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What’s the Difference Between Leasehold and Freehold Home Ownership?

What’s the difference between freehold and leasehold?

There are several differences between leasehold and freehold ownership, and you need to know about, them before buying a new home. This issue can affect the market value of your property. And it can change the legal process involved.

We’ve put together a brief guide on the differences between leasehold and freehold ownership. Make sure you know what they mean for your future plans before buying or selling your home.

What is a freehold?

A freehold property includes ownership of both the building and the land it sits on. You’re responsible for the upkeep and management of this land.

Buying a freehold property is usually the preferred option. You don’t have to pay ground rent. You don’t have to deal with a landlord. And you don’t need to worry about a lease for the land expiring while you still own the building.

Shared freeholds

A shared freehold is something you might end up with if you buy a flat. All of the property owners in the building can get together and buy the land from the landlord. Each owner then receives an equal share of the freehold. While expensive, this course of action gives you more control over what you can do with your property.

What is a leasehold?

Differences between freehold and leasehold

A leasehold gives you ownership of a building for the duration of your lease. The land always remains the property of the landlord. And unless an agreement can be reached once the lease has expired, ownership of the property returns to the landlord.

One of the biggest drawbacks about owning a leasehold property is that you often have to get permission from the landlord to perform building work, extensions, and major renovations.

Should I be concerned that I own a leasehold property?

If your lease is coming to an end in the next few years, your property’s value will probably decline rapidly. Mortgage providers are very wary about lending for leasehold properties with less than 30 years remaining. This means you could run into difficulties if you need to sell your home for its true market price.

But there’s some good news if you already own a leasehold property. If you’ve lived in the home for at least two years, you have the legal right to request 90 years to your lease. Of course, you’ll have to pay a fair market price for this extension, but it’s usually far better than the alternatives.

Reach out to your landlord if you want to arrange an extension. It’s always better (and cheaper) to do this by agreement. However, if an accord can’t be reached, the matter might have to be settled in court.
Leasehold properties incur charges and ground rent

As the owner of a leasehold property, you’ll incur charges and ground rent during over the course of your ownership. However, the rent is usually very low — less than £100 a year.

Differences between freehold and leasehold

Particularly if you’re living in a shared building or community, you may also have to pay charges to cover the following:

  • Maintenance of communal gardens.
  • Repairs and maintenance on buildings and structures.
  • Service charges (security, reception, etc.)
  • Utility bills for blocks of flats.

What are your rights as a leaseholder?

Although you don’t own the land on which your property sits, you do have certain rights as the leasehold owner. They include:

  • You must be consulted if improvement works are to last more than a year.
  • You must be consulted if the cost of planned building work will exceed £250.
  • You have the right to see a breakdown of how your service charges are spent.
  • You have the “Right to Manage” — where you can take over management of the building along with your fellow tenants.

Don’t worry if you’ve just discovered your home is leasehold. You have several options available, including extending the lease or buying it outright. If you’d like to sell, however, Flying Homes may be able to help.

What is Negative Equity and What Can I Do About It?

You may have heard the term ‘negative equity’ quite a lot in recent years. The housing and banking crashes of the late noughties resulted in thousands of UK homeowners succumbing to the property phenomenon.

Negative equity doesn’t just affect property owners at times of financial crisis. It can strike at any time — making life difficult for people who want to move on or cash in on their home.

We’ve put together a short guide to negative equity, so you have an idea of how to react if it affects you.

What is negative equity?

If your home is in negative equity, it means you owe more for your home than it’s worth. If you were to sell your home for its market value, you wouldn’t have enough to pay off your mortgage.

In most cases, this scenario is caused by a sudden fall in house prices. Imagine you bought a home for £200,000 with a mortgage of £180,000. After a sudden drop in prices just a few weeks after the purchase, your home’s value plummets to just £160,000. This means you owe £20,000 more than your home’s new value.

A lot of people fall into negative equity because they remortgage to fund home improvements. And when this happens, selling can become impossible.

Am I in negative equity?

Am I in negative equity?

The truth is negative equity doesn’t affect everyone in the same way. For instance, if you’re planning to live in your current home for the rest of your life, you’re unaffected as long as you keep up with mortgage repayments.

A lot of people don’t realise they have negative equity until they try to sell. It’s not until a home is valued that the problem becomes apparent. Call your mortgage lender and get the exact figure you still owe. Then get your home valued by a local estate agent. If you owe more than the likely sale price your home will fetch, you’re in negative equity.

Can I sell a home that’s in negative equity?

This depends on whether or not you have money in the bank to pay off your mortgage after the sale goes through. Most people don’t have this sort of cash to spare. And as a result, they’re trapped in their mortgage and their home. If you can afford to pay the mortgage lender what you still owe after selling, you can sell. But this doesn’t mean selling is the best option.

A lot of people keep up with their mortgage repayments and wait for things to improve. After all, house prices are volatile in the UK, and they rise as quickly as they fall. And as you pay off your home loan, the negative equity gradually reduces.

Can I get out of negative equity?

Yes, but there’s no quick or cheap fix. You either have to wait it out or stump up the difference. Here are your options:

Can I get out of negative equity?

Dealing with negative equity – make extra mortgage payments

The obvious choice is to repay more of your mortgage to eradicate the negative equity faster. Speak to your lender about making additional payments. However, be aware that there may be financial penalties for making extra payments.

Sell and pay the difference

Sell your home, and the money raised will go towards paying down your mortgage. You’re liable for what’s left, so you’ll need to pay this as well. If you have money in the bank, great. But you might also be able to borrow what you need from a commercial lender, a friend or a relative.

File for bankruptcy

Bankruptcy should always be the nuclear option. It can affect your ability to obtain credit for several years afterward. You should only consider this solution if you’re in serious negative equity and can’t afford monthly repayments. Even then, there are ways out — including selling your house to a specialist home buyer such as Flying Homes.

Choose voluntary repossession

If you’re struggling to keep up with repayments and you’re in serious negative equity, speak to your bank about voluntary repossession. This will affect your credit rating, but it’s not as life-changing as bankruptcy can be.

If your home is in negative equity, don’t panic — but don’t bury your head in the sand. Speak to your lender or a financial advisor about what you can do to tackle the issue.

What New Kitchen Features Add Value to Your Home?

What features add the most value when fitting a new kitchen?

The kitchen is the heart of the home for many people. It’s the place where people come together to share their stories over a meal. According to the National Associaton of Estate Agents, a new kitchen should always be a priority for renovations.

According to data published by Moneywise, a new kitchen adds the most value to a property when renovated. But if you have money to spend, which features and changes should be at the top of your wishlist?

A versatile living space

There was a time when kitchens were used almost exclusively for cooking and eating. Now, however, they’re used as a real living space — somewhere people can work, socialise or relax.

When designing your new kitchen, the cost is an important consideration but try and create spaces for everyday living. And try to add warmth wherever possible. Kitchens features cold, clinical surfaces because they’re practical. But nothing but tiles and granite worktops can leave the space feeling inhospitable.

Attend to repairs and maintenance in your new kitchen

Kitchen features that add value to a home

The quality and condition of your new kitchen could have a direct effect on your home’s market value. Buyers may forgive the odd defect or faulty appliance. But when there’s a series of issues, people see a lot of work without much payback.

Identify improvements and repairs before you list your house for sale including broken doors, faulty switches, bad paint jobs and any other trivial issues. Strive for quality and a great finish, and aim for a cohesive, consistent appearance.

Subtle changes are often the most effective

Don’t think you have to spend thousands of pounds renovating or installing a newly fitted kitchen to increase interest in your home. By making a series of subtle changes to your kitchen’s aesthetic, it’s possible to add value in a very cost-effective way.

For example, you can change the look and feel of your kitchen merely by changing cabinet doors. Keep the rest of the cabinets in place to save money. Choose a soft colour for the walls, and replace those tired worktops with something stylish. These changes alone don’t require significant renovations, but together they can transform your kitchen without breaking the bank. Visit a few showrooms and look at a few fitted kitchen designs to get even more ideas!

Think about what buyers want when planning a new kitchen

What do buyers want from a kitchen?

Imagine yourself in the shoes of your potential buyers. If your home is expected to attract first-time buyers, your new kitchen should be ready to use. Make sure all appliances are working correctly. Keep the decor neutral. And choose lighting that creates a warm ambience. Also, make sure your kitchen offers lots of storage and room to grow.

If you’re targeting affluent buyers who already own their own home, you might need to spend a little more. Invest in premium appliances, flooring and kitchen furniture. Stage your kitchen to showcase its strengths.

How much is a new kitchen?

The average cost of a new kitchen is £8,000, excluding VAT and appliances. Therefore careful consideration needs to be given if your objective is to add extra value to your home.

Make your kitchen functional

Your priority should always be functionality. While making a kitchen warm and inviting is excellent, the room’s primary function is cooking. Create a logical flow that aids better and faster cooking. Does the layout allow you to cook without continually turning back on yourself or bumping into things?

Where is the natural space for food preparation? Does this space have storage cupboards nearby? Is there space for clean dishes by the sink? Is there space for hot food to cool near the oven? These are all issues that will affect a buyer’s decision. Get them right, and you might add a little value to your home.

There’s little point to adding value to your property if you’re spending more on renovations than you stand to gain. Some smart decor choices, a little planning and a few subtle changes here and there can increase the value of your home significantly.

6 Simple Tips for Relocating Overseas

Relocating overseas? If you’re thinking about making a new life for yourself abroad, there’s a lot to consider. Relocating overseas requires a big adjustment to local customs and traditions. But first, you must get your affairs in order at home. Start by making a relocating overseas ‘checklist’. We condensed our checklist down to six simple points. Cover this as part of your preparations, and the big move should go smoothly.

1. Research local house prices

Assuming you’re going to be buying a property in the new country, you should go into the process with your eyes wide open. Research several neighbourhoods in the country, and find out which of them are expensive and which offer value for money.

The factors that determine house prices in the UK might not be the same as those that affect prices abroad. Start by researching the national housing market, and then move on to local areas. By changing your requirements slightly, you might be able to pick up a bargain with great potential for future house price growth.

2. Sort out your visa before relocating overseas

Tips for relocating overseas - visa

Don’t do anything until you know you can legally move to your chosen country. Each nation has its own rules on who can live and work there, so you might want to get some official legal advice from someone who lives there. Alternatively, contact the country’s embassy for more information.

If you aren’t eligible for a visa, you may still be able to purchase property in the country. However, your time there might be severely restricted.

3. Register for tax

If you’re be permanently domiciled in your chosen country, the chances are you’ll have to pay local income taxes.  If relocating overseas, then reach out to the appropriate governmental body before you commit to buying a property. Get an idea about how much tax you’re likely to be paying once you’ve moved.

It doesn’t matter if you’re retiring abroad, there may be taxes payable on your savings and pensions. Register with the country’s tax agency before you leave.

4. Count the cost of shipping

Tips for relocating overseas - shipping

When relocating overseas, your initial instinct might be to ship all of your possessions abroad. However, this is usually a very costly process, and it might encounter red tape along the way.

Compile a list of all costs associated with getting your stuff to your new home overseas. It might be more cost-effective to sell your possessions off before you leave. You can use the money you raise to fund new purchases once you move into your new home.

5. Count the pennies when relocating overseas

If you’re buying a house abroad, don’t take anything for granted. While an asking price might be within your budget, you need to add up all of the associated costs before you can make a decision.

Are there any local taxes on property? And if so, what is the threshold? What is the current exchange rate? And could it change before your sale completes? Draw up a list of moving costs, including removals, repairs, taxes, and conveyancing fees.

6. Follow Brexit developments

It might be several years before the future relationship between the UK and the EU is known with many UK companies relocating overseas. Changes to this arrangement could affect your residential status. And new agreements may involve increases in the cost of living abroad. If you know what’s coming, you can plan your finances accordingly.

Leave nothing to change when you’re relocating overseas. And if you need to sell your current home quickly to raise funds, contact us at Flying Homes for a quick and fair offer, and keep the stress of relocation to a minimum.

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