Is it worth buying the freehold of your leasehold house

Is it worth buying the freehold?

If the property you own is a resident, then it is worth buying a freehold as when you purchase a property on freehold grounds, you get the ownership of the house, and on the land, it is on. 

When you buy a property as a leasehold property you only have the ownership of the property for a certain period alike stated in your lease contract with the landlord of the property. As it is known, once the lease gets expired, then the property owner will revert to the freeholder. In addition, leaseholders also need to pay other extra charges such as ground rent or maintenance charges on the property. Furthermore, there will be terms specified in the lease about what you are allowed to do with the property or not, For example, having a pet, starting a business from home. 

In England, the current ratio of leasehold properties has more flats than houses. Fascinating is that the North West has the highest number of leasehold residences, despite various leaseholder issues. For such reasons, the Government in 2019 stated that no new houses will be put on sale as leasehold properties. Hence, flats and subsisting leasehold properties will be sold as a leasehold.

The boundless bulk of flats are sold on a leasehold basis. The freehold is further held by any other support firm. The passing flats designed from a single property can often be bought with a share of the freehold that is shared ownership. Ownership is shared within the individual of the flat holders. Hence, the shared ownership properties are also changed from leasehold perspectives.

The benefit of buying a freehold of a leasehold house

The benefit of purchasing the leasehold property is that you will not be liable for the maintenance of flats and the cost of home insurance. Still, they may ask to pay some of the maintenance charges by your service cost and improvise if it is in your lease. And, there are possibilities of lowering the initial buying cost of a leasehold property, even though it has been said that buying a leasehold property may exceed any primary savings you have secured. 

In 1993, the Leasehold Reform, Housing, and Urban Development Act states that leaseholders have the right to purchase the freehold of their leasehold property after two years of leasehold ownership. Furthermore, you can buy the freehold by paying the cost of it. Buying the freehold of a house is worth it or extending the lease is a more suitable alternative? 

Generally, extending a lease has been a daunting task, and claims a piece of expert legal advice before the lease extension process. Furthermore, it is an important step for the leaseholders who have at least 80 years or less, especially if they are thinking of selling the property later. 

The last article published on 4 September 2020 by the Government of the UK states that buying and owning a house or flat is a significant investment. It also claims that if a leaseholder buys the freehold of the house, then they become the outright owner of the leasehold property. 

Even, if the leasehold areas are also increasing the freehold ownership for buyers of new and existing flats, whereas a flat is divided into freehold units. As a result, each block of flat is freehold ownership with a shared area such as grounds, walls, and rooftop managed by different organizations constructed by flat owners. The flat leaseholders are likely to buy the freehold of the flat if 50% of the owners agree on it. This can be possible if they set a limited company unitedly to buy the freehold of the flats and manage the cost of the maintenance by themselves. This process is known as “freehold enfranchisement”. While the mutual deal of being an owner of the freehold would be a tough task. 

Those who acquire shares ownership of the property have to wait till they increase the ownership up to 100% by stair casing, then they are qualified to buy the freehold of the property. This may also charge you free as you expand your lease ownership from partial to complete.

The leasehold reform bill was published on 11 June 2021 by the Ministry of Housing and says that it will end the ground rent for the new, qualifying long-drawn residential properties in England, and Wales. This reform would be a notable update in the property law era. They included that this statement would determine if any of the new residential lengthy leases is obliged for the ground rent, then it should not be more than a peppercorn through the year. For upcoming leaseholders, there will be no demands of ground rent applicable. The reform forbids the freeholders from asking for administration fees for getting a peppercorn ground rent. 

The state of leasehold ownership is improving but not yet complete. Hence, buying the freehold of the property would be a lot beneficial. During this switch from leasehold to freehold, it would be difficult to deal with leasehold valuations of a house and negotiations. Therefore, Leasehold Valuations professionals have your back, we will guide you and advise you with the best. Feel free to call us at 01753 542984 for a free 10-minute consultation.

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Call 01753 542984 for a FREE 10 minute consultation on your lease extension or freehold purchase.