I've just seen a 3 bed house for sale on a Duchy Leasehold for 230K with an annual rent of over 5 grand a year. ... on a 20 year lease.
Now, it looks like quite a nice house, but that doesn't seem like a good deal at all... unless I'm missing something fundamental. Anyone have any idea how they really work?
Or is HRH just out to "sweat the asset" as it were?
It'll be cheap because it has a short lease. However, you won't (or at least have enormous difficulty) get a mortgage on it and it'll probably cost you something like the value of the house again to extend the lease once you've been in there for 2 years.
I don't think it's particularly cheap... you explicitly can't get a mortgage on them, the MAX lease is 20 years and the rent is pretty high. Who actually buys these places?
If it's on dartmoor, take a look at what an equivalent place without a duchy lease would set you back.
Oh and I think they review the rent every three years...
(230K/20 +5)/12 = 1375 a month, for an asset the landowner gets back in 20 years.
Someone's doing nicely from that.
Dont think of it so much as buying a place as paying a rental premium of 60% of the nect 2010 yrs rent up front. I.e. 15k a year rent equivalent (ignoring discounting)
It's the closest thing we have in this country to a residential security of tenure (which ASTs don't confer) and for that reason they are useful and of value for those that are happy to "rent". Id expect to find that the 1,200 pm rent equivalent is less than a comparable AST rent in the same area.
OK, that makes sense (although the rent equivalent is quite steep, even for the area), but I wonder how people finance them given you can't raise a mortgage on it?
Don't.
I used to see one of these houses on the way to work. I remember I used to look over the passenger seat of my car to get a better view.
If I remember correctly, Musical Youth moved in not long after.
Musical Youth? A friend of mine was their parole officer.