Buying a Leasehold Property? Read On…
It is a really interesting to listen to the various justifications people make when it comes to buying a leasehold property. To break it down, it is quite important to understand the difference between a Freehold and Leasehold Property is.
Buying a Freehold property means that you own the property/any land etc. In essence the buildings and the land that the building has been built on. On the other hand, buying a leasehold property means that you only own the rights to the inside walls and anything in between of this walls. Furthermore, signing the contract means that you covenant yourself into adhering to any restrictions and conditions outlined on the lease. A good example of this is the prohibition of any tenants keeping any pets at the premises. These terms/covenants could be so important in some instances that there could be restriction on the property that you as the new buyer will not be able to register your interest on the property unless specific consent is obtained.
In todays market, the main issue seems to be the price. A majority of first time buyers cannot afford to but anything apart from a flat which inevitably comes with a Management Company whether you like it or not. What you need to keep in mind is that a management company does exactly what it says on the tin. They are the agents who manage the property on the freeholder’s behalf. So in addition to you paying the ground rent for the land to the freeholder, you will also be paying a service charge for the upkeep of the managing company. The issue is that even though the figures could look appealing when you purchase the property, the managing company reserve the right to review this fee. The rent review period could also be as frequent as every year!
From a buyers point of view, at the point of purchasing you will be liable to pay whats known as Notice Fees to the agents so that they may amend their records to your details as the new owners of the property. From my professional experience, I have seen these costs easily running into a good few hundred pounds plus VAT.That doesn’t end there. When it comes to you selling the property, you as the seller is obliged to pay for a Management Company Pack which in essence show the financial information etc.
The purpose of this article is not to put anyone off purchasing a leasehold property but to rather make you aware that there are additional costs involved with buying a leasehold property.Its always to have a reserve of funds when it comes to buying a property as hidden costs like this always have a tendency to come any bit the inexperienced first time buyers on the back.
If you have any more questions, please contact the Express Conveyancing resident conveyancing guru!