Beware of leasehold homes with a short lease
If you buy a leasehold property, you effectively lease it from the freeholder. That’s because the freeholder owns the land on which the property is built.
Where a leasehold property has less than 80 years left on its lease (even by just one day), a lease extension becomes very costly – we’re talking £10,000s – and the property far more difficult to sell or remortgage. If there’s less than 60 years remaining, these things become even harder and eye-wateringly expensive.
Therefore, home-hunters should be wary of leasehold properties with a lease nearing, or below, 80 years in length. We’ve got a whole guide which explains the importance of lease length and how leasehold and freehold properties differ.
Don’t accept estate agents’ promises of easy extensions. As a compromise, a seller can get the extension ball rolling and pass the rights on to you (you don’t have to wait until you’ve become the owner to extend the lease). The process of extending a lease can take some time, as it involves lots of legal work, which is another reason why it can be worth asking the seller to begin the extension.
And don’t just rely on your solicitor to point out a short lease. Make sure you do your own research too, by enquiring about the length of lease up front, and, if it’s a short lease, asking how much it would cost to extend. We’ve been shocked by stories from buyers who said solicitors didn’t spell it out.
Forumite Norm says:
I bought six years ago and now my lease has 60 years left. I cannot find anything in the paperwork from the purchase advising me that the lease would need to be extended or that it would be expensive.
I was a first-time buyer and totally reliant on the conveyancer’s advice. They should have highlighted this issue. I would not have bought this property if I knew I would have to pay £10,000 to extend the lease.