The Popularity of Leasehold Properties
According to the Land Registry, leasehold properties made up 43% of all UK new-build registrations in 2015, compared to only 22% in 1996; whilst an astonishing 90% of London’s new-builds are found to be leasehold.
Whether you’re a landlord looking for a new Buy-to-Let property, a first-time buyer hoping to get a foot on the ladder or an owner-occupier seeking the opportunity to downsize, leasehold homes are a great way to buy a property without the cost and commitment of owning the land. This can mean that buying leasehold is often cheaper than buying freehold, whilst communal upkeep of the development housing the property is taken care of by an assigned management company, rather than the homeowner, tenant or landlord.
Thinking of investing in a leasehold property? View the selection of developments and leasehold properties for sale using the property search, or call today to speak to a sales advisor on 020 8418 3635.
What is a Leasehold Property?
A leasehold property is a residence where the purchaser owns the right to occupy, but not the building itself. Take a block of flats for instance: the owner of an apartment would own the right to occupy their individual home and enjoy any of the communal facilities within the building or grounds, but they do not own the land it stands on. The land is owned by the landlord, also known as the freeholder.
Generally speaking, flats and apartments are sold leasehold, whilst houses are most commonly owned as freehold properties. Houses bought through a shared ownership scheme are also usually leasehold.
A leasehold property contains a lease length; this is the specified period of time that the leaseholder owns the right to live at the property for. Once the lease runs out, ownership will revert back to the freeholder.
What to Consider When Purchasing a Leasehold Property
When looking to purchase a leasehold property, it is important that you consider the lease length left. A new-build apartment purchased through a development will come with a specified lease length, or if you buy a leasehold property pre-owned you will take over the lease from the previous owner.
Many leases are granted on a 99-year term, while Galliard Homes offers leases for up to 999 years. Most banks and building societies are happy to lend on a property that has at least 75 years unexpired on the lease. You are likely to face mortgage issues with leases of a lesser period, and for this reason, you may struggle when reselling the property. In this case it is always recommended that you speak to an independent mortgage advice service. That said, you can ask the freeholder to extend your lease at any time, granted at their discretion, or once you have owned the property for two years, you could qualify for the right to extend the lease for 90 years (on a flat or apartment). The Leasehold Advisory Service’s lease extension calculator provides a guide to the costs associated with extending the lease of a property.
What are the Advantages of Buying a Leasehold Property?
Since when you own a leasehold property you don’t own the land, naturally you won’t be responsible for running and maintaining the building. The burden of this will be handled by a property management company organised by the freeholder, with the costs split by all residents of the building and paid to the management company via a service charge. Services may include: cleaning of communal areas, landscaping of communal grounds, maintenance of lifts and electronic gates, and the arrangement of the buildings’ insurance. Peace of mind that this is all taken care of is particularly attractive to those with a busy lifestyle, or those who do not spend much time at the property due to work or travel commitments.
Many developments containing leasehold apartments may also benefit from premium residents’ facilities, such as concierge services, private gyms and underground parking – services which you would not expect from a freehold house.
Buying a Leasehold Property with Galliard Homes
Galliard offers a range of leasehold apartments in some of the capital’s most sought-after locations with excellent potential for capital growth and return on investment. A leasehold property can be particularly attractive as a Buy-to-Let investment as landlords do not need to worry about the management of the building and facilities, only the individual apartment.
At The Chilterns in Marylebone, residents can enjoy the luxury of a lobby gallery, featuring limited edition artwork by David Bailey, in addition to a temperature-controlled wine cellar, whilst The Stage in Shoreditch is set to feature a games lounge with bowling lanes, as well as an on-site salon. Similarly, Harbour Central in the Docklands will have its own “Residents’ Club” with a private cinema amongst other lifestyle facilities, whilst residents of Baltimore Tower can enjoy access to London’s largest residential gym and leisure facility.