Help with choosing leasehold property?

Leasehold rights from freeholder property118.com

by Readers Question

12:02 AM, 28th June 2023, 3 years ago 6

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Hi everyone,

My partner and I have been saving for a long while to buy our first investment property together. We’ve found a deal for a one-bedroom flat in Bradford city centre for £125,000 with 107 years left on the leasehold.

Comparables in the building sell for £50-60k, however, this has a 25-year guaranteed rent contract with a Housing Association which provides supported/assisted living social housing for vulnerable adults, funded by the local council.

The rent is floored at £13,000 per annum, with annual reviews in line with CPI_1% inflation.

There is a compulsory buyback scheme whereby the developer can buy it back/sell it to a nominated buyer, usually an institutional investor/pension fund, at a minimum of the original purchase price + 30% extra within the first 3 years. They’ve done the buyback on all their properties so far by the sounds of it.

Overall it sounds like a good deal and we love the aspect of putting our money towards something that’s helping people.

However, we’re very weary of leasehold properties. Is 107 years enough time left on the lease, given the above information?

Ground rent and service charges are paid by the Housing Association. The 25-year contract with the HA is expected to be renewed afterwards, but it’s not compulsory, and if it didn’t get renewed then we’d be free to sell or rent to the open market.

Any advice would be very much appreciated please.

Thank you,

Clare

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Tags: Housing Association, leasehold properties, saving for first investment property, time left on lease

Comments

NewYorkie Read Full Bio

Member Since October 2013 - Comments: 1642 - Articles: 3

9:32 AM, 28th June 2023, About 3 years ago

I wish I had never bought a leasehold. flat. It’s the only BTL I have left and it’s privi g a problem to sell for all the usual leasehold problems. But yours sounds like an amazing deal. Sounds totally hands-off, and the rent sounds very high for the area. Even a buy-back! 107 years is fine. Even after all my leasehold problems, I think I’d go for it if I was staying in the PRS.

1 Report Comment Reply
Puzzler

Member Since July 2013 - Comments: 1266 - Articles: 1

9:34 AM, 28th June 2023, About 3 years ago

Get proper legal advice

3 Report Comment Reply
Kizzie Read Full Bio

Member Since October 2022 - Comments: 410

4:39 PM, 28th June 2023, About 3 years ago

If it’s too good to be true then it usually is

4 Report Comment Reply
Freda Blogs

Member Since July 2013 - Comments: 754

10:55 AM, 29th June 2023, About 3 years ago

If comparables are £50-60k, why would you want to pay more than double that sum? I doubt you’d even get a mortgage for it.

If it’s such a great deal, why is the vendor selling?

Something doesn’t sound right. Personally I wouldn’t touch it. Too many questions and too much to go wrong.

3 Report Comment Reply
Reluctant Landlord

Member Since September 2018 - Comments: 3538 - Articles: 5

11:35 AM, 29th June 2023, About 3 years ago

I never buy anything leasehold – end of. Always a potential for issues and the more complicated the ‘deal’ the more chances of getting screwed over. Personally I would not progress with this.

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GlanACC Read Full Bio

Member Since March 2023 - Comments: 1506

1:13 PM, 1st July 2023, About 3 years ago

If it looks too good to be true …… buyer beware

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