Leasehold property buying tips

In our last column we looked at the typical things to expect when selling your leasehold property – now we take a look at what happens when purchasing a leasehold property.

When buying, you will purchase the leasehold interest which is held under a lease for a fixed period of time. Once this lease comes to an end, the property will revert to the landlord, however in practice this is unlikely to happen.

Most leaseholds are flats/ apartments, although you can get leasehold houses, especially under the Shared Ownership Scheme.

Charges such as ground rent, maintenance and service charge will be payable either monthly or annually. The ground rent is a fixed sum which increases in accordance with the terms of the lease.

However, the service charge changes each year as this is the amount paid to the landlord/managing agent to maintain the building, grounds or estate.

It is crucial to read through the clauses of the lease, especially the covenants, as you will be bound by them when you move in.

If you are uncertain of anything, please ensure that you bring it up with your lawyer as soon as possible.

Always make sure you are clear as to what you are entering into.

Can you extend the lease? If you have held the lease for at least two years, you will have the right to request an extension to your lease by applying to the landlord/ managing agent.

There is usually a premium payable and once the term goes below 80 years, then the premiums rise quite sharply.

A lot of mortgage lenders will not lend on properties that have a lease of less than 70 years remaining.

If you require any help and advice, you can speak to a member of our team on (023) 9298 1000.