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Leaseholds - Good no more?
In the area from which we practice, and in particular the southern part of Brighouse, and much of Huddersfield and Oldham, there has been a tradition that houses are owned as leaseholds. Our view had always been that this made no significant difference to the value of the property. The leases, in general, are of good quality and sensible, and the landlords have been responsible and fair.
Over recent years, more and more of the freehold reversions have been sold to companies who are committed to making money from its ownership. This is not something to criticise, but it is coming to make a difference to our advice, to the extent that we now advise clients to be cautious about the purchase of leasehold locally.
There are three main areas of concern.
All three circumstances suggest freeholders from whom it would be sensible to distance oneself. The obvious step is for the householder to buy the freehold reversion from the landlord. Whilst this is an additional expense which in the past we would advised was an unecessary expense, we are now clear in our advice to our clients that unless the nature or layout of the building suggests that a leasehold is the only appropriate way of holding the property, the householder/tenant should seek to buy the freehold.
There is always 'another hand' When you buy a freehold, the freehold and leasehold titles are merged. In effect the leasehold estate disappears. The law says that it does not make sense for you to be your own tenant (or indeed landlord). In practice, this can lead to other difficulties. The main advantage of leaseholds is the way it provides, relatively easily, a way of regulating the interests of those living next door to each other.
Many freeholders offer to sell thefreehold for a small sum. The natural temptation is to accept the offer and buy. This will sometimes make sense, but the question then arises of what happens to the obligations between neighbours which operated under the lease. A simple transfer of a simple title can do great harm. The position is complicated. How can obligations be created between a freeholder and an adjoining leaseholder, and how can the various other combinations of relations be coped with. Whatever the answer is, a simple transfer will not do.
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