What's with newbuilds and leaseholds?

[SavageHoutkop]

Recently in Manchester I've spotted that the new build (houses, not flats) seem to all be sold on a 250yr leasehold. What is the reason behind this?

 

[Archie_tect]

Developers can sell on the freehold as an asset later.

 

[SavageHoutkop]

how much of an 'asset' is a 250yr leasehold? Ground rent isn't that much surely - and 250yr is a long time away if you're waiting for repossession!

 

[Archie_tect]

Ground rent on one house isn't significant.... ground rent on 500+ houses at £100+/year is. That's the asset, which can be sold on at any time.

 

[SavageHoutkop]

True! Are there rights and responsibilities that go with it though?

 

[Theseus]

Maybe the landowner doesn't want to sell. Future generations inheritance, what!

 

[Archie_tect]

Hardly any! Money for old rope... that's why most of the land in centre of London is still owned by the likes of the aristocrats...
have a look at this link:
http://www.landvaluetax.org/theory/who-owns-london.html

 

[ASC1951]

And whereas pre-war long leaseholds had static ground rents, these modern 250 year leases tend to have rents which at least double every 25 years.

There is sometimes a legitimate justification for an up-market development, in that a lease makes control of undesirable changes much easier for neighbours than relying on freehold restrictive covenants. More often, though, it is to create an asset which can be sold separately, as Archie_tect says. Some professional ground rentholders make a substantial return from extracting excessive fees for various 'consents' - Google 'Simarc' for one of the worst.


Don't overlook that the freeholder of a long leasehold house usually has the right to buy the freehold.

 

[Scilly Suffolk]

Hardly any! Money for old rope... that's why most of the land in centre of London is still owned by the likes of the aristocrats...
have a look at this link:
http://www.landvaluetax.org/theory/who-owns-london.html

Interesting read...