buying freehold - unfair trading experience

KorbenDallas

Hi All.

I have searched the forum prior to posting and cannot find a similar thread with these specifics. This is my first post, I have been a lurker for a while in different topics and threads have never needed to post until now.

In 2007 I purchased my (tiny first time buyer) house which is leasehold and at that time had 66 years on it. It was no problem getting a mortgage, prior to the severe dip in economy. Alas here I am with 59 years left wishing to buy it in order to sell it, as now and has been said in other threads, a long lease or outright purchase of freehold is necessary so others can secure a mortgage on it. That's fine, so have had estate agents value it and it's on the verge of being listed.

I have paid the company I pay my ground rent to to arrange a quote of what it would cost to buy the freehold, £4350. They specified a six week window in which the quote was valid. Fine. Now, silly me, it took me that long to pull monies together to get ready to buy it. Which... Fell about two weeks after that quote being valid. I phoned the company, Simarc property management ltd, and they invited me to make an offer anyway and that the freehold owners may be open to negotiation. I'm not made of money so offered £3,000. They replied by email to say it was rejected. Fine, I increased it to £3,500. Heard nothing so called them. I was told it had been rejected and that also they can't consider the quote as it was outside of the quote being valid for. I strongly objected over the phone at having been encouraged to effectively play my hand and that it was shoddy they'd happily received my offers knowing they were outside of the window. I then had to pay another approximate £100 for a new quote.

So, a matter of six weeks on, they've upped it to £5,000 and upped the legal costs I have to pay from £576 to £831. I've replied offering £3,600 today and strongly worded my reasoning for offering.

They've got me over a barrel and this company, Simarc, are acting terribly. I feel so let down by them and I get the feeling they know this and don't care. Sorry for how long this post is.

I have a quote for a solicitor to do the sale conveyancing and legal work to buy freehold. It's a fixed price and wonder if I should get them to act on my behalf, but I think they'll just say pay the £5000 and that they haven't the time for back and forth offering lower amounts until they come down if they actually do. This is a real downer, as the property is being advertised as the freehold being included. So I've got to buy it, not interested in lease, as my ground rent is £90 per year and if I extend lease they quote me that it will then instantly be £478 per year.

They seem to pluck numbers out of the air. My neighbour bought hers for £3800 2 years ago, same company, same terms albeit without 2 years more increase.

I realise this may be their prerogative to charge what they want but does anyone have any advice on what they would do in my position? There's no way it is fair to just increase the amounts like that in six weeks. Sorry again for the length

Cheers

DandelionPatrol

If the lease had 66 years left in 2007, it now has 58 years. Leases in this sort of range become steadily less valuable and the value of the freehold increases considerably. So it is not surprising that a quote is only valid for a few weeks after which it increases.

You do have the right to extend the lease [by 99 years ???] and there are established procedures and formulas for this. Perhaps someone will come with a link.

If you can establish the price for a lease extension on your property, any offer of the freehold for a similar amount probably represents good value.

eddddy

The leasehold reform act gives you the statutory right to buy the freehold, and it specifies the statutory formulas for calculating the price (based on the property value etc)

People often get valuation surveyors to value the property and calculate the price.

If you want them to, many valuation surveyors will also negotiate with the freeholder (and/or their valuation surveyor) on your behalf.

But obviously, you have to pay the surveyor a fee for the valuation and negotiation.

see: http://www.lease-advice.org/publications/documents/document.asp?item=15

KorbenDallas

Thanks for the reply. Actually I just realised (in getting carried away only waiting for the purchase quote to come) that they never even supplied a lease extension quote I will ask them for this tomorrow.

The different estate agents who came, all of whom have sold houses in the street, "advised" me heavily that the right way to go is freehold. I guess in a way that might earn them their commission quicker if it's more attractive to sell. I see that but do agree with them. I also want to secure the maximum value for the property and their valuations without it were disappointing.

For me, I don't wish to sound paranoid but this company seems to have acted unethically. The quote that expired, and this one, aside from those... My ground rent would tootle on for another two years until the next review to be £90 and they last time said if I proceed to extend it goes up to £470. Also, it cost £48 plus vat last time and for this new quote it was nearly £100, I asked them why and they simply said oh it went up this week, that literally is how they reply, all so on-the-spot and oh so convenient. i have had issues before with them refusing to maintain fencing that collapsed that winter when there was serious gale damage, to the point a residents car park is exposed to express route train tracks and where children play. They are the owners of that land and for years haven't spent a penny on maintenance. One of those companies that you learn to only deal with in writing from here on anyway. Thanks again for the time. Cheers

Edit - Cheers edddy too for the link. I will be deciphering this tomorrow. I do understand the economics of a lesser remaining term increasing the value,of the freehold but knowing the dealings I've had with this company over the years I am quite sure there is something fishy with this. Especially with the sudden rise in legal costs for the same amount of paperwork.

I need to see whether there are any surveyors in my area (Worcestershire) who can quote me for this. Those in my area who bought theirs never went through any such step they paid a little under the going rate (as dictated to by free holding company). I run the risk of paying more than the actual new value of the freehold. But I won't know that til I've spoken to someone and number crunched. Thanks I will get cracking

eddddy

KorbenDallas wrote: »

... they paid a little under the going rate (as dictated to by free holding company)...

Just to be absolutely clear...

The law specifies the price for the freehold - not the freeholding company.

So if you think the freeholding company is asking for a price that is higher than what the law specifies, you get professional help from a valuation surveyor.