Before you buy a leasehold property, it is important to be aware of what your lease includes and understand any charges you may face when buying a leasehold home.
What is the Difference Between a Leasehold and a Freehold?
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 hold the property on behalf of the freeholder and rent the home 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.
What is Ground Rent?
Your agent, conveyancer or solicitor should be able to advise if there are any rent review clauses in your lease and check what this would mean for you. The costs of the ground rent may be negotiable so make sure to check this with your agent or the developer if you are buying a new build.
Why Do I Have to Pay a Service Charge?
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 to pay for.
Why Would I Be Asked to Pay an Administration Fee?
Administration charges are payments for services connected with your buying, selling or use of the property; they can include anything from charges for document applications to exit fees. The costs of any administration fees should be expressed in your lease agreement however your conveyancer or solicitor should be able to review your lease and advise you accordingly.
What Should My Agent Be Telling Me?
- 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 & charges payable under the lease
- Rent payable in the case of a shared ownership arrangement
- Details of any other fees or charges contained in the lease
- Details of any unusual restrictions or covenants affecting the use and enjoyment of the property
Keep in mind that estate agents are not solicitors, if you are concerned about any aspect of your contract or your lease, speak to an impartial solicitor.
What Else Should I Be Aware of When Buying a Leasehold Property?