Buying Property? Check whether it’s Freehold or Leasehold first

Are you buying a property?  Have you checked whether it’s Freehold or Leasehold?

If you own the Freehold to your home, it means that you own the building and the land it sits on.

If your property is Leasehold, you have bought the exclusive right to live in the property and the use of the communal areas until your lease expires.

Leases are usually long term – often 90+ years, however some developers have sold homes with leases as high as 999 years.

The Lease sets out what you have bought, what is exclusively yours and what is shared; what services the landlord must deliver and what you must pay. The wording of leases can vary from property to property and you will always need to refer to the specific wording of your own lease which details what you have agreed.

What Should My Agent Be Telling Me About Leasehold?

Your Estate Agent should pass on all material information in respect of the lease. This would include, but is not limited to:

• The number of years remaining on the lease
• Ground rent costs and when it is payable, together with details of if or how this will increase over time
• The annual service charge costs and when it is payable
• Details of any event-related fees and charges payable under the lease
• Rent payable in the case of a shared ownership arrangement
• Details of any unusual restrictions or covenants affecting the use and enjoyment of the property

Important: Estate Agents are not Solicitors – if you are concerned about any aspect of your contract or your lease, speak to an impartial Solicitor.

Why Do I Have to Pay a Service Charge?

A service charge is a fee that is payable by all residents and which contributes towards the up-keep of the building. This could include general maintenance, upkeep of outdoor spaces and cleaning of communal areas. Generally, the fee payable is fixed, however this may change year on year.

Make sure you ask your conveyancer or solicitor to explain all charges fully and enquire as to whether the lease administrator has any plans for works which you will be responsible for paying.

What Else Should I Be Aware of When Buying a Leasehold Property?

Developers have been known to sell the Freeholds of entire developments to third party companies who then charge escalated fees to the homeowner when they come to purchase the freehold. Spiralling fees and onerous clauses have led to some building societies and banks refusing mortgages on leasehold properties – this can make them difficult to sell. Your Solicitor should check and advise you of any onerous clauses.

Read Your Contract Carefully

Some leases have clauses which obstruct your use of the property and some restrictions are not always obvious. Read your lease VERY carefully and if you are unsure of anything, speak to your solicitor immediately. Make sure you have an understanding of what you are entering into, how much you will be expected to pay on an annual basis and if any increases are due.

Here’s a useful link for more information – https://www.gov.uk/leasehold-property 

Are you selling your property?  Whether Freehold or Leasehold, Callaways offer FREE MARKETING APPRAISALS.  Contact us today on 01273 735237 or email sales@callaways.co.uk