lease. This is not as unusual as it sounds, and most freeholders will be open to a prolongation of the agreement at a financial cost to the lessee.
If you are buying a leasehold property, particularly a new build, make sure you do your homework, have the correct advice and can purchase with peace of mind.