The recent controversy of Leasehold Scandal is spreading through England like a terrible virus that will infect any potential homebuyer. If you are not familiar with the term leasehold, here is a short explanation: if you intend to buy a home in England, you can buy it under two terms: freehold or leasehold. Leasehold sales are a sort of “light type of buying” a house, and on paper, it looks like an amazing deal. Of course, some buyers are so happy to finally be able to buy their own homes, that sometimes, they do not read the fine print. A leasehold sale will allow you to basically own the house you live in, but not the ground it is on. You might be asking yourself—What is wrong with that? This has led to what has become the Leasehold Scandal.
Why a Scandal?
The priority of new couples, and exponentially growing families, has brought to the market a huge demand for new homes. This means investors are jumping on the opportunity to build and sell—at leasehold. The scandal lies in that a leasehold sold property will only be yours for the set amount of years. Additionally, you will have to follow the terms and conditions of the contract the landowner sees fit.
That does not sound so bad… right?
The truth is that as long as you plan to keep the house you bought in the same state, it really is not that bad. However, you will have to pay a “mortgage fee” which is basically rent. If you want to make any changes on the property itself, you will not only need to pay for the changes, but you will also have to ask the landowner for permission to do so, and you may even be required to pay a fee for changing the property. You might not even be able to own a pet, or even have a certain number of kids.
What to do?
If you are going for a leasehold, make sure you find a house that nest fits you. Read all the fine print, and make sure that you can comply with all the rules and regulations. Explore all the financial entities the house will require and how often the “mortgage” will double. As long as you can agree to all of these, go for it and enjoy your new home!