buying a freehold of a leasehold house

Richard_Webster

What you are saying is the value of the freehold is £180-270

NO, I didn't say that. I said the rent element would be worth that. If you buy the freehold the freehold loses the ability to collect the ground rent. That has a value.

The other bit in the calculation is the value of being able to regain possession at the end of the lease. What sum when compounded at around 5% per year (the rate used for these calculations) will bring in £140,000 in 53 years time? I've worked that on £140K as £9,565.70. So add that to 13/14 times ground rent and you get around £9,700. I reckon the value of the freehold is around that figure so getting it for £1,000 is a complete snip and you should bite their hands off.

I am not really clear what you mean by enfranchsement process. If the freeholder is prepared to sell for £1,000 and you agree that figure then you present his solicitors with a draft TP1 showing the agreed price - they agree its wording (or amend it) and eventually get it signed and you pay the solicitors the agreed amount and they send you the TP1.

You then have to complete the AP1 and the ID forms for the Land Registry.

If you can't agree the price with the freeholder then you will have to instruct surveyors and solicitors etc and it will cost you a lot of money to go through the formal procedures. That would be far too complicated for most lay people to attempt. If she is offering it for £1,000, grab it!

If you don't grab it when you want to sell you will find your buyers can't get mortgages on it and by then the lady may have taken more advice and be asking for a lot more!

Vincenzo

murray2 wrote: »

To Richard Webster,
Thank you for your reply.The freeholder is willing to sell for a £1000.There are 55 years left on the lease at a rent of £9 a year with no service charges.I think under the present economic housing climate this figure may be two high.I have made an offer of £400 and am awaiting a reply.Where can I obtain copies of the T P I and the A P I?From the brief outline you have kindly given, the process does not look any more difficult,(perhaps less so)than house conveyancing of which I was able to complete the main work in 2 weeks.
Many thanks for your help so far. Murray2.

With just 55 years remaining, £1,000 is an absolute bargain! If I were you, I would accept and get a solicitor instructed as soon as possible. It is also standard practice for you to pay their solicitor's fees.

On a separate note, there is much more to the service provided by a solicitor than filling in a few forms. Their advice can save you '000s, not to mention their professional indemnity insurance that can come to the rescue when their advice fails you!

The Landlord may not realise their interest is worth considerably more than they are asking, although once they have instructed a solicitor, this may be pointed out.