Buying a Freehold

17 messages
21/01/2013 at 16:01

My 89-year-old Mum lives in a house with a lease of over 900 years to run (it was originally 999 years).

The freeholder has offered her the opportunity to buy the freehold, for around £3,500.  The ground rent is £8.50 per year.

I have two questions, if anyone can help:

Is there any point in buying the freehold, given the length of it, and what should she expect to pay a solicitor to handle it if she does do so?

21/01/2013 at 16:09

If she buys the freehold then she has total control of her property. At the moment the freeholder controls the building and your mother only the contents. This usually means that she has no say in the up keep of the fabric of the building. If she's lucky then it will be taken care of at an affordable cost. If she's unlucky then the fabric of the building could suffer from neglect or costly renovation that your mother can ill afford.

Either way, if I was still in a leasehold property I'd jump at the chance to buy the freehold. Hoever, if your mother doesn't want the hassle then she may not be so keen to do so.

21/01/2013 at 16:15

As long as the house is a house and not part of a block of flats then yes. Unusual to find a leasehold house, nearly all freeholds, its the land that has the value. 

Solicitor is invariably involved. After all they need to check up on things. Could be mine workings under the house. Land contamination etc.

21/01/2013 at 16:16

Maybe I've used the wrong terminology with leasehold/freehold, but I don't think that anyone but my parents (who bought the house new in 1932) has ever paid for any repairs or anything to the house.

She pays the annual ground rent of £8.50, but no service charges or anything (like I do on my flat).  No-one ever comes round to inspect to see if any work needs doing.

21/01/2013 at 16:22

As far as I understand, owning the freehold/leasehold would be beneficial, regardless of how long is left on it. It just gives you total control of the property. 

21/01/2013 at 16:24

Most leasehold properties in our area are long term like this, with a 'peppercorn' rent payable like your mum. Normally causes problems for mortgage purposes if only short term remaining of around 30 years approx and/or if freeholder goes missing. If your mum's never had any problems with freeholder, it's a lot of money to part with at her age for no benefit that I can see, unless anyone else knows otherwise?. If there's anything missing from deeds when the time does eventually arise and house sold, then a solicitor would normally just draw up an indemnity policy at a low cost for next purchaser.

Dark Vader    pirate
21/01/2013 at 16:27
Wilkie wrote (see)

The freeholder has offered her the opportunity to buy the freehold, for around £3,500.  The ground rent is £8.50 per year.

 

Those are ridiculously cheap figures...   go for it...

 

21/01/2013 at 16:30
Dark Vader wrote (see)
Wilkie wrote (see)

The freeholder has offered her the opportunity to buy the freehold, for around £3,500.  The ground rent is £8.50 per year.

 

Those are ridiculously cheap figures...   go for it...

 

Why?  With hundreds of years left on the lease, selling it won't be a problem.   £3.5k is still quite a bit of money, what's the benefit?

21/01/2013 at 16:46

The only thing I can see as it is a house, would it be easier to dispose of if it is freehold property should your Mum need to sell it at some stage - as someone else said, leasehold houses are very rare - it might make it a more attractive purchase if it is freehold. (just a thought)

seren nos    pirate
21/01/2013 at 16:57

all the houses in this area were originally leasehold.but they have been gradually bought out........old mining village.... all house originally pit houses later sold off.......

some people just don't want the hassle of a freehold so will not even look at the house........but with that long a lease you can buy it when you go to sell it..even if it costs more...........or on selling most buyers will reduce their offer by the amount needed to buy it..

My mother has a leashold and had to get written permission off the landowner before she was allowed to put gas connection to the house or the utilities wouldn't do it.......

It cost her £100 for the leasholders solicitor to do the letter

21/01/2013 at 17:13

If your mother has to maintain and insure the house, there is not much benefit in buying the freehold- you and she only have to worry when it gets down to 80years!

And £3500 seems a lot of money with such a low ground rent,

21/01/2013 at 17:32

Wilkie
is the freeholder offering your Mum the opportunity to purchase under the Right of First Refusal?? A freeholder wishing to dispose of  the land holding of a domestic property is supposed to offer it to the sitting tenant first at fair market value.i e they cannot offer to sell to the tenant for more than they can achieve elsewhere.

as far as your Mum is concerned her lease term is so long that for all practical purposes it can be regarded as freehold - it will not impact upon the value of the house at all. However houses do not last forever and hence the freehold has a potential redevelopment value at some stage in the far future - or even sooner if there are redevelopment plans afoot in the area!!!

There were a lot of houses, not just flats, built under leasehold conditions and sometimes the lease also reserves certain rights to the freeholder - mineral rights under the building for example - but it is a very complex area and I do not pretend to be an expert in it though I have come across it professionally a few times.

lease advice may help. Leaseholders have more protection now than historically which is also good news

21/01/2013 at 19:02

We considered buying a leasehold house, but decided against it.  The main reason being that we weren't convinced that there wasn't some catch.  We wanted the security of knowinng that it was all ours and that we weren't going to get caught out with anything.

So if we had bought it then we would have felt that we needed to buy out the lease.  However we were mortgaging ourselves up to the hilt and the additional £500 seemed like a huge amount of money to us at the time.

We told the sellers that we would consider it if they bought out the lease, but they were reluctant to do that as 'it would only cost us £500' so they thought we should do it.  If it was that cheap then why weren't they prepared to do it.

It just didn't sit comfortably with us at all.

So i would suggest that although she is happy with the agreement now, she might want to consider it at a later date if she wants to make the house easier to sell

21/01/2013 at 19:16

As a freeholder she would be a bona fide purchaser for value, so this would give her more rights than being a leasholder.

However, there are things that need checking first. Is it on registered land, are there any restrictive covenants over the land, does anyone have an easement over the garden?

It's always best to get a solicitor to look in to this first. Hope that helps. 

22/01/2013 at 15:55

My first house was a lease-hold, it was a new-build about 15 years ago so its still a current practice.

When we bought, the advice our solicitor gave was that we would be given the opportunity to buy the lease about five years after purchase at a discounted rate, and we should consider buying if we intended to stay long-term.  However, as it was our first house and was a small two-bed mid-link, we knew we would outgrow it and it was never going to be our long-term home.

It is worth getting some legal advice f you want to pursue it, but with 900 years left on the lease I don't think there's any incentive to buy the lease of the landowner.  Only proviso I could think is: What is the landowner's reason for offering to sell?  If they want to sell it to release their capital, then they may sell to another estate managment company.  Is the annual rent fixed, and is there anything to stop this increasing significantly in the near-future?

31/01/2013 at 17:11

I would probably want to buy the freehold for convenience's sake if I could get it at market value and I felt it wasn't money down the drain.

If the lease prohibits alterations, for example, the value to you or your successors in title of being able to extend the property or convert the attic into extra accommodation as of right might well exceed what you have to pay for the freehold - and if someone else owns the freehold then the leasehold owner won't be able to alter without going cap in hand to the landlord for a consent to do the work.

I suggest, ask a surveyor to tell you what the value of the freehold is (he will need a copy of the lease), then take legal advice.

Hard to comment further without knowing the exact nature of the property and all the other details that apply to the particular situation.

 

 

 

31/01/2013 at 17:44

she should take advice as indicated

and I guess the other thing is - does she really want to part with £3500 at her age??  


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