Whether you’re looking to create your own new build property from scratch or buy an existing new build, there are many considerations. You may have heard about the risks and hidden costs of new build properties that are sold as leasehold. Is this something that still poses an issue today?
Find out below.
What is a leasehold property?
Leasehold properties are owned for a fixed period of time. You are leasing the property from its owner for years at a time. A leasehold agreement typically lasts for 90-120 years, although this can go as low as 40 years and as high as 999 years in certain cases. A leasehold contract will often outline the following legal responsibilities and rights:
- The leaseholder must pay building maintenance fees and annual service charges, along with a share of the insurance.
- Permission is needed for major works to be done on the property.
- The freeholder will be required to maintain any common functional parts of the building, such as staircases, hallways, exterior walls, and the roof.
- Annual ‘ground rent’ is charged to the leaseholder.
- Additional restrictions may relate to subletting, owning and keeping pets etc.
You are considered the owner for the duration of the lease however; ownership will return to the freeholder once the lease expires. The leaseholder can also forfeit the lease before this time if they fail to fulfil all its terms.
New build properties – freehold or leasehold?
In 2019, the UK government made changes to the law surrounding new build properties resulting the abolishment of leasehold ownership. This was done to prevent developers from exploiting home buyers through ground rents. As such, all new build homes are sold as freehold properties.
This is a substantially more beneficial option, as it lists you in the Land Registry as owning the ‘title absolute’ to the new build. This gives you full control over the property as well as the land it stands on. You won’t therefore be subject to the consequences of failed maintenance from a third party. Although, you will still be legally responsible for maintaining the outside of the building.
Even if your new build is freehold, developers might instead try to impose unfair restrictions on the sale. Buyers that find out too late about restrictive covenants can be put in a difficult position. To avoid this, the best course of action is to use professional conveyancing services.
Expert residential conveyancing Tynemouth
At Toomey Legal Limited, we believe everyone should be able to access friendly and professional conveyancing services, especially when undertaking the big purchase of a new build. Our options for online conveyancing Newcastle include a no-obligation meeting with an expert property solicitor to discuss your goals. We are here to support home buyers in the surrounding area as well, offering local conveyancing quotes Consett, Cramlington, and Whitley Bay to name a few. Contact us today to begin our partnership.