Leasehold Property - entering negotiations to buy the Freehold

moneybunny123

We've made an offer (and had it accepted) on a detached, 6 yr old house. However, when we made the offer we had no idea that the property is in fact Leasehold. :eek:

It carries a ground rent of £250 pa, and has a maintenance fee of £150pa. :eek: To say we're angry is an understatement. :mad:

We haven't yet told the vendors of our annoyance at the fact we weren't told, or to try and negotiate anything off the asking price but we HAVE written to the Freeholders and asked how much to buy it.

They've written back to us and told us the fee is £11,750. We replied saying that this figure is not acceptable to us and asked for a revised figure. They've said they WILL negotiate and asked us to submit a figure.

So, what would you offer? Alternatively, does anybody have any experience of these companies that do the negotiations on your behalf (for a fee). Are they worth contacting?

The vendors are currently out of the country and so cannot be contacted to ask for their stance on this. But as things stand, if they're unable to meet the cost of the freehold halfway, I'm not sure we're prepared to buy a Leasehold property and they will lose their sale, so I'm hoping they will at least throw something into the mix to keep from losing us (the house was on the market for 18 months before we came along - probably why they accepted a cheeky offer from us - so I doubt they will want us to walk away, but one never knows....) That is, unless, the Freeholders will accept a silly low fee (such as £2k!!) Fancy our chances?!

hazyjo

Can't see them taking such a low offer, but worth a shot. Don't forget legal costs too!

What's the maintenance charge for? Are there communal areas/gardens? You might find you're still stuck with a charge...

Presuming you won't be there for the rest of your lives, is it worth several thousand to save £400 a year?

If you desperately want it, if I were in your shoes, I'd try for the freehold and would get the vendors to pay for it - and associated costs (solicitors, etc). If I couldn't do that, and didn't want a leasehold house, I'd pull out of the purchase.

Pain, innit...

Jx

moneybunny123

hazyjo wrote: »

What's the maintenance charge for? Are there communal areas/gardens? You might find you're still stuck with a charge...

There is a shared driveway/access and, as far as I know, a pathway round the back of the houses with overhanging trees, etc.

moneybunny123

hazyjo wrote: »

Presuming you won't be there for the rest of your lives, is it worth several thousand to save £400 a year?

It HAD been on our plan to stay in this house until our children had left home (they're currently aged 2 years and another at 5 months) - so yes, a long time. So £400 multiplied by, say, 20 years = £8k. Not only that, with Leasehold we're prohibited from building an extension, making external alterations, putting a fence/wall/railings around the front, etc, etc. What's the point in paying a mortgage when the house isn't truly yours?

We're determined to get the freehold. It's just how much do we offer, and do we try and get some/all of it paid by the current vendors? I worry that they may tell us to shove it which would be a terrible shame as we really want the house.

david29dpo

I would be worrying about the maintenance charge as well. These have a habit of increasing (a lot) and the maintenance decreasing.

moneybunny123

david29dpo wrote: »

I would be worrying about the maintenance charge as well. These have a habit of increasing (a lot) and the maintenance decreasing.

But if we buy the freehold, would we still be obliged to pay for a maintenance fee? Is it enforceable?

david29dpo

Yes, thats the problem.

glottalstop

Depending on the term of the lease remaining and any other value attached to the freehold reversionary interest, there is a RICS / LVT approved formula for calculating a fair price. In your case £5,000-6,000 sounds about right.

It is something like 20 x ground rent. Since this is an elective rather than a Right To purchase maybe it doesn't apply - but if the landlord is selling the freehold interest he must offer the current leaseholder a RTFR opportunity for 2 months. Has this offer been made to the vendor? In which case they can obtain a determination of a fair price, and you can do the deal with them.

In your deal make sure you have a say in the control of the management/maintenance arrangements. To prevent rip-offs and creeping costs demand that you obtain the collective right to replace the manager on a simple notice-period basis.

Unfortunately RTM is not available to freehold properties on a managed estate, a gaping loophole in the CLRA 2002. So make sure this control of the manager is achieved before enfranchisement.

Many people's experience of leasehold and managed estates (service charge exploitation, disregard of maintenance standards, insurance commission scams, demands for consent fees when sub-letting, demands for transfer fees on sale) would suggest that it is worth your while to proceed, at a fair price.

bee78

hello, i have been reading this with some interest as we are looking to buy in a area where there are more leasehold houses than freehold.

Is it possible to purchase a detached house which is currently leasehold, as a freehold property at the point of sale. I thought we would have to buy and own property for 2 years before you can buy the freehold of the property.

How do i go about approaching this. I have seen a leasehold property-detached 5 bedroom house. i would like to purchase this as freehold. what would be my first step, do i ask the current owners to purchase the freehold and pay for it. or do i/could i approach the freeholder myself even though i don't the own property as yet.

Some expert advice would be useful.

Thanks in advance

Bluemeanie_2

You could go back with a ridiculously low figure and negotiate from there? That's what I do when I am haggling? But I do have a brass neck.

How badly do you want the house? In my experience properties with shared areas are always a pain.

NeverAgain_2

How many others sharing?

Might be worth approaching them to see about a joint purchase of the freehold.

It should be possible to set it up to link a 'share' of the freehold to each lease, so if any leaseholders sell, they are obliged to include their share of the freehold.