Leases – When is your home not your Castle?
A recent article in one of the national papers has highlighted problems faced by homeowners with shrinking leases. The article looked at Cramlington but many other towns have similar problems.
Much of Cramlington is a new development built by builders John T Bell (now Bellway) and Persimmon. About 75 % of the properties are leasehold often with leases of 99 years. With a freehold buyers own the house and the land. With leasehold you only buy a right to live there for the length of the lease and pay rent. When the lease ends the property goes back to the landlord. Ninety nine years originally sounded like a long lease but many home owners find that as leases run down to 70 or 60 years left they are hard to sell or remortgage. Homeowners then have to negotiate to extend the lease or buy the freehold. This can often be very expensive even for a modest typical North East house.
The tip is to take professional advice from a solicitor and a surveyor and not to pay the first price the freeholder asks for. Even short negotiations can often halve costs of buying or extending. If the landlord is initially unwilling to negotiate homeowners do have a card up their sleeve. The law allows certain qualifying homeowners to buy the freehold or extend the lease even if the Landlord does not cooperate. There is also a tribunal fixing a fair price. While you have to pay for professional help with a tribunal this can still save you lot of money.
My top 5 tips are:
- If you already own a lease remember the shorter the lease the higher the price for purchasing it, so don’t put it off trying to buy as the price will only go up
- If buying a leasehold house or flat always check how many years are left on the lease
- Don’t agree the price asked by the landlords without taking advice
- Be aware you will need to budget for your solicitor’s costs and the landlord’s solicitors costs
- If you have a flat in a block you can club together to buy the freehold. Many blocks have done this but good legal advice is vital.
For more information contact Cliff Veitch or a member of our Property Team on 0191 427 3426