Topic: The 'Eeeek...buying/saving for a house' thread

[redbyrdz]

No you definitely own the house just not the land it sits on.

When the lease is up, you have to vacate the land though. It seems mad.

[reddebs]

When the lease is up, you have to vacate the land though. It seems mad.

But if the lease is 100yrs plus when you buy the house that's never likely to happen and the main reason mortgage lenders insist on a long lease.

[BarryCrocker]

Spent a bit of time investigating whether to buy the flat I currently rent as the landlord has put it up for sale. After looking into the details it looks like I'd need to pay around £100/month in service charges each month, £20/month in ground rent, and the leasehold runs currently runs for another 109 years. I spoke to my bank, Halifax, and they said they only offer mortgages for leaseholds with 90+ years on them, but after looking around at some older discussions on leaseholds I noticed that 60-70 years used to be acceptable. It also sounds like some recent legislation has led to new builds having leaseholds of 999 years.

My concern is that while my bank would approve a mortgage, the minimum leasehold length to secure a mortgage might increase again, making it lose a lot of value when trying to sell. Additionally I could find myself looking to sell with 90-100 years on the leasehold in the future and competing with new builds that have much longer leaseholds and are much more secure, further driving the value down. From what I've seen it looks like the current owner bought the property for £148,000 but is willing to sell for £138,000, which at first glance looks like a good deal but with the context of the leasehold makes me wary.

I think I've talked myself out of it at this point but since this is my first foray into the market I'm curious if I'm blowing the issue out of proportion. I know leaseholds can be extended, but the cost sounds quite high and the world of service charges and ground rent sounds quite murky and filled with its own risks.

Do you know who owns the freehold?

I remember my dad telling me we had a leasehold home in Ireland in the mid-70s. The Irish government forced the freeholder to sell all the estate to the residents for 5 x yearly rental as they wanted people to be property owners. The funny thing is Ireland still pays 'ground rent' for the Four Courts and Dublin Castle. To who I have no idea.

[rob1966]

Can't get my head round leaseholds...you buy the house at full price, but you still don't own it. When the lease runs out, it goes to whoever owns the freehold. What?! It's basically a scam.

Probably invented as a way to keep the great unwashed from owning the lands and not the rich few.

It is a total scam on the short term scam leaseholds they do now. Our house was built in 1935 and the leasehold id 999 years, so runs out in 2934, so its not something I worry about - the house won't be standing by then and our kids will have sold it after we have both died anyway. The company that owns the leasehold keep on trying to sell it to us.

[redbyrdz]

But if the lease is 100yrs plus when you buy the house that's never likely to happen and the main reason mortgage lenders insist on a long lease.

The idea just seems wrong to me. You can't pay so much money for something that you can't move. If leaseholds were considerably cheaper than freeholds, maybe, but they aren't.


I do agree that it makes no difference if its 999 years, but it does when it get closer to 100 years - many people will see a property as a long-term investment that they will either live in or benefit from after their working careers, so about 30 years. So at 100 years, the next owner after you might already be thinking that the one after them might have the lease run out, and they won't be able to sell.

It's completely bonkers and doesn't exist in other countries.

[reddebs]

The idea just seems wrong to me. You can't pay so much money for something that you can't move. If leaseholds were considerably cheaper than freeholds, maybe, but they aren't.


I do agree that it makes no difference if its 999 years, but it does when it get closer to 100 years - many people will see a property as a long-term investment that they will either live in or benefit from after their working careers, so about 30 years. So at 100 years, the next owner after you might already be thinking that the one after them might have the lease run out, and they won't be able to sell.

It's completely bonkers and doesn't exist in other countries.

They actually do https://en.m.wikipedia.org/wiki/Ground_rent

[CraigDS]

They’re mostly used on estates or in buildings which have communal land aren’t they? As there needs to be an owner of those areas for upkeep, etc.

I know they get massively abused though.

Sure there was a story on the BBC a day or two ago about the Govt. really cracking down on them and think two of the largest lease owners have agreed to cap the sale of them at £2k and remove any shitty clauses like the doubling of the rent every 10yrs.

[The G in Gerrard]

Going to see a two bed flat today. For living in short term and renting out long term. Any decent house has an open day and has offer's accepted within a week of being advertised.

[gazzam1963]

They’re mostly used on estates or in buildings which have communal land aren’t they? As there needs to be an owner of those areas for upkeep, etc.

I know they get massively abused though.

Sure there was a story on the BBC a day or two ago about the Govt. really cracking down on them and think two of the largest lease owners have agreed to cap the sale of them at £2k and remove any shitty clauses like the doubling of the rent every 10yrs.

The doubling of the rent on these is a pretty new phenomenon instigated by new builders as a way of extra cash , build a property and sell at a top price then sell the leasehold onto a financial company to squeeze that bit of extra cash out of the plot .

It’s a practice that seems to have stopped now ( the doubling of the ground rents every ten years ) but a lot of people still actually caught in it . The housebuilders did give the prospective purchasers a chance to buy it at a set amount but not many took the opportunity due to the outlay when you have other priorities moving into a new house , the chance to buy was there for a set time but once sold on that option of a fixed price was then set aside and the new owner of the freehold was able to ask whatever .

[Schmidt]

Do you know who owns the freehold?

I remember my dad telling me we had a leasehold home in Ireland in the mid-70s. The Irish government forced the freeholder to sell all the estate to the residents for 5 x yearly rental as they wanted people to be property owners. The funny thing is Ireland still pays 'ground rent' for the Four Courts and Dublin Castle. To who I have no idea.

It looks like it was owned by Bellway Homes Limited when the leasehold was last sold.

I'm sure there is logic behind leaseholds in the case of flats like this one, however the short length of the lease, the asking price being lower than what the previous owner paid and the fairly sizable service charge and ground rent fees make me think this is one best avoided. Since the government has seemingly cracked down on the kind of practices that went on when this building was constructed and new leaseholds are typically much longer, I'm probably best looking at either a newer build or a freehold.

[Jake]

Leasehold is a scam. I'd never ever ever buy one.

Its my house thank you, I'm not paying some other c*nt rent for the luxury.

[BarryCrocker]

It looks like it was owned by Bellway Homes Limited when the leasehold was last sold.

I'm sure there is logic behind leaseholds in the case of flats like this one, however the short length of the lease, the asking price being lower than what the previous owner paid and the fairly sizable service charge and ground rent fees make me think this is one best avoided. Since the government has seemingly cracked down on the kind of practices that went on when this building was constructed and new leaseholds are typically much longer, I'm probably best looking at either a newer build or a freehold.

Strata title is the best type of ownership for apartments.

Strata Title Schemes are composed of individual lots and common property. Lots are either apartments, garages or storerooms and each is shown on the title as being owned by a Lot Owner. Common Property is defined as everything else on the parcel of land that is not comprised in a Lot, such as common stairwells, driveways, roofs, gardens and so on.

We each have to contribute to a quarterly strata levy based on the size of your apartment that is split into components, There is 'admin fund' which covers things like building insurance, cleaning of common areas and gardens, electrical of common areas, etc. Then we having a 'sinking fund' which is a pool of money used for major capital works like replacing the roof, painting balconies, etc. The more facilities your apartment block has then the higher the strata fees. Things like elevators, swimming pools, electronics security gates all come at a cost that is shared proportionally across all unit holders.

[gazzam1963]

If anyone’s aware and I’m not sure of any other blocks of flats that do this but Waterloo Warehouse in Liverpool has what’s called a sinking fund on top of service charges . There sinking fund is payable when you sell a property there that you have owned . It can be a fairly substantial amount as it’s 0.5% of your selling price times by every year you have lived there.

I’ve done quite a bit of work there over the years and the chairman of the residents committee told me about
it . A few years ago a guy I do a bit of work for asked me to remove a few things as he was selling up and during conversation mentioned he’d be getting stung as he owned it 25 years .

Poor guy was totally oblivious to it , didn’t know anything about it and when I next spoke to him after he moved he confirmed he had been hit with a 20k plus  payment

[CraigDS]

If anyone’s aware and I’m not sure of any other blocks of flats that do this but Waterloo Warehouse in Liverpool has what’s called a sinking fund on top of service charges . There sinking fund is payable when you sell a property there that you have owned . It can be a fairly substantial amount as it’s 0.5% of your selling price times by every year you have lived there.

I’ve done quite a bit of work there over the years and the chairman of the residents committee told me about
it . A few years ago a guy I do a bit of work for asked me to remove a few things as he was selling up and during conversation mentioned he’d be getting stung as he owned it 25 years .

Poor guy was totally oblivious to it , didn’t know anything about it and when I next spoke to him after he moved he confirmed he had been hit with a 20k plus  payment

I thought it was when you buy it? We looked at a property there a while back and were told about having to pay 0.5% of the purchase price into the sinking fund.

[Riquende]

Just popping in to vent about flathunting. I'm trying to relocate to Fife to live with my partner, her current flat is too small for two so we've been looking seriously for months. I've got a cat and it seems 90% of places won't accept pets, and we just can't seem to move quickly enough on the few places that have come up that suit us (which is about 1 per month). We really thought we'd found somewhere this week - she saw it Thursday after work and offered on it Friday morning, but it was already too late.

I own my house in Luton outright and the prices have risen so much since I bought it that I could upgrade by a bedroom or two if I went the whole hog and sold up, but I wanted to 'dip my toe' for a year beforehand as I've never lived outside of SE England. If this goes on much longer though then it's going to be a more attractive option. Zoopla's estimate is over 100k more than I paid in 2014 (though I think they've gone overboard on it - house next door is for sale now so I'm keeping an eye on developments).

She's very settled in her job and I've been itching for a career change for a few years now, which is why she's not relocating down here (also I don't think anyone else should have to endure living in Luton).

[gazzam1963]

I thought it was when you buy it? We looked at a property there a while back and were told about having to pay 0.5% of the purchase price into the sinking fund.

Yes it may be factored into the purchase price but I imagine it’s just taken out of the purchasers money so the vendor can’t do a runner with it unless the purchaser pays 0.5% as well and then the Vendor has to pay his whack too . The guy I worked for expected his profit to be x amount but only found out near the end of the sale that he was about to lose 20K plus of what he had accounted for .

https://www.atlasestateagents.co.uk/property-892/residential/for-sale/waterloo-warehouse-waterloo-road-city-centre-l3

[Slippers]

A lot of 'tenant in situ' properties hitting the market down here,no takers so far.

[BarryCrocker]

A lot of 'tenant in situ' properties hitting the market down here,no takers so far.

Not a bad option depending on how long their lease is and if you have a place to live. The less people interested the lower the competition to push up the price.

[Drinks Sangria]

Been buried under the paperwork for turning my mortgage into a by-to-let whilst simultaneously sorting the mortgage on our new place. I'm hoping that we will get everything sorted before 30/09, as that would save us a few grand in SDLT, but I'm trying to keep in the mindset that I'm paying full whack and then it'll be less painful if they don't beat the deadline. There's no chain - we're not selling a property and the house we're buying is empty with the family having already moved - so I'm optimistic but you never know. The survey for the house is this Friday.

It took me like three emails to get the solicitors to agree that the price would be lower, prior to that they kept saying it would be the full amount. I felt a bit odd about it, as if even if it got done before the deadline they were going to demand the full amount and pocket the difference. They probably weren't and I'm just being cynical. I just wanted them to fully recognise that and acknowledge that I know it shouldn't be the full amount if we do complete ahead of 30/09. We'll see. 

[rob1966]

The mother in laws house has gone up for rent, she won't ever leave the home unless its in a bag in the back of a black van, so its getting rented to go towards the fees. Estate Agent said £1100 a month rent, its now gone to £1200 and there are 8 people after it, including one fella who wanted to pay 6 months rent up front. Fucking nuts it is.

[Drinks Sangria]

The mother in laws house has gone up for rent, she won't ever leave the home unless its in a bag in the back of a black van, so its getting rented to go towards the fees. Estate Agent said £1100 a month rent, its now gone to £1200 and there are 8 people after it, including one fella who wanted to pay 6 months rent up front. Fucking nuts it is.

That's mad, especially the guy who's pretty much got the start of a decent house deposit available to put down on a rental. Is it a decent sized 3/4 bed detached with a garden?

[CraigDS]

The mother in laws house has gone up for rent, she won't ever leave the home unless its in a bag in the back of a black van, so its getting rented to go towards the fees. Estate Agent said £1100 a month rent, its now gone to £1200 and there are 8 people after it, including one fella who wanted to pay 6 months rent up front. Fucking nuts it is.

Tell me about it. We've been trying to find a house to rent and keep coming up against stuff like this.

The last one we even went in over the asking rent and offered 6 months up front and still missed out.

[buttersstotch]

Another one here about leases - I agreed to purchase a 2 bed leasehold property in York. The previous owners were making about 4% yield on a flat that was in a terrible state for the price the tenants were paying. This was March, the Estate Agents had told the sellers we'd complete by the end of June.

Unsurprisingly my solicitor has found some dodgy things in the lease, ground rent is £350 pa, so needs an indemnity policy and the ground rent is something like 0.63% of the entire freehold property on the open market, so in theory it could easily double or triple if house prices keep rising. The freeholders sold up in Jan 2021 and I've been quoted 10k plus legal fees to renegotiate the lease.

Problem I have is I moved back home, I'm 30 now and itching to get out but the Market is so slow and people are paying ridiculous prices for property or still think the Market is like it was 3-4 months ago. Saw somewhere I loved, definitely 10k over what it is worth, but someone offered just below asking price (I couldn't stretch that far). Not sure whether to negotiate on the purchase price and hope the leasehold laws change in 2-3 years time or to pull out the sale. My heads going to the latter as it just seems an utter nightmare.

[Jake]

Been buried under the paperwork for turning my mortgage into a by-to-let whilst simultaneously sorting the mortgage on our new place. I'm hoping that we will get everything sorted before 30/09, as that would save us a few grand in SDLT, but I'm trying to keep in the mindset that I'm paying full whack and then it'll be less painful if they don't beat the deadline. There's no chain - we're not selling a property and the house we're buying is empty with the family having already moved - so I'm optimistic but you never know. The survey for the house is this Friday.

It took me like three emails to get the solicitors to agree that the price would be lower, prior to that they kept saying it would be the full amount. I felt a bit odd about it, as if even if it got done before the deadline they were going to demand the full amount and pocket the difference. They probably weren't and I'm just being cynical. I just wanted them to fully recognise that and acknowledge that I know it shouldn't be the full amount if we do complete ahead of 30/09. We'll see.

Why not sell it

[rob1966]

That's mad, especially the guy who's pretty much got the start of a decent house deposit available to put down on a rental. Is it a decent sized 3/4 bed detached with a garden?

3 bed semi, extended large kitchen, Driveway, Stand alone garage, large back garden, easy access to M60/Trafford Centre, 15 mins drive to City Centre,nice area (Man Utd used to own next door to house players in the 60's)

[Drinks Sangria]

Why not sell it

I have thought about it a few times, but it will rent well and I'm very lucky to not need to sell to move. For some reason, in this area, rental valuations are out of whack with house values, in that rents are far higher as a proportion of the house's total value than in most areas. I'll likely sell it in a few years but for now it will top up my wages whilst we do the building work we want to, to the house we're building. In short, it's a good investment, even though I don't love the idea of being a landlord and will look to keep the rent fair.

[Slippers]

Twenty properties for sale in our area;three have tenants in situ,one's a ten bedroom hotel and one's a former doctors' surgery

I'd absolutely hate to be looking for a house at the moment.

[CraigDS]

I'd absolutely hate to be looking for a house at the moment.

We're (meant to be) out of our place at the end of the month and there is nothing on the market we want (rent). The area we're looking in is pretty big, and out budget is good, but there is just fuck all coming on the market which even comes close to matching what we want. 3 in the last 3 months at best (1 before too soon, 1 went the day it was put up, the other we missed out on despite offering £100 a month over asking and offering 6 months up front).

We're going to try and get 2 more months where we are in the hope something comes up in that time. They likely won't want to agree to that so just going to have to pay the rent and argue with them as long as we can!

[Slippers]

We're (meant to be) out of our place at the end of the month and there is nothing on the market we want (rent). The area we're looking in is pretty big, and out budget is good, but there is just fuck all coming on the market which even comes close to matching what we want. 3 in the last 3 months at best (1 before too soon, 1 went the day it was put up, the other we missed out on despite offering £100 a month over asking and offering 6 months up front).

We're going to try and get 2 more months where we are in the hope something comes up in that time. They likely won't want to agree to that so just going to have to pay the rent and argue with them as long as we can!

It took our daughter and her boyfriend four months to find the place they're in now;it's expensive and there's no outside space but it was all they could get.

They almost missed out on it but the other 'interested party' got stuck in Spain and couldn't make it back for a viewing.

[Claire.]

We're (meant to be) out of our place at the end of the month and there is nothing on the market we want (rent). The area we're looking in is pretty big, and out budget is good, but there is just fuck all coming on the market which even comes close to matching what we want. 3 in the last 3 months at best (1 before too soon, 1 went the day it was put up, the other we missed out on despite offering £100 a month over asking and offering 6 months up front).

We're going to try and get 2 more months where we are in the hope something comes up in that time. They likely won't want to agree to that so just going to have to pay the rent and argue with them as long as we can!

I know you don't like them but is it about time you made friends with an estate agent?

[CraigDS]

I know you don't like them but is it about time you made friends with an estate agent?

I'd rather be homeless 

The main issue is just a total lack of what we're after coming on the market, and so many others looking for the same. Everything seems to be fairly low end or super super high end!

[Elmo!]

I'd rather be homeless 

The main issue is just a total lack of what we're after coming on the market, and so many others looking for the same. Everything seems to be fairly low end or super super high end!

Alright Goldilocks. 

[CraigDS]

Alright Goldilocks. 

Haha, it's not even that specific what we're after - the area is huge we're prepared to move to (in fact we have two areas, both of them big) and just want a decent sized home and have a decent budget for that.

Literally nothing has come on the market in either area which matches that though since we missed out on the other one above!

[wampa1]

If anyone’s aware and I’m not sure of any other blocks of flats that do this but Waterloo Warehouse in Liverpool has what’s called a sinking fund on top of service charges . There sinking fund is payable when you sell a property there that you have owned . It can be a fairly substantial amount as it’s 0.5% of your selling price times by every year you have lived there.

I’ve done quite a bit of work there over the years and the chairman of the residents committee told me about
it . A few years ago a guy I do a bit of work for asked me to remove a few things as he was selling up and during conversation mentioned he’d be getting stung as he owned it 25 years .

Poor guy was totally oblivious to it , didn’t know anything about it and when I next spoke to him after he moved he confirmed he had been hit with a 20k plus  payment

Paying into a reserve/sink fund should now be part of your monthly service charges (so maybe an extra £20 a month or something on top your normal charges) and is there to pay for things like a new roof or some other massive expense. Having to do it when you sell is basically them recouping what you would have contributed to the reserve fund over the time you lived there.  Still a shitty thing to get stung by though.

On the subject of flats/service charges/ground rent etc, I bought a new build flat around 6 years ago. As a new build, the lease was 250 years so will be probably still be over 200 years by the time I sell or even die. Service charges were around £800 but are now hovering around £1000, including paying into the reserve fund so won't get stung like the bloke above. £200 increased over 6 years is like £3 a month increase each year so whatevs.  Ground rent is £150 and I made sure to check I wasn't on some daft doubling every scheme or something before I bought it.  It's reviewed every 10 years linked to RPI.

I know new builds have shitty reputations and everyone (including me) would say don't get a flat, get a house, but honestly, it's pretty much all come up Millhouse for me here and never had any issues or hidden 'surprises'. I love it here.

[Elmo!]

Are informal arrangements in blocks of flats a thing at all in England? I live in a small block, only 3 flats, 1 on each floor.

I pay no ground rent, no service charge. Any work that is done is just split between each flat on an as needed basis (not had anythign yet, been here 2 years). In larger blocks often there will be a factor looking after maintenance and cleaning but they are generally just an agreement between all the owners and if you can get everyone to agree you can get out of it and just do it adhoc.

[Too early for flapjacks?]

Are informal arrangements in blocks of flats a thing at all in England? I live in a small block, only 3 flats, 1 on each floor.

I pay no ground rent, no service charge. Any work that is done is just split between each flat on an as needed basis (not had anythign yet, been here 2 years). In larger blocks often there will be a factor looking after maintenance and cleaning but they are generally just an agreement between all the owners and if you can get everyone to agree you can get out of it and just do it adhoc.

Assume the flats are owned on a "share of freehold" basis?

[Elmo!]

Assume the flats are owned on a "share of freehold" basis?

I'm no lawyer, but Scots Law is completely different to England and Wales when it comes to property.

This kind of explains it:

In Scotland, we historically had our own form of property tenure called ‘feuhold’. This was previously the most common form of land tenure in Scotland, as conveyancing in Scots law was dominated by feudalism.
However, legislation passed by the Scottish parliament, including the Abolition of Feudal Tenure (Scotland) Act 2000, and the Tenements (Scotland) Act 2004, effectively brought feuhold to an end.
Now nearly all property is held under a tenure known as ‘Outright or Absolute Ownership’, including apartments and tenements. This is comparable to ‘Freehold’.

Furthermore, the Long Leases (Scotland) Act 2012 automatically converted remaining long leases over 175 years to outright ownership. However, there are still a handful of isolated cases where leasehold properties remain in Scotland. For example, check out this property on Byres Road in Glasgow: Grosvenor House, Hillhead, Glasgow, G12

https://homereportscotland.scot/leaseholds-outright-ownership-facts/

[Rhi]

Are informal arrangements in blocks of flats a thing at all in England? I live in a small block, only 3 flats, 1 on each floor.

I pay no ground rent, no service charge. Any work that is done is just split between each flat on an as needed basis (not had anythign yet, been here 2 years). In larger blocks often there will be a factor looking after maintenance and cleaning but they are generally just an agreement between all the owners and if you can get everyone to agree you can get out of it and just do it adhoc.

We have something similar (ish?) in our flat - there are 6 flats in our building and rather than it being completely informal, the freehold owner sorts out communal issues then sends us and invoice with evidence of invoices paid etc once a year along with the ground rent (but are always flexible if you need time to get the money together, e.g. over COVID). We've lived here 2 years and it has only been about £100 a year plus ground rent of the same amount. Obviously that could change if a bigger problem arose, but that's true of owning a house or a flat anywhere.

[Slippers]

I'd rather be homeless 

The main issue is just a total lack of what we're after coming on the market, and so many others looking for the same. Everything seems to be fairly low end or super super high end!

It's the same here now;a choice between houses like my aunt's old place where the only thing worth keeping is the front door or something that'll set you back over £500k.

Rental wise there's absolutely nothing.

[Drinks Sangria]

So we've had our first fuck up in the process, one which may end up costing me several thousands of pounds that I can't really afford.

Our Homebuyer's Survey was scheduled for 16th July. I got a text on the morning of 21st to say it had been moved to 30th, which was news to me. I called up to ask why and the Surveyor's said that it was because no one from the estate agents made themselves available to allow access to the property.

I spoke to the estate agent and they blamed the surveyor, saying that they went to the property and not the office to collect the keys, which is standard in these situations apparently. So back onto the surveyors. They stated they agreed over the phone to meet at the office and collect the keys and when they arrived at the office on Friday 16th PM, no one was there. This is a National Chain Agents who have offices in the middle of Chester, which is around 25 minutes drive from the property.

So I go back to the estate agents, who refute this, saying that there is always someone in the office and he must never have come. A few things - they have never, ever answered the phone to me in that office, I always have to leave a message with the concierge team based in London. Always. Not once have they ever picked up the phone through the months of house viewings, the negotiation process or buying process with this house. However, it does seem bizarre that absolutely no one would be around and the property locked up just after 13:00 on a week day. They also said they have no CCTV, which I requested to see whether the Surveyor did go (of course they don't  )

So I'm not sure where I stand now or who I can hold accountable. If we miss the 30/09 deadline (which of course is no guarantee but we've had the searches back, all the mortgage is sorted and there's no chain, absolutely feasible to complete before then) it will cost me around £3,800 in additional Stamp Duty. I will contact the Surveyors back because someone is lying and someone has fucked up, but both are playing the blame game and pointing the finger at one another.

A two week delay at this stage of the year is absolutely crucial.