Leasehold property guide

If you are planning to purchase a new property with a mortgage, it is important to consider the type of home ownership you want to go for.
Property ownership involves two major forms of ownership – freehold and leasehold
In simple words, freehold property where you own the property and land it on. Leasehold property is where you own the property you live but not a land.

Factors worth considering with leasehold property
Ground Rent
Ground rent is the rent payable to the landlord of your leasehold property on an annual basis. Lender will consider this cost as commitment. Usually ground rent charge is lower amount compared to service charge.
Make sure you check all necessary details about the amount to be paid and the due dates for the same in the lease.

Service charge
Management company is responsible to carry out repairs and maintenance of leasehold property on a regular basis. The service charges are often borne by the leaseholders. Your lender will take this as a regular commitment to be paid every month.
Lease term and extension cost
While purchasing leasehold property make sure you are aware of the years remaining on the existing lease.
Generally, most mortgage lenders do not agree to a loan if there aren’t many years left on the lease.
If the time on a lease is lesser, you may still have lenders available, but the choice is limited. You may also need to consider extending the lease at some stage which can be very expensive.

Additional legal work
As buyer of a leasehold property, you should know most of the conveyancer working with your purchase of leasehold property will required more legal work than standard freehold property.
Which usually take longer to complete the purchase resulting in additional legal costs related to of which will be added to your completion statement.
These were some of the key factors that need to be considered with leasehold property.