There are many factors that come into play when choosing a new property, including location, price, and future-proofing, but one of the most important issues can be the legal status of the property.
Housing in the UK falls into two categories – freehold and leasehold – and the differences between the two can have a major impact on the suitability of the property for the homebuyer.
The most common form of ownership is freehold, where you own the land and building outright, and the title is registered at the Land Registry. No ground rent is payable, and the property comes with responsibilities such as maintenance of the construction and land.
On the other hand, a leasehold property is owned for a specific time outlined in the lease, and the property reverts to the landlord at the termination of the lease. Most flats and Gloucester Park Homes are leaseholds, although houses can also be subject to a lease.
You should check out the status of the property you are interested in at the beginning of the conveyancing process. You will find reputable conveyancing professionals who will be able to establish the status of the property and advise on issues that it raises.
Extending a Lease
In the case of leasehold properties, one of the main factors to be addressed is the length of the lease. This can vary from decades to hundreds of years. The longer the lease, the more value the property has since a short lease means the property will revert to the freeholder sooner and any investment will be lost.
Naturally, lenders look closely at the terms of the lease where one applies to the property. They may refuse to lend on a property that offers them little security, and it is often the case that they will ask homebuyers to negotiate with the vendor to ask them to seek an extension to the lease or to attempt to buy the freehold.
Landlords will often be open to such a suggestion, but extending a lease can involve extra costs on the part of the purchaser.
You can ask the landlord if you may buy the freehold at any time. In the case of a flat, this may be more complicated, as you will have to buy a share of the freehold.