The SURPRISING FACTS About Leasehold Property in the UK
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- čas přidán 14. 07. 2024
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In this video, we explore the history of leasehold property versus Freehold in the UK for new build and existing homes where back in medieval times, all of the Lords owned all of the land (Where the term Landlord comes from). We explore how over time peppercorn ground rents became a thing and recently how housebuilders like Taylor Wimpey have been part of a leasehold scandal.
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Timestamps
00:00 Intro
00:46 What is Leasehold VS Freehold?
02:57 The History of Leasehold
06:23 1800 Leasehold Developments
06:54 Post War Leasehold
07:28 Leasehold Today
08:24 Scotland Leasehold Reform
09:44 Conclusion & Next Videos
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I'm Matt, a product owner and property investor working in London, UK. I make videos about money, finance and property investing to help people lead a more financially savvy life. In my spare time, I’m documenting what it takes to diversify my income and build a business.
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#leasehold #newbuild #ukproperty
Do you have a freehold or leasehold property? Let me know what you think about leasehold in the comments!
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I live in a leashold flat and will never again buy a leasehold property. Our freeholder is a billionaire who lives in Monaco. For the last 15 years the leaseholders have been in a state of constant litigation with the freeholder. Under the leasehold system freeholders can charge the leaseholders whatever they like for the building maintenance and insurance. The freeholder controls the contracts for services such as security, concierge, gardening, insurance and maintenance and can charge a huge markup on the basic costs. This can be a goldmine for the freeholder and in my case the leaseholders are having to pay huge amounts in legal fees to fight him in court. We are shortly going to court again against our freeholder and this will cost us approximately £80,000 in legal fees for an 8 day hearing.
Leasehold is an appaling system and a disgrace to the country. It does not need reform. It must be abolished.
too right..time our politicians stopped this leasehold nonsense once and for all..estate agents are also conning bastards who try and cover it up
The easiest way to understand leasehold... Its basically paying all your rent upfront and then having to pay for maintenance and repairs and extra rent on top, with no way of getting out of it. It's worse than renting because even when renting at least the landlord covers costs of repairs and you can leave when you want. NEVER BUY LEASEHOLD... EVER. Either the government should ban it or we make sure people stop buying them.
Leasehold should be banned, terrible that the government let it continue
It's so horribly outdated! Feels like the progress they're making isn't fast enough to sort it out
7 years ago, I purchased a leasehold flat with 87 years left on the lease. I did a lease extension as soon as I could (2 year after purchasing the flat). I was very lucky because the management agency lost the notice they had received (and signed) and missed the deadline for negotiations. So I paid the bare minimum as they had to accept my initial price.
Amazing - how much did you pay?
Unfortunately you still have a bad deal as you are just a tenant in law. You've just paid your rent upfront without any of the benefits of being a tenant (landlord covering costs of repair and maintenance etc) . My advise... Sell the flat ASAP or rent it out if you are allowed.
I bought my freehold to my house, they only charged £20 per annum and had 950 years left on lease.
I paid £800 plus legal costs. A bit of a rip off but I preferred to own the freehold.
In the UK all the land is owned by the queen(for example, if someone dies and leaves no will, the land automatically goes back to the Crown). This is known as the doctrine of tenure
When you buy a property you are buying an estate in land. There are two types of estates. Freehold and leasehold. The difference between them is the amount of time that you get to use the land for.
Freehold is known in legal terms as fee simple absolute in possession (a mouthful, I know). What this means is that you pay a fee, to be the absolute owner in possession. Fundamentally means that the estate is yours for an unlimited amount of time
A leasehold is known as "term of years absolute" this means that you are the absolute owner of the property for a limited amount of time.
Thanks for the video! Never actually thought of the history of leasehold!
I've just learnt so much more haha. Interesting comment thanks! Glad you enjoyed the video
In a flat leasehold you are not an owner of any kind. In law you are a tenant of the freeholder. You have right to live in the property and the right to pay to repair and maintain it, you don't own any of it. If it's a house, you own the house but not the land it's on.
The point is: Leasehold is a fancy way to say that you are renting on a rather high price and for a really long time. The property will never be actually yours on a leasehold, so your kids will either have to extend the lease or find a new home. It's great for the landlord (freeholder), he will rip the benefits and pass the property to his/her descendants. Get it?
I'm a property solicitor by profession, but never actually looked into the history of leasehold 😅 very well made video. Thank you for this.
Haha glad you enjoyed it! I found some interesting nuggets when researching the video
Great video! Would love it if you're able to do a video on all things 'bridging loans' (how to obtain one, what to look for, what the payments look like, the pros, the cons, the pitfalls and the extent to which it helps to do a quick buy, refurb and then flip).
Hey Rishi,
It's on my list! I'll probably do this as an interview style with my Broker to help explain some common myths and questions about how bridging works! I'll pop it on my list and get it covered for you soon
@@MattBrighton cheers buddy! That would be awesome! Always love your videos!
omg uk is so ancient. you really should sort out this whole monarchy thing!
I am finding out that in Canada we also have A LOT of leasehold properties. So thank you SO MUCH for this video ❤
Fascinating topic. I had no idea how the peppercorn rent came into being so thanks for sharing that little factoid.
Enjoyed researching this one - some little interesting nuggets came out of it!
I always wondered about the origins of leasehold, now I know! I see what you mean about that background music, very fitting. You always have very high quality footage on your videos, helps make them look very professional. I have a leasehold but with over 900 years left on the lease, I’ll sort it out nearer the time. 😉 Great video as always, looking forward to your next one.
Haha - it had to be done! Appreciate the nice comment! I was quite shocked when buying my flat to see that it had 999 years on it. It's one less thing to worry about!
Nice to see Mezut Ozil has a new career after football!!!
why don't they abolish it? its evil. people are evil.
Hopefully goes in that direction. Would be great to see blocks of flats have a commonhold share
Because the people in charge of abolishing it would be the people loosing the privilege. Not happening.
@@albertodejuan6104 well lets abolish this lord status nonsense,get rid of the house of lords and the crown..antiquated bullshi-t and has no place in a modern society
All leasehold should be ended. You either own a property fully or you don't.
My old house in Liverpool had a peppercorn rent, thou it was changed to £20 for the whole street, and just sent the bill to the whole street every year in the hopes that every one paid for it, so they got the money from each house. We ended up buying it for like £400
Interesting! Funny they still exist today but for absolutely no reason!
Brilliant and very interesting and historic overview Matt. Could you post a another video on your thoughts on so called freehold new builds with increasing associated annual estate maintenance fees which is another contriversial issue. At the present there appears no regulations or capping with these annual services and fees. Enjoying the Channel and great work 👍
Great video. Well explained. Not sure if you can do anything about it but there was a mid roll ad by a fellow youtuber who seems to want to be an advisor claiming all the other guys talking about property just talk BS. If you can see you gets ads on your channel review it and whitelist those that are fine.
I think I've seen it! If they have to advertise to spread their message rather than grow a natural audience then I can't imagine them lasting too long
Great work Matt!
Thanks Darren! Glad you enjoyed it
The 1st thing that I saw said you own the house but lease the land, well this is wrong you own nothing & you lease it all, this is a very common misconception.
Leasehold will go but not sure when!
I am a Property Solicitor and I can confirm this man speaks complete sense.
Very reassuring! 😂
i have leasehold 999 years want sel my house got a conservetry built and estate agent asked did i get permision off the lanlord wtf she said you cant even put a shed up or own a dog you need permision is she mad or wot i only pay 40 pound a year ground rent
So glad you covered this topic, I’d personally only ever buy a property with the freehold, my current property luckily is a freehold!
I was speaking to my broker about this as some great property deals came up on the market but I noticed they're leasehold. Seems around Sheffield there's a lot of old patches of land still owned by people - it does add an extra layer of complexity and annoying when it's a semi-detatched house and you need permission to change walls around!
@@MattBrighton loads of leasehold houses around Manchester / Lancashire.
@@ep1929 no doubt in the jewish sector
Unlike the UK, in Spain they do not have leasehold (which coincidentally, which the UK government will 'never' abolish due to the billions of revenue that 'THEY' will lose) . Even when you purchase an apartment you own it outright...the floor, ceiling, walls, everything that is constructed within it and you even have a share of the land it sits on.
The main issue with the UK lease fleecing is the so-called management cost that are reviewed each year against the RPI (wish salaries 'realistically' reflected against that has well!). If management cost were low and more realistic to the actual annual cost of maintaining, then if your sitting on a 999 year lease it would not be so much of an issue. And most likely the banks would treat leasehold like any other freehold property.
But has long has we have governments who will not outlaw this crazy practice, then we will always have alongside them the companies that purely base their business model on buying up all the leases from all the developers when they in turn need that cash injection to move onto their next development....and hences the cycle continues.
Yet another reason to move to Scotland ;)
Haha, one of many!
would you buy a leasehold as a FTB or travel long distance to work and buy freehold?
can I sell the lease if I own that lease, sell the whole term to a buyer to own that land and be the owner of that leasehold building?
Hey Matt, loving ur content and I just wanna ask, would you recommend share of freehold? I still feel icky about leasehold, what’s your insight on this? Thanks so muchn
Share of freehold is fine. It’s a newer way of doing it in flats and apartments.
I’m looking at purchasing a leasehold property with a 125 year lease on completion. I plan to live there for 5-7 years. Is this a good idea? Would I struggle to sell it on? Thank you!
Yep! 125 can often be quite standard for new builds, but only a worry when it gets below 80 years so when you come to sell you'll have many years left so not an issue
Hi Matt,
Im 20 years old and have about £20k saved. Im heading off to Uni this year with the option of renting with some mates or getting a mortgage on a flat (with help from my southern parents 😅). Should I keep saving and wait to eventually get a mortgage on a house or get on the property ladder now?
Cheers for any advice!
I used to know somebody at university around Staffordshire (house was only 70k) and he rented the spare rooms out to his friends. He essentially lived cost free as his 2 spare bedrooms paid for bills, food mortgage etc.
Depends whether you want to live in halls in first year etc as well and experience some of that but 3 years isn’t too bad to own a place before if you sold up at the end of uni
@@MattBrighton thanks matt! Appreicate your time
Love the thumbnail
Thanks Henry! :D
Hi Matt, I'm nearly near the end of my working life and I'm currently renting after becoming a single parent many years ago. However, unfortunately after losing my elderly mom this year I'm finding it very stressful as she had property which although should be easy to sell as its in a sought after area, my parents did not purchase the freehold some decades ago and now its only got 36 years left on the lease, therefore any potential buyer will be refused a mortgage. So does this mean I could lose a huge amount of money by being forced into a cash sale only. Would it be better to go and live at the property, it does need some work and renovation required? I'm desperate for some good impartial advice, please help 😢
Banks tend to ask for 80 years on the lease otherwise needs renewing. The best thing to do is have a chat to the freeholders and get a quote for a lease extension. Anything under 80 (especially as low as 36 years) banks won't lend on which means an unmortgeable house and therefor won't be full market value.
I recommend exploring auction as an option, they're incredibly hot at the moment, lots of people bidding for properties in any condition. if you sold on open market you might struggle to get a good buyer, but with auction people understand properties come with risks and costs / problems to solve which this one would need solving with a lease extension. So worth having a chat to an auction house and see what they think they could get for you, or put a reserve price on it so it doesn't sell for a price you don't want it to.
Ultimately the house won't be worth anywhere near market value because either you, or the new buyer will have to pay 5 figures to extend the lease so someone has to pick up that cost, either you pick up the cost and see whether you can uplift the value of the properrty higher than the cost of the lease (EG Lease is 20k but property value goes up 30k you get 10k equity). Or a buyer gets it at a discount and takes on this risk, cost and hard work
@@MattBrighton can you look up who the freeholder is say on a flat? i'm interested in a flat with a 59 year lease but the estate agents seem very reluctant to share information on it..on this flat the estate agent didnt even know the length of lease was,i said its on the actual property details you are advertising..its like dealing with idiots or maybe conniving crooks would be a better term to use.
01:05... so, renting?
love the music at 4.55!
Cheers let's hope the Brits get their butt's in gear and catch up to Scotland. Great history too cheers.