Buying back a peppercorn lease?

fliddie

Hi

I own a coach house which is basically a flat over 3 garages, one is mine and the orher two are also owned by me but leased to neighbouring houses on 100 year peppercorn leases (with about 70 years left to run).

I have never really understood what the peppercorn rent is, but my question is: I would very much like to regain full and permanent ownership of one or both of these garages which would allow me to extend my living space. Can the neighbour sign the lease back over to me (if I paid him whatever he wanted for it)? Or am I stuck with never being able to get hold of the lease(s) until the 100 years are up?

Any help would be much appreciated, especially if explained in very basic and uncomplicated language!

Thank you in advance

HappyMJ

Would each of your neighbours be interested in selling the leasehold garage to you?

You would also have to look at the property title to see if the driveway is part of the neighbouring property's freehold or part of the leasehold.

I also own a freehold house and a leasehold garage under a coach house but my driveway is on my freehold house title.

G_M

The peppercorn rent is what makes the lease valid. There has to be some payment, so the 'peppercorn' is a token payment.

I assume you own the freehold of the land on which all 3 garages and the flat sit?

And I assume the flat is also leaehold.

Because of the seperate ownership of each of the 4 'properties', there has to be a lease for each, so as to determine who/how each is maintained.

Yes, if you owned all 4 leases you could convert the whole into a single freehold Title.

The owners of the two garage leases could sell their leases to you (or indeed anyone else) for whatever price your and they agreed. Doubtless if you offer enough, they would sell, but as to how much is 'enough' that depends how much they want/need a garage, how much value it adds to their own home, and whether they know how desperate to buy you are.

tberry6686

Remember they will have the right to extend the leases if they want too, although you can make it difficult you cannot prevent it so it is highly unlikely that you will get hold of the leases as anyone in their right mind would extend them.

Depending upon where you are buying out the leases could well prove to be very expensive. How much would the loss of the garage(s) knock off the value of the houses ? then add in some profit for the current occupiers and you will likely be looking at tens of thousands of pounds (could be over 100k in London).

DandelionPatrol

fliddie wrote: »

I have never really understood what the peppercorn rent is, but my question is: I would very much like to regain full and permanent ownership of one or both of these garages which would allow me to extend my living space. Can the neighbour sign the lease back over to me (if I paid him whatever he wanted for it)? Or am I stuck with never being able to get hold of the lease(s) until the 100 years are up?

Theoretically, you could buy the leases. But given the nature of the properties, they are almost certainly mortgaged at high Loan to Value. The showstopper will be that the mortgage lenders will have a veto and they will not like the implications of your proposals for the values of the properties on which their loans are secured.

AdrianC

Your best bet really will be to wait until your current neighbours put their places on the market, buy them, do the legals to strip the garage from the property, then re-sell the property.

Anything other than that leaves you open to a ransom price from the current owner, even assuming their mortgage lender would be happy with them devaluing their property in that way.

Freecall

fliddie wrote: »

I would very much like to regain full and permanent ownership of one or both of these garages which would allow me to extend my living space.

Are you sure? Have you checked your original planning consent?

If your property has been constructed in recent decades it is normal for Local Planning Authorities to prevent this with a restriction on the consent.

fliddie

Thankyou for the replies, I still dont really understand much but hopefully I can clear some bits up:

As I understand it, my house, land and parking space on the driveway is freehold, the two garages within the building are leasehold with freehold ownership of their individual car parking spaces on the driveway. I am not interested in attempting to get their parking spaces aswell (I am just trapped in an overcrowded situation inside the property with no possible avenue to extend due to the layout and I cant afford to move. Therefore I would very much like to acquire the lease so as to convert an extra garage into internal living space)

Neither of the neighbours has ever paid me a penny for the lease of the garages (although I have never asked for anything due to not understanding it). I have lived here for 8 years. Does this non-payment invalidate the 'rent'?

The house was built in the 1980s. I didnt realise that there may be a planning consent issue in converting a garage if its lease was bought back by myself? My garage had already been converted when I moved in so I thought (possibly wrongly) that if I bought the lease, it would convert it to freehold to me to do with what I wanted?

Sorry if I sound really thick, I just cannot understand the legal jargon and my solicitor didnt really explain it in any real depth when I bought it. I would never buy a coach house again, far too complicated. And as an extra annoyance, very few house insurers have a clue what a coach house is or how to insure it!

AdrianC

No, non-payment of a peppercorn rent doesn't invalidate the lease. It means you can sue them for eight peppercorns.

Simply put, you own the ground, and have a 99 year long contract with the leaseholder saying they can have their garage on your land. Until that contract expires, you and they are bound by it. They can sell their lease - which is part of the property they own and, presumably, have promised as security for a mortgage. So the mortgage lender have a say in whether they sell off part of that security.

G_M

fliddie wrote: »

Thankyou for the replies, I still dont really understand much but hopefully I can clear some bits up:

As I understand it, my house, land and parking space on the driveway is freehold,
ALL land has a Freehold Title.
Some land alos has a Leasehold Title.
Usually leases are created because two or more people have property sitting on the same bit of (freehold) land.

Think of a block of flats. The land id freehold, and someone owns this. Each flat sitting on/above that land is owned on a leasehold basis by each flat owner.

In your case it is exactly the same: the land is freehold (and you own the frehold), and sitting on the land is a garage ( with a lease owned by someone) and above that a flat/coachouse (with, I stringly suspect) also a lease, which you happen to own.


the two garages within the building are leasehold
OK - as explained above
with freehold ownership of their individual car parking spaces on the driveway.
The freehold ownership of this land is entirely separate. The owners own TWO Titles 1) freehold of the drive and one lease of the garage
I am not interested in attempting to get their parking spaces aswell (I am just trapped in an overcrowded situation inside the property with no possible avenue to extend due to the layout and I cant afford to move. Therefore I would very much like to acquire the lease so as to convert an extra garage into internal living space)
Yes, we understand. And some of the issues have been explained o you.

Neither of the neighbours has ever paid me a penny for the lease of the garages (although I have never asked for anything due to not understanding it).
So why not write (properly) and ask for the ground rent
I have lived here for 8 years. Does this non-payment invalidate the 'rent'?
The ground rent is payable. Write and ask for it!

The house was built in the 1980s. I didnt realise that there may be a planning consent issue in converting a garage if its lease was bought back by myself?
Converting a garage to residential accomodation normally requires Planning consent. Check with the Planning Dept at your council.
You'd also have to comply with Building Regulations (to ensure the conversion was safe, and sufficient insulation included etc)
My garage had already been converted when I moved in so I thought (possibly wrongly) that if I bought the lease, it would convert it to freehold to me to do with what I wanted?
If you buy the lease, you will ..... own a lease. If you happen to also be the freeholder of that lease, yes, you could apply to have the lease dissolved and the entire property included within the freehold

* Go to the Land Registry site here.
* enter your address. you should see
a) the Freehold title. Pay £3 to download it and you should see your name as the owner of the freehold
b) The Freehold Plan. This is a map showning the area of the Title above (£3)
c) the Leasehold Title for the garage. Pay £3 to download it and you should see your neighbour's name as the owner of thelease
d) The Leasehold Plan. This is a map showning the area of the Title above (£3)
e) the Leasehold Title for your coach house. Pay £3 to download it and you should seeyour name as owner of the lease
f) The Leasehold Plan. This is a map showning the area of the Title above (£3)

You could also look at your neighbor's address and see that he owns (presumably) the freehold to his house (which may include the driveway) and/or the freehold to the driveway (if it is a separate Title.)

eddddy

G_M and others have explained the legal position etc.

But in simple terms, the situation is very likely to be as follows:

- Your neighbours 'own' the garages (under a lease)

- You can offer to buy the garages from your neighbours. You could offer £5k, £10k or £50k - they might say "yes" or they might say "no". It's all down to negotiation, you cannot force them to sell.

- They don't have to pay you rent for the garages (in legal jargon "a peppercorn rent" means "zero rent".)

- BUT... they might have to pay you a contribution towards your buildings insurance, and any repairs that you have to do to the building/garages. You need to read the leases to check this, and then ask them for the money.