Last minute leasehold!!!

Hevv

Hi,

I'm a first time buyer who is nearly at the stage of signing the contract on a house. However in the final stages of purchasing the property I found out it was actually leasehold not freehold as it was listed. It's a 130's semi-detached property so not a flat as you would maybe expect with a leasehold.

My main worry with this is that it will lower the value on the property if we come to sell it. Also am I right in thinking that my offer was for a freehold property not a leasehold so should I go back and renegotiate the price?

There is no ground rent as our solicitor found documents that this had been settled. And it has a 890 year lease so won't effect us but I worry this will will put people off if it was to go back on the market.

Any help would be greatly appreciated as I can't seem to get any straight answers out of our solicitor or the estate agents.

Thanks is advance.:D

G_M

890 years is a good long lease, but if you wanted to build an extension etc you'd probobly need to get the freeholder's permission. So yes, it affects the market value.

Tr1pp

I dont know if this is make or break for you but I would still go back and try get a reduced price. freehold would be preferable to me than a leasehold. see what you can get, depends on how willing you are to walk away of course

you may want to double check everything else as you never know what else the vendors got wrong...

Richard_Webster

In my area there is not much of a discount because a house is leasehold, but it is true to say that buyers are put off because it doesn't sound as good!

A seller is in a potential lose lose situation. If he gets the estate agents to advertise it as leasehold then a percentage of potential buyers won't even consider it - if the agents don't ask and then just put "Freehold Tenure not verified" on their particulars, then as has happened here, buyer gets concerned later.

Typically then the seller is asked to establish the costs of buying the freehold. You have to pay your own and the seller's solicitor's costs so these can be between £600 & £1,000 and the actual cost of the freehold may only be £100-£300, so usually the total figure is within the typical negotiation band for a property.

If the freeholds still belong to the children or grandchildren of the original developers/landowners then very often the total cost will be of the order of £1K and you might get the seller to reduce the price by that amount or a proportion of it.

If some rip off landlord company has bought the freehold then they may try to charge an exorbitant figure for the freehold going into the thousands. If that happens your response to the seller is that he has the rip off landlord and that is a problem he is stuck with so you will only buy the property if he first buys in the freehold.

The third possibility is that because there is little or no ground rent payable then freeholder has lost interest and can't be contacted. Typically son/daughter of developer dies and his/her children don't really understand about the ground rents and as the amount is so small they can't be bothered so they sell their parent's house and any contact address is lost. Usually (unlike with a flat) having an absent landlord is no big deal - it just means some indemnity insurances to keep a lender happy - and normally you never hear anything at all. It is possible, but unlikely, that the real freeholders will wake up at some stage and sell the freeholds to a rip off landlord, so that danger is always in the background, but as the years go on the risk of this will become smaller and smaller.

In other cases, detailed investigation by a number of local solicitors has failed to get to the bottom of the identity of the freeholder. In Southampton there are stretches of land with hundreds of houses on them where the land was leased in the 1860s for a rent of 1/- per year plus 6d for every thousand bricks burnt on the land! The lessor/freeholder was a well known local landowner and his family have been selling off chunks of land in the area around Southampton for development over recent years, and still maintain an estate office, but deny any knowledge of this land. Wimpeys even built a block of flats on part of it, and had to content themselves with the remainder of the 1000 year lease because they couldn't find the freeholder - so it does happen. I am sure that solicitors in Northern towns can tell similar stories about chunks of land in their areas. In this kind of case then people tend to accept the position and look on it as an odd legal quirk.

casper_g

Pay attention to Richard Webster's post above -- he knows what he's talking about!

Just to reiterate that you need a bit more info to know if this is a big problem or not. For example, my parents live in a house in the North of England which is nominally leasehold. However, the lease has c. 900 years left to run and there's a peppercorn ground rent of only a few pence a month (so little in fact that the freeholder, a solicitor in the West Country somewhere, only bothers writing to ask for it every several years). All the houses in the suburb where they live are in the same position, so there is no question of their house being less valuable as a result.

Richard_Webster

Just to reiterate that you need a bit more info to know if this is a big problem or not. For example, my parents live in a house in the North of England which is nominally leasehold. However, the lease has c. 900 years left to run and there's a peppercorn ground rent of only a few pence a month (so little in fact that the freeholder, a solicitor in the West Country somewhere, only bothers writing to ask for it every several years). All the houses in the suburb where they live are in the same position, so there is no question of their house being less valuable as a result.

Quite, and if you can establish that the position is something like this then it is probably no big deal that the place is leasehold.

So the landed estate that I mentioned in my last post have sold freeholds to a surveyor who has now retired, but local solicitors can contact him and we never have a problem buying the freeholds for a reasonable figure and he doesn't charge the earth for giving consent to extensions (which is a rip-off company ploy).

tbs624

I'd agree that a property being LH subject to one of these long leases doesn't necessarily make it a less attractive proposition to buyers nor mean that it would necessarily command a lower price than a similar property which was FH: much obviously depends on what is "usual" for your area. Huge swathes of northern England have thousands of LH properties.

If your local area has few LH properties though ,and the property was misrepresented to you as FH, it may be worth seeing if the sellers would be prepared to make some financial gesture

Have to say though OP , your solicitor is perhaps a bit slow on the uptake if he has only just uncovered the fact that the property is LH