Led to believe a property was freehold

oscode

I've just had a structural survey done on a house I have an offer accepted on. The survey states that the land is leasehold for 999 years starting in 1924 with a ground rent of under £5 annually. I just paid for 3 title registers for the property and they show that there is one freeholder and 2 leaseholders, both leases are for 999 years.

I'm a first time buyer and I'm unsure of how bad this is, I know a 999 year lease is effectively forever, for me, but will it have less resale value? My offer was based on the property being freehold. Would you renegotiate?

The survey shows some work needs doing on the house, would it be reasonable to use this as part of my argument for deductions for the work required?

Thanks.

kingstreet

Such a lease term will not present any resale problems. You may wish to check for any covenants or clauses which require you to do/not do certain things, or things for which permission is required from the freeholder.

You need to ask your solicitor about this.

As they will do such searches, why are you carrying them out too? If you were going to do them, why do them after you fork out for a structural survey?

Renegotiation of price will depend on value now, cost of repairs and estimated repaired value. You will need to discuss with vendor.

oscode

I carried out searches as it's only £9 for the 3 titles and I wanted to be sure that I'd been misinformed by the vendor. Also I have them immediately whereas I'd have to wait a while for the solicitor to confirm. I've always done searches early on for other houses I've been interested in but the vendor assured me it was freehold and I mistakenly believed him.

I'm glad that it shouldn't affect resale value, that's the main thing I'm concerned about, thank you.

SecondTimeBuyer

oscode wrote: »

I've just had a structural survey done on a house I have an offer accepted on. The survey states that the land is leasehold for 999 years starting in 1924 with a ground rent of under £5 annually. I just paid for 3 title registers for the property and they show that there is one freeholder and 2 leaseholders, both leases are for 999 years.

I'm a first time buyer and I'm unsure of how bad this is, I know a 999 year lease is effectively forever, for me, but will it have less resale value? My offer was based on the property being freehold. Would you renegotiate?

The survey shows some work needs doing on the house, would it be reasonable to use this as part of my argument for deductions for the work required?

Thanks.

A 999 year lease usually indicates a "share of freehold". This means that the leaseholders own a share of the company that owns the land. Is the property a flat or a house? If it is a flat there are very few freehold flats due to issues relating to maintenance.

If it is a house, I believe there can be some complications to owning a leasehold house. I don't know what they are but I'm sure someone here can help you.

propertyman

After two years you can exercise the right to enfranchise. While the price of doing do is a complicated formula, that the rent is so low and the lease so long that, net of the landlords and your legal costs, its going to be around £1k, with costs of 1-3K.

That is the basis for negotiation on price.

The other issue to BE VERY CAREFUL about is whether there have been any alerations to the property, eg an extension or roof conversion and that they have the consent of the landlord.

This will be very expensive to remedy and some landlords see this as the way to make money out of these investments.

Dont accept the answer that'll be sorted out with solicitors, by then you will have spent money by then - ask the vendor now.

propertyman

SecondTimeBuyer wrote: »

A 999 year lease usually indicates a "share of freehold". .

This is a house so this is not relevant.:A

And as for share of freehold no such thing its freehold leasehold or commonhold.

SecondTimeBuyer

SecondTimeBuyer wrote: »

A 999 year lease usually indicates a "share of freehold". This means that the leaseholders own a share of the company that owns the land. Is the property a flat or a house? If it is a flat there are very few freehold flats due to issues relating to maintenance.

If it is a house, I believe there can be some complications to owning a leasehold house. I don't know what they are but I'm sure someone here can help you.

I just remembered that a friend lives in a leasehold house and it is because he lives down a private road which was not fully adopted by the council, so they have to pay a maintenance charge towards maintaining the road.

oscode

propertyman wrote: »

The other issue to BE VERY CAREFUL about is whether there have been any alerations to the property, eg an extension or roof conversion and that they have the consent of the landlord. This will be very expensive to remedy and some landlords see this as the way to make money out of these investments.

The vendor has built a garage so I'm glad you brought this up, thanks!

Richard_Webster

If there are three titles then get copies of all three and find out who the owners of each are. The seller may own one, two or three. Sometimes a person will own both freehold and leasehold titles.

In my area there are a fair number of houses that were originally long leasehold but the lessees have since bought the freehold. However the freehold did not include or give a right to use the rear vehicular access way so the leasehold title was kept in existence for that reason.

Also if the freehold title is owned by someone else then particularly if it is a company it is worth Googling the name because some of them have bad reputation for various money making scams,.e.g. charging a lot of money to approve alterations. Propertyman has already alluded to this.

propertyman

SecondTimeBuyer wrote: »

I just remembered that a friend lives in a leasehold house and it is because he lives down a private road which was not fully adopted by the council, so they have to pay a maintenance charge towards maintaining the road.

Thats right its one way of funding that. the houses can still be enfranchised but will need a estate rent charge or be part of a statutory estate management scheme to ensure that any such contributions are still made.

violettasomerset

We have a house built in 1960 with a 999 year lease and £3 a year groundrent. We were concerned when we found out it was leasehold, but it's not caused any problems. The lease says that only garages, conservatories, sheds and greenhouses can be built on the land without permission - any other extension would require permission from the freeholder (who has been absent for 25+ years) but we understand that if we did build, we could get an indemnity policy against the freeholder re-emerging and complaining. We did look into buying the freehold but the solicitor we spoke to say that it wasn't worth the bother, given the remaining lease of 950 years and that house value wouldn't be affected - since the house will no doubt have been long gone before the freeholder will get their land back in 2959. About half of the neighbours, who do know their freeholders, have bought the freehold, but we've decided not to process with it. Our house is on an adopted road, so there are no further management charges, which may well be the case for a house from the 1920s.