Buy Your Freehold - guide discussion

the_mandarin

Firsttomeseller said:

Thanks yes I meant the current owner is buying the freehold.

They have approached the freeholder informally. 

Does this mean they don’t have to pay the stamp duty?

I think you are gettng two different things mixed up.

Stamp Duty is paid when you purchase any property worth more than £125,000. This is paid on both freehold and leasehold properties.

The property you are interested in buying is a leasehold property. If you buy it as-is, you will pay "rent" to the Freeholder, as per the agreement. If you ask your seller to buy the Freehold for you, they can do it right away but I would expect them to pass the cost on to you. 

You can also buy it as a leasehold property, but you will have to wait for 2 years before you have a legal right to purchase the freehold for the property. You could approach the freeholder before that, and they may agree to sell it to you - but they don't have to.

Firsttomeseller

Thanks.
that’s what I thought but the article under additional costs says… 

• Stamp duty.

  Stamp duty applies to lease extensions and freehold purchases in the same way as any other home purchase. However, this is unlikely to affect most flat-owners, as you don't have to pay anything if the purchase price is £125,000 or less. Use our Stamp Duty Calculator to check if it affects you.

eddddy

Firsttomeseller said:

Thanks.
that’s what I thought but the article under additional costs says… 

• Stamp duty.

  Stamp duty applies to lease extensions and freehold purchases in the same way as any other home purchase. However, this is unlikely to affect most flat-owners, as you don't have to pay anything if the purchase price is £125,000 or less. Use our Stamp Duty Calculator to check if it affects you.

That's saying that if buying the freehold costs over £125,000 - the leaseholder has to pay stamp duty on the cost of buying the freehold.

I would guess that the freehold of the house will cost much less than £125k - maybe £10k or £15k or £20k - so no stamp duty will be payable on the buying the freehold.

Firsttomeseller

eddddy said:

Firsttomeseller said:

Thanks.
that’s what I thought but the article under additional costs says… 

• Stamp duty.

  Stamp duty applies to lease extensions and freehold purchases in the same way as any other home purchase. However, this is unlikely to affect most flat-owners, as you don't have to pay anything if the purchase price is £125,000 or less. Use our Stamp Duty Calculator to check if it affects you.

That's saying that if buying the freehold costs over £125,000 - the leaseholder has to pay stamp duty on the cost of buying the freehold.

I would guess that the freehold of the house will cost much less than £125k - maybe £10k or £15k or £20k - so no stamp duty will be payable on the buying the freehold.

Ok now that makes sense!! Thanks for the clarification. 

kiteboywales

Not sure if this the right forum to ask this - out of the blue today my parents who are in their late 70s had a recorded delivery letter from a solicitor dealing with a deceased persons estate advising them of change of billing essentially and that the lease on their property is up in a few years too.

They had a big shock as they bought their house at Auction in 1970 and have never had any charges or anything - totally out of the blue. 

They have their copy of the deeds (well I and them have always assumed they are the deeds to the property) but they have "conveyance" at the top of it. Over the front page of this documemt its says Freehold of their property address - it doesnt say anything about title deeds (the original "conveyance" document is stored at a solicitors locally to us)

So it looks like yes  the property is freehold - but when I read through what I could unserstand of this document theres lots of old worldy english regarding leasehold etc.......so Im not sure if this docoument is in fact deeds or some sort of leaseholder agreement.

I do know there are a number of signatures on this document which then had me thinking when I bought my property I didnt actually sign the deeds themselves......so thought that was odd too

Thier house is unregistered on the land registrty site and most bar a few in the street are all freehold properties so I was just wondering if there some sort of scam going where people search for unregistered land or something and then try it on?

My gut feeling is that its a genuine letter though as some of the names match on the solicitors leter and the Conveyance letter
So they could have in fact been leasholding all this time 

My guess is though the next step would be solicitors but if anyone has any experience or knows of scams would be appreciated

Thanks

eddddy

kiteboywales said:

My guess is though the next step would be solicitors but if anyone has any experience or knows of scams would be appreciated

TBH, if it's a scam, it would be a very niche one - writing to random owners of freehold houses, and telling them their house is leasehold, and suggesting that they need to pay for a lease extension.

But I guess it's possible that somebody has made a mistake somewhere.

Was the letter addressed to your parents by name?  You could phone the solicitors who sent it (using a trustworthy phone number - e.g. one from their website or the SRA website), to ask if the letter is genuine.

kiteboywales said:

They have their copy of the deeds (well I and them have always assumed they are the deeds to the property) but they have "conveyance" at the top of it. Over the front page of this documemt its says Freehold of their property address - it doesnt say anything about title deeds (the original "conveyance" document is stored at a solicitors locally to us)

So it looks like yes  the property is freehold - but when I read through what I could unserstand of this document theres lots of old worldy english regarding leasehold etc.......so Im not sure if this docoument is in fact deeds or some sort of leaseholder agreement.

Just to clarify - if it's a leasehold property...

• Somebody will own the freehold
• And somebody will own the leasehold

If it's just a freehold property

• Somebody will own the freehold
• There shouldn't normally be any mention of a lease/leasehold

So if the documents are mentioning "Freehold" and "Leasehold" - it sounds a bit more likely that your parents own the leasehold. (But it's also possible that they own both leasehold and freehold., or some other explanation.)

Perhaps it makes sense to ask the local solicitor for the conveyancing documents they are storing and/or ask them for clarification...

... or post more details here of the document(s) you have.

kiteboywales

Thanks for the reply - I have looked up the solicitors and they seem genuine to be fair so ive left a message to call me back asap
Its not listed as freehold or leasehold on the land registry at all and is just unregistered

The solicitors letter was just to the property not them personally - it was by recorded delivery too!

I would like to post photos but would have to redact some stuff before posting - Ive posted the end of it below 

Ill need to have a read of it again as there bits that say the purshasers (my parents) declare that the said leasehold term shall forthwith merge and be extinguished in the fee simple of the said property

Ive only taken a photos of the deeds today but need to have a read through

eddddy

kiteboywales said:

Ill need to have a read of it again as there bits that say the purshasers (my parents) declare that the said leasehold term shall forthwith merge and be extinguished in the fee simple of the said property

So assuming a freehold and leasehold existed...

...if a leasehold is 'extinguished' or 'merged' - it means the leasehold disappears, just leaving the freehold.


So what happens sometimes is that a leaseholder buys their freehold (so they own both leasehold and freehold), and then the owner (or a later owner) extinguishes the leasehold. That could have all happened in 1970.

And it's possible that the solicitor who sent the letter is looking at an old list from before 1970 - so they've missed the fact that somebody bought the freehold in 1970.


But that's a huge amount of guessing - there could be many other possibilities.

kiteboywales

eddddy said:

kiteboywales said:

Ill need to have a read of it again as there bits that say the purshasers (my parents) declare that the said leasehold term shall forthwith merge and be extinguished in the fee simple of the said property

So assuming a freehold and leasehold existed...

...if a leasehold is 'extinguished' or 'merged' - it means the leasehold disappears, just leaving the freehold.


So what happens sometimes is that a leaseholder buys their freehold (so they own both leasehold and freehold), and then the owner (or a later owner) extinguishes the leasehold. That could have all happened in 1970.

And it's possible that the solicitor who sent the letter is looking at an old list from before 1970 - so they've missed the fact that somebody bought the freehold in 1970.


But that's a huge amount of guessing - there could be many other possibilities.

Thanks a great help - solicitors will be the way forward is my guess anyway as the property isnt registered on the land registry and I dont like that so that needs sorting anyway

But that would make sense if they are looking at documents before1970 as their conveyance does mention first and 2nd vendors

Thats a good pointer so that I can try and decipher the meaning but either way will get solictors in to get it sorted hopefully

the_mandarin

kiteboywales said:

..................................

The solicitors letter was just to the property not them personally - it was by recorded delivery too!

This bit here in bold is a red flag for me. I have heard from my Leaseholder about 3-4 years after buying the property, but it was addressed to me by name. A genuine freeholder, who has even engaged a lawyer, would surely approach the Land Registry to find the name of the owner of the Property and then start communicating and making any financial demands. The fact that the letter is just addressed to the Property does not sound right.

Sending it by Recorded Delivery costs a measly £1.75, not a bad investment for a probable fraudster seeking a few hundreds/thousands in return.

Like others have correctly advised, I would not dip into my pockets to pay anything without engaging your own solicitor.