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Buying a long Freehold property with a lease

stebiz
stebiz Posts: 6,592 Forumite
Part of the Furniture 1,000 Posts Combo Breaker
edited 20 May 2013 at 3:48PM in House buying, renting & selling
I wonder if somebody can help me. I am looking to purchase an investment property.

It is a house
20 years left of 99 year lease
£5 a year ground rent

Does anybody know how to put a value on this property?

Also if the leaseholder wishes to buy the Freehold from me at a later date am I entitled to

Rent x 20
Reversion value -ie what I'd lose on house
Marriage value

Also with rent being so low is the value calculated on land value, rather than land and house value?

Thanks
Ask me no questions, and I'll tell you no lies

Comments

  • cattie
    cattie Posts: 8,841 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Your post is confusing as if you buy a leasehold property, you will not own the freehold unless you negotiate with the current freeholder to do so, or am I missing something here?
    The bigger the bargain, the better I feel.

    I should mention that there's only one of me, don't confuse me with others of the same name.
  • artbaron
    artbaron Posts: 7,285 Forumite
    You would be the leaseholder and of a very short lease at that.
  • stebiz
    stebiz Posts: 6,592 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    I'm sorry for confusing you. I would be buying a Freehold property, as an Investment, with a tenant, (leaseholder) who has the remainder of a 99 year old lease.
    Ask me no questions, and I'll tell you no lies
  • cattie
    cattie Posts: 8,841 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Ah, so you will be the freeholder, that's much clearer! Have you tried http://www.lease-advice.org/ for advice on clarifying matters for you?
    The bigger the bargain, the better I feel.

    I should mention that there's only one of me, don't confuse me with others of the same name.
  • jamie11
    jamie11 Posts: 4,436 Forumite
    stebiz wrote: »
    I'm sorry for confusing you. I would be buying a Freehold property, as an Investment, with a tenant, (leaseholder) who has the remainder of a 99 year old lease.

    Are you just buying the freehold rights? Or buying the property itself?
  • sirmosh
    sirmosh Posts: 701 Forumite
    Owning the freehold of a leasehold house isn't much of an investment at all really. Generally it really isn't worth much although you will get a bit of cash if and when the leaseholder wanted to extend but after that it'll be nothing for the next ~100 years so that freehold isn't going to be worth much to you.
  • G_M
    G_M Posts: 51,977 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Waste of time and money.
  • TrickyDicky101
    TrickyDicky101 Posts: 3,532 Forumite
    Part of the Furniture 1,000 Posts
    G_M wrote: »
    Waste of time and money.

    That depends on the price which will be paid for the property, surely?

    Presumably it may also depend on what type of tenancy the leaseholder has too (not my area this so I'm sure you know much better than me).
  • tim123456789
    tim123456789 Posts: 1,787 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    If the LHer doesn't renew, in 20 years time the lease reverts to the FHer and the then tenant has the rights to a secure tenancy (with no sucession rights) at a market rent.

    So at that point the FH is worth the market value of a similar property with a sitting tenant which, at a guess, is 80% of full value.

    So to answer your specifuic question: the value of a freehold is a function of the value of the whole house.
  • tim123456789
    tim123456789 Posts: 1,787 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    G_M wrote: »
    Waste of time and money.

    plenty of people make a living doing it
This discussion has been closed.
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