Leasehold Property

Hi Shassan,

A lease of 117 years is fine imho.

Leases only start to become a problem below 80 years, so you have 37 years without worry.  If you sold the property after 20 years, the new owner would still have 17 years themselves before needing to consider whether to extend the lease etc.

However, for what it is worth, I am not a fan of leasehold and particularly studio flats ....  See - Studio flats - good investment?

What are you buying ?

You will only be a tenant with a landlord

This is a crazy way to go 

If it was common-hold that would be different 

You will also sign up to uncapped and unregulated fees to many to mention  Don't do it !!!

117 years is not a problem at all, don’t let it worry you. The most important questions are what’s the ground rent, the service charge, is there a section 20 for major works, who is the freeholder.

I don’t like studios, but then it depends on the price and location.

You can always find a reason not to go ahead with a plan, but in your case the lease length is not the issue.

117 years left is good yes for the reason V mentions

Service charges are an occupational hazard anyway

Often includes insurance and they look after the major works - economies of scale

And  you buy much cheaper than the equivalent freehold so weigh that up

If the freeholder is the council the charges  wont sky rocket

If its a privately owned block then they can potentially get out of hand

but here are mechanisms to challenge if they do

And studios can be great little earners too on the yield front

Low maintenance.

Mine have trebled in value

Good Luck with your decision

I have 2 leasehold flats that I rent out .. my advice with leasehold is only buy if you have a share in the freehold .. ie the owners appoint the managing agency and hold approval over all charges .

The issue with leasehold is when the freehold is owned by a company .. a lease extension to 999 years for my flats cost £850 ... this would have been £25k plus had it been via a leasehold company , they also hold the right to increase service charges which can be very expensive ... I pay £850 per year on each flat .

It's worth a little research prior to making a offer

Read the lease legal document very carefully for any restrictive clauses. Check the wording regarding the Ground Rent. Factor in the maintenance and ground rent charges when doing your ROI analysis.

Assuming the ground rent and it's growth are reasonable a leasehold if 117 years is not a issue per se.

You need to check:

1) is the lease enfranchiseable. I suspect it is but you need to check so you can extend the lease. The sooner you do the better financially but definitely before it's less than 80 years where you would pay 100% of the marriage value.

2) you will have a right to but the freehold if a majority of leaseholders do not own the freehold (as you need a majority to exercise this right). You should check who the feeeholders are.

Best of luck!

Is there any potential problem at the time of remortgaging in few years time because of lease duration.

Also at what stage can I  request for lease documents (before or after  making an offer ).

117 years shouldn't be a problem. You will be looking to extend the lease when you have about 85 years left as a bare minimum. The value of the lease will very slowly diminish year on year though, but not by much.

As other members have suggested, take close note of service charges (and sometimes ground rent). Since Grenfell, some freehold buildings will require major works costing each leaseholder a lot of money. Personally I would stay away from leasehold property due to the astronomical service charges, which seem to increase far beyond inflation. In new builds, service charges tend to start low and then increase once all the flats are sold. As part of the sale, the management information pack will provide you with the latest 3 years accounts.

Ask your solicitor to make enquiries if any major works are expected within the next few years.