Question About Buying the Freehold

Cameraman

Hi,

This is my first post here but I’ve been reading the forums for ages now.

My question is this, we currently live in a converted house and want to buy the freehold between us and the other flat. After approaching the managing agent they have advised us it will be £6000 plus all their legal fees which to me sounds really expensive. The flats are worth about £100K each and not overly large. Has anyone got any experience in buying a leasehold and how much did you pay? Also what’s the best way to get it valued so we know we aren’t overpaying. The managing agents are completely useless and never do any work we need doing so that’s one of the main reasons for wanting the freehold.

Thanks in advance.
:A

cattie

These are probably your best people for information. It's a government funded agency offering advice to leaseholders. http://www.lease-advice.org/newintro.htm

RHemmings

I'd definitely like to hear from people who have bought the leasehold on their house or flat. There is a leasehold semi near me that sold for about £30-40K less than similar houses. If the cost of the leasehold would have been £6000, then buying the house and the leasehold would have been a bargain. Though it's easily possible (likely?) that there are other reasons for the lower price.

I don't look at flats, but certainly if I was buying a house, then it being freehold rather than leasehold would be worth a lot to me. Assuming other people are similar, then buying the freehold would cost money, but add value to your home. For flats, you'd buy with other flat owners, and if you sold your flat it would be "with share of freehold". I don't know if flat buyers value "share of freehold" rather than "leasehold". Can someone explain? But I'm tempted to think that the £3000 plus half expenses that you'd pay would be recovered in additional value in your flat when you come to sell. Though of course if you can get the freehold cheaper, that's even better.

natlie

Hi
I bought my house lease hold in 2003 for £58500 three bed detached semi, garage drive, ensuite etc, in south wales.
Just before price boom

I bought my leasehold for £4000 including all solicitors fees, house valued last week - £126000 would have been £109,500 without
HTH
Nat
xxx

EdInvestor

I am not convinced about the superiority of buildings where the leaseholders own the freehold. They are just as likely to be badly run as buildings where there is an independent freeholder.If there are leaseholders who refuse to pay the maintenance charges and those who own the freehold don't enforce payment, the result is the same.

Leaseholders can these days obtain the "right to manage", which means they can dump bad managing agents and run the place themselves without actually buying the freehold. This halfway house idea might be a better bet if there are only a couple of leaseholders who are of the same mind and will co-operate with each other.

See the lease advice site for details.

Cameraman

Thanks for the advice so far, interesting about the "right to manage" didn’t know that. However flats do seem to always having a higher asking price when they have a share of the freehold which is also an incentive.

There is always that concern about the other flat not paying up if work needed doing but in the case of our neighbours I can’t really see that happening ( I hope). Might go in with a much lower offer and see what happens.

WHA

In my experience figures of around £5,000 are fairly typical for the purchase of a freehold where the leaseholders have long leases (99 years or more) as a long lease is virtually the same and therefore priced virtually the same as freehold.

Where you will find a larger difference in price between freehold and leasehold is where the lease period is shorter. For example a leasehold property with only 10 years left on its lease will cost a lot less to buy as effectively you're only buying 10 years use of it, which is where you sometimes find a leasehold property being valued at tens of thousands under the freehold price.

As a general rule of thumb, if the length of the lease is longer than the average life expectancy of a person, then the freehold cost is small (circa £5,000), but if the remaining lease is less than the average life expectancy, then you are talking more money. It comes down to the freeholder - if he can realistically see the lease coming to an end and him re-taking all rights to it, it is worth a lot more money to him, but if the lease term is so long that the freeholder can not realistically ever expect to regain the rights, he would be happy with a notional amount to sell the freehold or extend the leasehold and a figure of £5,000 or thereabouts seems to be the norm.

Cameraman

Thanks WHA if I remember rightly there is about 75-80 years remaining on the lease. Does anyone have idea what sort of legal costs we are looking at?

Sapphire

Also, if a landlord owns the lease for a whole building, with two flats, and is renting one of them, can the leaseholder of the (bought) other flat force the landlord to sell him the lease for the latter flat? I just wondered whether a landlord can refuse to sell the lease?

I seem to remember that there were some regulations bought in that make me think that freeholders have to allow leaseholders to buy leases for their own flats at a not too exorbitant cost.