Is my freehold worth £1000?

lerougegorge

Hi All,

Just bought a mid-terrace house on a 999 year lease (dated from 1964). I've tracked down the owner of the freehold, who is willing to sell. All in (legal fees, VAT, land registry), it will cost just about £1000 to buy, is it worth it? Land rent is negligible (£10 year), but owning the freehold might be make the property more attractive to future buyers as technically freeholder's consent is required for modifications to the property.

One other question: my solicitor has informed me it is in my best interest NOT to merge the titles, ie I will own the freehold and leasehold separately. Does that sound right?

Bananamana

lerougegorge wrote: »

Hi All,

Just bought a mid-terrace house on a 999 year lease (dated from 1964). I've tracked down the owner of the freehold, who is willing to sell. All in (legal fees, VAT, land registry), it will cost just about £1000 to buy, is it worth it? Land rent is negligible (£10 year), but owning the freehold might be make the property more attractive to future buyers as technically freeholder's consent is required for modifications to the property.

thats 100 years of ground rent. Unless there are particularly onerous covenants in favour of the freeholder then no not worth buying (such as consent to works etc.)

One other question: my solicitor has informed me it is in my best interest NOT to merge the titles, ie I will own the freehold and leasehold separately. Does that sound right?

depends on the title. It most cases if it is don right there is no reason not to merge the titles (just a matter of submitting an extra form with the application to LR - there is no fee if don at same time you purchase the F/H) is the house mortgaged as you wont be able to merge until the charge is repaid.

see above

thanks

lerougegorge

Yes, in terms of ground rent it doesn't make sense. There are some conditions to the lease:
- Freeholder can theoretically inspect the property twice a year (doubt that he/she does)
- Required "to paint in every fifth year" exterior "with two coats at least of good oil paint"
- Consent for modifications to exterior
The only way it might make sense is increasing the value of the property in the market.

henpecked1

surely with leasehold you dont own the ground the property is situated and with free hold you do. So am i missing something when you are buying land for £1,000?

Bananamana

Perhaps something to consider down the line when you come to market. I doubt it would put any buyers off as a lot of freehold's have similar covenants.

Some landlords insisit on the covenant remaining in the transfer of the freehold in any event.

I dont think its worth it on long leases with a nominal rent

Richard_Webster

surely with leasehold you dont own the ground the property is situated and with free hold you do. So am i missing something when you are buying land for £1,000?

This is an old chestnut. For practical purposes freehold gives you the right to a property forever - mostly this includes the ground and everything over it but if you have a first floor literal freehold flat (not a good idea) then you don't own the ground because you are on the first floor!

The distinction is nothing to do with the ground - it is the length of time you have a right to whatever is included - so put simply a 999 year lease of a piece of land carries the right to the land and anything on it for 999 yaers and then it reverts to the freeholder - hence the use of the expression "freehold reversion" to describe the asset that OP is thinking of buying here. Freehold doesn't have these time limits.

Although the actual freehold itself will perhaps be worth something of the order of £300 with the costs added on a total cost of £1,000 is quite typical.

OP needs to think of selling his house in the future. There must be a percentage of potential buyers who won't even look at a leasehold houses because they perceive things are worse than they actually are. It will depend a bit on the area and how common leasehold houses are there. Where I am in Eastleigh and Southampton we have a fair number of older houses that are leasehold but it is pretty localised so a lot of people are put off by them. So if, for instance, there was a £10,000 price band between a run down unimproved house of a particular type and one that had been fully modernised, having the freehold would be another factor that would push a property higher in the range when it was on the market.

As to merger of the titles it will depend on the circumstances. I tend not to do this because sometimes the lease will contain rights (e.g. to use a rear access way) that are not in the freehold title. Having two title sis only a technicality and makes no difference in practice to the average seller or buyer - except if you feel really skinflinty - it will cost you a further £8 to get a set of entries and plan from the Land Registry for the second title when you sell! So merging enables you to make this massive saving!

lerougegorge

Thanks Richard - That basically sums up the scenario, you were within £10 on the price (£290), rest is legal fees and VAT. I suppose there is no way to know if it is worth it until I actually sell the house (even then its difficult to say). I expect I'll probably go for it, will be doing £10K in rennovation so somehow £1K doesn't seem that much.

tinaxxx

we are buying a house and have been told that its lease hold .my solicitor has said that its now freehold is that possible

Richard_Webster

we are buying a house and have been told that its lease hold .my solicitor has said that its now freehold is that possible

Who told you?

tinaxxx

Richard_Webster wrote: »

Who told you?

i have a copy of lease dated 1962 . but solicitor says its been changed to freehold we are close to exchanging contracts

Doozergirl

tinaxxx wrote: »

i have a copy of lease dated 1962 . but solicitor says its been changed to freehold we are close to exchanging contracts

I'd be inclined to belive your solicitor! Of course it's possible - it's what the OP is planning to do