New development - leasehold

The_One · 8 Sep 2016 at 10:00

Interested in a new morris homes development near me but the land is leasehold with a 999 year lease.

Ground rent is £350 a year to cover maintaining communal areas etc

Apart from the obvious cost are there any other implications to leasehold for a new build?

Shoza · 8 Sep 2016 at 10:35

Good that it is 999 year lease but expect constant problems with management of the estate, inflated costs each year to maintain nothing and difficulties selling the property in the future - you will need the landlords consent and they will charge for it!

Skillmister · 8 Sep 2016 at 10:47

Are you sure the ground rent is £350 or is that the service charge? They are usually separate.

Service charge tends to go up year on year with very little you can do about it.

They may well have fees when you purchase and fees when you sell. The leases are usually very restrictive when it comes to what you can do regarding alterations etc.

Legal costs for the purchase will be considerable, legal costs for the sale will be higher than normal too as they are a PITA.

I would never buy a new build, I would doubly never buy a leasehold new build.

ov_sjo · 8 Sep 2016 at 10:52

Leasehold sounds a bit weird on a new build.

I have a new build, freehold, but there is a ~£130/yr service charge to maintain parts of the grounds which aren't handed over the council (a couple of greens and some foliage mainly). There is a company which all the home owners are members of (~60 houses) and we recently nominated a few directors to maintain it. No doubt one day it'll become a pain in the arse but so far it's OK.

krooton · 8 Sep 2016 at 11:11

Leasehold is usually for flats, charged as ground rent, and separate from services charges for estates, etc.

Skillmister · 8 Sep 2016 at 11:33

Leasehold is very common with new build houses actually, not just flats.

BennyC · 8 Sep 2016 at 12:22

krooton said:
Leasehold is usually for flats, charged as ground rent, and separate from services charges for estates, etc.

This is what I thought.

ov_sjo · 8 Sep 2016 at 12:32

Skillmister said:
Leasehold is very common with new build houses actually, not just flats.

I have heard of it, but are you really sure it's very common? What sample are you basing your statement on?

The_One · 8 Sep 2016 at 13:29

its definitely £350 a year ground rent

They are private semi and detached homes not flats at all

manic_man · 8 Sep 2016 at 13:49

ov_sjo said:
I have heard of it, but are you really sure it's very common? What sample are you basing your statement on?

Every single new build property I viewed over a 12 month period (including the one I eventually bought) was leasehold, except one or two rare examples where the owners had the foresight to pay the few thousand to buy the lease up front...

The terms of most of the leases are astonishing as well. Take ours (a large detached property with a reasonable amount of its own land and parking for 3 cars, so not unsubstantial), it is a 250 year lease (240 years remaining), £250 pa for the first 15 years and then the lease doubles every 10 years for the remainder of its duration! This is a standard set of terms (lease amount is the same even for the 3 bed semi-detached town houses) for the houses on the estate. We literally couldn't make it a deciding factor as we wanted something relatively new and nearly every house we viewed was leasehold.

It's a quick and easy way for builders to keep making money off their portfolios. It costs them nothing as they roll the cost of management into the fee and it means they get a return every single year from hundreds if not thousands of properties.

Suffice to say, as our original builder went bust 5 years ago and the management company informs us that they are actively looking to offload our lease, we are currently in the process of buying it ourselves...

Skillmister · 8 Sep 2016 at 14:08

The_One said:
its definitely £350 a year ground rent

They are private semi and detached homes not flats at all

If it's £350 ground rent you might want to find out what the service charge is on top of that as that's extremely expensive for the start of a 999 year house lease rent.. Considering the rent will likely increase too.

ov_sjo said:
I have heard of it, but are you really sure it's very common? What sample are you basing your statement on?

The sample of files in my filing cabinet and archives

Rids · 8 Sep 2016 at 14:50

manic_man said:
The terms of most of the leases are astonishing as well. Take ours (a large detached property with a reasonable amount of its own land and parking for 3 cars, so not unsubstantial), it is a 250 year lease (240 years remaining), £250 pa for the first 15 years and then the lease doubles every 10 years for the remainder of its duration!

Christ, thats some food for thought.

Could easily have seen myself overlooking that when I come to buy new build, I'll be keeping a bloody close eye on that now.