When you buy a flat in a block or a conversion in a house typically you will have a lease for a number of years. When that number falls below 80, you may find it difficult to get a mortgage as the value of the flat reduces. As a leaseholder you are obligated to pay ground rent and service charges to the freeholder.
There may be an option to purchase a share of the freehold. Is this a good idea?
Pros
Buy the freehold and you can usually extend the lease to 999 years for free. You will still need to pay legal fees.
You control service charges. You can choose value-for money, quality providers.
You normally will not need to pay ground rent.
Leases can come with lots of conditions which you may not have been aware of at the purchase stage. which can come as a surprise after you've laid out £100,000s on your own place. For example, you may need the freeholder's permission to let the flat or keep a cat.
It can add value to your home as most buyers prefer a share of the freehold
Cons
This is not for the faint-hearted. It takes time, effort and can be expensive. You also have to get on with your fellow flat owners.
The new freeholders need to set up a freehold company, do the accounts, arrange insurance and keep the place spick and span. There is some advantage in that being someone else’s problem.
You may still get disagreements and now you will need to resolve them.
The lease may stay the same if you do not adjust them at the same time.
For more information on leases, have a look at the government website here.
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