I am looking to buy a house with my girlfriend in Norton Lees area of Sheffield and have found out that the property is leasehold. I enquired further and have been told that the Lease is for another 700 years or so and that the ground rent is £3.50 a year. This strikes me as somewhat bizarre, why bother with such a miniscule amount?. Is there a catch or something I am missing here?

Any realistic advice or insight I have missed would be appreciated as I feel I am somewhat in the dark here.

I *think* these leases were set up when the houses were built (in my case 1901) and were set up for 900 odd years. The leases were set at certain amount and cannot be changed at anytime until the lease has expired. That's why they seem such a small amount, I'm guessing that they were quite a bit of money when they were set up but are now considered a small amount.

Having a lease on a house, means that you may not be able to make any changes (such as a conservatory) without the permission of the landowner (leaseholder), they may charge for giving permission and this is how some companies make the leases pay.

Do a search on this forum as there is another thread about leaseholders and a london company holding leases.

Done the search, here's the thread http://www.sheffieldforum.co.uk/showthread.php?s=&threadid=8757&highlight=lease+holder

We've got a similiar house in Norton Lees - 999 year leasehold from 1930-ish, and a ground rent of roughly a fiver a year. A VERY large percentage of the housing stock in that area is in the same position.

From what we found out when we bought the place, any major structural alterations (e.g. extensions) have to be approved by the owner of the lease (and unless you're doing something very unusual they're unlikely to be bothered), but other than that things are pretty straightforward. The only sticking point is that when it comes to buy/sell you need all the documentation that confirms that there are no outstanding arrears on the lease... and getting that from the leasehold solicitors can be a longwinded process. (Well, it delayed our purchase, and they did actually LIE to us, first confirming that there were no arrears, then six months later demanding the missing 2 pounds fifty. The only consolation is that they lost more money themselves in the cost of the time spent on the letter than they actually gained, so we're not overly peeved, except on principle). There are usually a few other conditions (e.g. no bonfires, no home businesses that impinge on the neighbourhood (e.g. smelly chipshop), no chickens allowed(!)), but to be frank, you get those with modern freeholds as well - when the land is allowed to be developed, you can often get those kind of conditions attached.

So, while having a peppercorn rent leasehold is really no big deal, you may wish to buy the freehold at some point, which you can do after a few years I believe. It'll cost you more than you pay out each year, but you'll have no source of potential hassle when it comes to extensions/speedy sales/not scaring off buyers worried about leaseholds.

Leasehold properties are pretty common in Sheffield. The leases are usually for a huge amount of time (mine is relatively short at 125 years!), and the ground rent is low. It was mentioned that this is probably because the lease started early in the 20th century, but even new leases are inexpensive - my lease was granted last year and the ground rent set at £10 a year - hardly going to break the bank!

As mentioned, it can make things a little more complicated with the conveyancing, but mine went smoothly. And the lease is sometimes a good read, especially the older ones, my parent's old lease stated that they were not allowed to hang washing out on a Sunday, and they were not allowed to boil tripe on the premises!

Providing that the conditions of the lease aren't too restrictive when you buy the house, remember that you will have the right to buy out your head lease (and effectively become your own leaseholder- it's called merged freehold) after some time in your new property. I think that it's either 3 or 5 years.

I did it on my house, and it was no great shakes- cost me a couple of thousand (but I needed to do it because the lease at 50 years was short enough that lenders wouldn't lend on the property if I decided to sell, so I knew when I bought the house that I would be unable to sell on until I had got merged freehold).

The most annoying thing was trying to find the lease holders, which took some time and convoluted paperwork, but it only took 3 months, and now nobody can tell me not to hang out my washing whenever I feel like it!

thanks for the tips/suggestions and general information, another question I had was about buying the leasehold but you answered that already.

Well I am going ahead with things. I am not from Sheffield originally and when i told people who I know that the property was leasehold everyone kind of panicked as it is something of a rarity in many parts of Britain, i guess it is one of those things that makes Sheffield a little bit more unique:) :thumbsup:

don't know about the area in particular but we have a very similar one on our house. 700 odd years at £2.20 per year, although the people before us advised it had not been collected.

the solicitor checked everything was up to date when we bought the house so no problems.

i think the reason for it is, our house is terrace (standard walkley/crookes fare) and the 4 houses share access to the back through our garden, so we have to keep access clear, and i beleive it would work for shareing the cost or repairs to common boundry's drains and things like that but not read it in enough detail.

bottom line is nothing to worry about, just for piece of mind talk it over with sols and maybe ask about the possibility if buying the lease out (or purchasing an extention if less than 100 years).

Originally posted by Hezza

Well I am going ahead with things. I am not from Sheffield originally and when i told people who I know that the property was leasehold everyone kind of panicked as it is something of a rarity in many parts of Britain, i guess it is one of those things that makes Sheffield a little bit more unique

That's exactly the position we were in. These type of leaseholds are very rare in other parts of the UK, but common as dirt up here in Sheffield, it seems. Good luck with it!