Leasehold properties - can they be as good an investment as freehold ?

[Saphronica83]

I have been looking to buy a property for a few months now. I want a property that I can let out and keep as an investment. I have looked at a few leasehold flats but have no experience with them and the idea of them bothers me - renting out a flat that I will never own - can any real profit be made or shall I just stick to looking at freehold properties ?
Sorry, I forgot to say that I live in London and this is where I want to purchase the property. I have seen many leasehold flats here but worry they will not be a good long term investment as the lease runs short.

[Dell]

It depends how long the lease has to run in years and possibility of buying the lease at later date I think you have the right to purchase the lease

[snowandsun]

I would imagine that it would be harder to get rid of should you need to. Less people will want to purchase a leasehold than to just buy something free and clear. I personally would not buy any residential property as a leasehold.

[bull_rooster_aardvark]

Not sure of the laws where you are but I can give you some generalities. The first place you buy should be the one where you live. No rent to pay, you don't have to deal with not getting rent from someone else and great tax breaks (again this is for the US not sure about the UK). After that, however, rentals are great and give you great income if you buy them well and can handle all the hassles. The income will be slow to build, however, and it does take work. Still, if you stick with it this is the best way I know to invest.

[Cari]

It depends on where you're located. In the UK, especially in the larger centres, leasehold is the norm and it's certainly not detrimental to purchase a leasehold property. If you're in London and you decide that you're only looking for freehold properties, then you're going to be looking for a very, very long time. In smaller towns/cities there may be more freehold properties available and these are generally more profitable, but to be honest it won't make enough of a difference.

If you're in another country, however, buying leasehold can be a big problem. For some reason most people won't touch leasehold with a barge pole so resale can be very difficult. But this is because they're not so common and people don't understand what they involve, and can't be bothered to find out.

The only thing is, you need to ensure that the lease has at least 75 years left to run. They're costly to renew and most banks and building societies will not give you a mortgage if the lease has less time than this.

Remember also that sometimes it is possible to purchase a leasehold property and then buy out the lease, and whilst this is an expensive process, it can certainly provide you with good returns eventually.