London is top leasehold hotspot
More than half of homes in London and 46% in Manchester are leasehold, new research has revealed.
Conveyancing provider My Home Move analysed more than 20 million property transaction records in England and Wales, using Land Registry price paid data, and found that, on average, 15% of homes are leaseholds.
However, in London, this rises to 53%, while 46% of residential property in Manchester is leasehold. Other large cities in the top 20 for leaseholds are Liverpool, Newcastle and Birmingham.
Highly dense populations and rising property prices mean that more houses are split into flats and more new-build apartments are built in city centres, leading to more leases being created.
Traditionally, leasehold properties – where you own the property for a certain length of time but not the land or building – take longer to buy than freehold properties, have more legal red tape and extra costs attached to them compared to freeholds.
Inner city apartments
In popular London postcodes, some areas are almost exclusively leasehold. For example, the N1C postcode in Kings Cross is 100% leasehold, while nearby Barbican (EC2Y) is 98% leasehold, and the WC1E postcode, where University College London is located, is 95% leasehold. In fact, more than 60% of residential properties in the central WC, EC and W postcodes are leasehold.
In contrast, moving further out to Greater London, leaseholds account for no more than 40% of properties, while in some areas – Abbey Wood in the SE2 postcode, for example – leaseholds only account for 14% of properties.
In Manchester’s M15 postcode, which includes Hulme and the Manchester Science Park, leaseholders account for 94% of property owners. And there is the same number of leaseholders in Manchester’s M50 – home to Salford Quays and Media City. In contrast, a little further out in Chorlton-cum-Hardy (M21 postcode), just 14% of properties are leaseholds.
Berwickshire and rural Wales are areas that have the lowest proportion of leaseholds, at less than 1%.
“Proportion of leaseholds could grow even more”
Doug Crawford, chief executive of My Home Move, says: “The redevelopment of England and Wales’ towns and cities over the past 30 years means there are more leasehold properties on the market, as new-build apartment blocks are constructed and old warehouses are converted into flats.
“Would-be buyers looking to claim a little piece of the city as their own may be in for surprise. Leaseholds make up almost all of the housing stock in some of our cities’ redeveloped districts, and the proportion of leaseholds could grow even more as additional new developments come ont o the market.”
“Home buyers need to understand that while purchasing a leasehold means they own the property, they won’t necessarily own the building or ground on which it is located. As a result of this, leasehold buyers often have to pay ground rent, service charges and buildings insurance to to the building’s owner.”
The right to hold or use assets (generally property, but also vehicles) for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. Leasehold ownership of a residential property is simply a long tenancy, the right to occupation and use of the flat for a specified period – the ‘term’ of the lease, which is fixed at the beginning and so decreases in length year by year and the property can be bought and sold during that term. When new, leases are for 99 or 125 years until its eventual expiry, whereupon ownership of the property reverts to the landlord.
Permanent and absolute ownership and tenure of a property (residential or commercial) and/or land with freedom to dispose of it at will but with no time limit as to how long the property/land can be held (in perpetuity). Freehold is the opposite of leasehold.
The branch of law concerned with the preparation of documents for the buying and selling of property (or remortgaging), always handled by a qualified solicitor. The conveyancing process covers many of the legal aspects of the sale/purchase/remortgage such as land registry, local authority searches, freehold and leasehold status, title deeds and much more.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.