Sheffield is well known hot spot for leasehold houses and flats, and in certain areas of the city there are major problems facing the owners of leasehold properties. Unfortunately owners are very often oblivious to these problems until they try to sell. A property with about 80 years left on the lease could in fact make selling up very costly and at 75 years it may be practically unsaleable. This is because many lenders would refuse to grant a mortgage to a buyer with such a short lease. So what can you do?
One option is to look to acquire the freehold of the property but there is a cost to doing this, a cost which unfortunately escalates as the lease shortens. The more time passes, the more expensive it becomes. A rough calculation of the cost of acquiring the freehold on a £150,000 property with 80 years left and a ground rent of £5 per year, could well be anything between £1,000 – £3,000 plus the freeholders legal and valuation fees, which could well amount to another £1,000.
It seems that the Government is at last going to do something about the issues surrounding leasehold properties by considering if it should introduce legislation to make the valuation more favourable to the leaseholder, however, this could be some years away.
In recent years, some developers have created leases with larger ground rents and periodically increasing the ground rents, which may make a property slightly more attractive in terms of the asking price, but may make it less valuable on a resale. Again the Government is trying to limit new leaseholds and is actively encouraging developers not to sell properties as leasehold. It is likely that there could be legislation to prevent future leasehold sales, but again that could be some years away.
The following Government web-sites may be of interest
Steve Williams from the Banner Jones Solicitors office in Sheffield has made an extensive review of leasehold hot spots in and around Sheffield, and can advise on the specific situation regarding any such property. If anyone requires any assistance with regard to this, please make contact Steve on SteveWilliams@bannerjones.co.uk or call 0114 275 5266.