Buying out the Leasehold

MancBrel

I live in a house with just under 800 years remaining on the leasehold. The ground rent is under £2 a year, but as I have now paid off my mortgage my thoughts are moving onto owning the land as well.

Until last year I paid this money to a local agency about a mile away, but now I pay it to an offshore company (I think it's the Isle of White, but not 100%). I know that they have bought the land rights from the previous "landlord" as they advised me in the last bill.

Is it worth the bother trying to buy out the leasehold and does anyone know what the formula to do so? I have to admit, I have my doubts about the new company. I have heard about the practice of buying out leaseholds and playing hardball when home owners want to buy them out, in order to up the return.

Any advice much appreciated.

MancBrel

I should add. I live in the North of England (Manchester) and there is no dire need for me to clear up the leasehold. I know the rent is a peppercorn one and with a long tenure this is not a major concern. I just want to know if it's a road worth going down?

Ta!

chewmylegoff

MancBrel wrote: »

I should add. I live in the North of England (Manchester) and there is no dire need for me to clear up the leasehold. I know the rent is a peppercorn one and with a long tenure this is not a major concern. I just want to know if it's a road worth going down?

Ta!

do you pay a service charge to the leaseholder on top of the ground rent? if so, how much.

Richard_Webster

If the freeholder is being reasonable then he will sell the freehold for around £100 plus his legal costs. These could be £300-£400 and your own legal costs around the same so the minimum likely all up cost to you would be around £700 and £1,000 in total would not be unreasonable.

It will depend a bit on the extent to which the house being leasehold is a turn off to potential buyers in your area. Round my way we have a fair number of similar long leasehold houses but as most houses are freehold certain percentage of potential buyers won't look at leasehold houses, possibly because they have a friend or relative who has had a leasehold flat (not really the same) and had problems with it. So it is generally worthwhile buying the freehold to improve future marketability. Whether it is worth the £1,000 or so cost is a matter for you to weigh up depending on how your local market looks at such houses.

If your landlord turns out to be a landlord from hell who dreams up lots of admin charges for alleged contraventions of the lease etc. then it may be that it is worth buying the freehold. If they ask a really silly price then you may have to go all through the legal process to force sale of the freehold at a sensible figure.

Ian_W

Richard_Webster wrote: »

If your landlord turns out to be a landlord from hell who dreams up lots of admin charges for alleged contraventions of the lease etc. then it may be that it is worth buying the freehold. If they ask a really silly price then you may have to go all through the legal process to force sale of the freehold at a sensible figure.

That's the real problem here.
Most leasehold houses I've had dealings with, certainly in this neck of the woods a bit north of Manchester, don't have a service charge but do allow the freeholder to charge admin fees to agree to extensions, alterations and the like. So when the freeholds get sold on with hundreds of years to run and an uneconomical rent, why do people or companies buy them?
There is a page from Leasehold Advisory Service -HERE - but basically it says what Richard said above, ask informally first.

Our house is leasehold with 950yrs and a ground rent of £20pa, freehold still owned by the widow of the original builder. Every couple of years I enclose a letter asking if she is prepared to sell. So far it's always been NO, but at least she knows she has a willing purchaser rather than sell at a much lower price to a third party company.

MancBrel

Thanks for all your responses. I think that it's a non starter. Where I live there is no issue when it comes to Freehold v Leasehold. It does not put potential buyers off, infact it's pretty much ignored by househunters. I just thought that I would get an idea of what the likely costs would be.

My ground rent is only £1.85 per year, so there is absolutely no economical sense in spending serious money on this.

Cheers.

Richard_Webster

Thanks for all your responses. I think that it's a non starter. Where I live there is no issue when it comes to Freehold v Leasehold. It does not put potential buyers off, infact it's pretty much ignored by househunters. I just thought that I would get an idea of what the likely costs would be.

My ground rent is only £1.85 per year, so there is absolutely no economical sense in spending serious money on this.

That may well be quite right - I have freeholders round my way who don't interfere - but I would find out who the freeholders are and Google them to see anyone else has made comments about their behaviour.