House lease 999 years, garage only 125!! Missing documents, management company issues

mylilangel

Dear all

I am in the process of buying a 2010 David Wilson built house in the North West. All houses constructed post 2007 in this huge estate were sold leasehold.

On checking the lease documents, I found that the lease on the house which started in 2007 is for 999 years, but for the garage (at the back of the property in a separate shared block of garages) it's only 125 years. I wrote to my solicitor asking if this affects saleability, and he just acknowledged the difference and the mentioned it should not affect saleability.

I have never owned leasehold properties, and was wondering if this is a unusual to have two different leases with varying lengths for essentially one 'house with garage'.

Also, there is no upper or lower chain. The offer was made and accepted on 14th October, mortgage offered to me on 31st October, home buyers report available to me 2 days after, and legal searches were complete by end of November.

However, the vendor failed to initially appoint a solicitor till end of October, and then took another 2 weeks to fill in preliminary property information questionnaires. Then, 1st week of December, their solicitor informed that the NHBC guarantee certificate, building regulations completion certificate, and the gas fire compliance certificate were all reported missing by the vendor, and that they will reapply. NHBC re-issued the certificate at the cost of 35 pounds, but rest are still not available to date. The regulations certificate are to be issued by the council.

On top of the ground rent for lease, there is also a management company involved for the upkeep of the common areas around the garages. They were prompt to issue a management company pack (at a substantial cost to the vendor I presume), but there is some on going dispute I have come to know between the residents and the company, and they have been delaying issuing the 'licence to assign'.

All this while, I have been haemorrhaging money on expensive rent (sold my house to be chain free in August), moved jobs, family staying in the rented house (which I used to own) in the previous town to avoid moving twice, and I putting up in workplace accommodation 230 miles away, and paying rent on it as well!

Do you think I got it all wrong, and I would be equally hassled when it comes to selling it, probably 3-4 years down the line when I plan to?

The market is pretty slow where I am buying, this house which I am buying had been on the market since March 15, and dropped twice on price. Some colleagues who live in the same estate suggested that I am still overpaying for this house - do you think I should try and negotiate the price further down for delays purely caused by the vendors??

Many thanks

Pete9501

mylilangel wrote: »

Do you think I got it all wrong, and I would be equally hassled when it comes to selling it, probably 3-4 years down the line when I plan to?

No, because when you come to sell in the future you will have a file of all the documents relating to purchasing now and subsequent service charges, management accounts etc ready to hand over to your solicitor.

You could try dropping the price at the last minute before exchanging however, it's a pretty underhand trick.

Irratus_Rusticus

mylilangel wrote: »

I have never owned leasehold properties ... Do you think I got it all wrong, and I would be equally hassled when it comes to selling it, probably 3-4 years down the line when I plan to?

No idea about your location so can only answer generally. Ask yourself why any modern house sitting on its own foundations needs to be leasehold, a form of tenure essentially designed to cope with titles that do not sit on their own exclusive land? Leasehold is not the same as freehold even with a 999 year lease.

Always read any lease carefully. If there's a dispute now holding up your vendor's permission to re-assign the lease to you, who is to guarantee it won't happen again when you wish to sell? Got to be a red flag to consider carefully.

Read the lease again. Will you need to pay for consent to extend the property or replace the heating system or just to paint your front door? All leases are different. Some better than others. How much service charge might you pay for things you don't see done? If you've never been a leaseholder, learn the difference to freehold. A lease is a binding contract.

Making new-built houses leasehold is apparently a growing business model. Google this, e.g...

http://www.thisismoney.co.uk/money/mortgageshome/article-3088134/The-great-divide-Buy-165-000-house-left-road-outright-buy-one-right-don-t.html

mylilangel

Many thanks for your reply.

mylilangel

I asked my solicitor again about this discrepancy in the lease tenure between the house and the garage. He said this is not a usual practice, but I needn't worry too much. After two years, I can get the lease extended, but that would be expensive.

He could not tell how long the local authority can take to re issue the building completion regulation certificate.

Thanks

Irratus_Rusticus

If as your OP says you plan to sell in 3-4 years, a garage lease still 120 years now is not really a concern for you. Why worry extending it? Extending is usually a priority just before 80 years. See this very site...

http://www.moneysavingexpert.com/mortgages/extend-your-lease

princeofpounds

The leasehold/freehold set-up here probably exists for two reasons:


1) The developer would have coined some £ by selling the freehold to an investment and management company, because normal punters tend not to price ground rent correctly, especially at low interest rates when it is actually quite valuable.


2) Less cynically, it also enables the estate to sponsor the management of common areas that are held as part of the freehold and used by the leasehold properties. Councils used to do much more of this sort of thing (provide small parks, playgrounds, paths etc.) but they tend not to like adopting to many additional burdens these days (to the point where they often turn down such facilities in new developments even if offered by builders).


It is a conceptually somewhat ugly way of doing things, largely because it results in the imposition of a management company that has different incentives to the leaseholders, but it's not in itself a deal-breaker. Lots of properties are leasehold, even some houses (for example, much of posh London is also long lease housing, but for historical reasons to do with previous aristocratic owners who still own the freeholds)


If the garage and house are on separate deeds and on separate land then the difference in lease length is really not a problem. The way the law works around long leases, as long as you don't let the garage slip below 80 years on the lease then the cost of extending the lease should be rather modest. And there is little difference in value between a 125 year lease and 999 year lease (the longer in the future it is, the less the difference is by adding an extra year, that's the way it works mathematically).


And make sure you understand the ground rent and management fee terms properly.


The only point that is notably concerning is the existence of the dispute between management company and leaseholders.


These are not uncommon - some leaseholders just don't understand the nature of the relationship and will raise perennial disputes for totally incorrect reasons. But it might be a valid dispute, as some management companies can also neglect their duties or become too enthusiastic about trying to raise fees. So I would look into the specifics.

mylilangel

Many thanks prince of pounds

AdrianC

At a guess, the garage is not on the same plot as the house - is there a block of garages within the development?

mylilangel

Yes. The garage is just off the main plot, through the back garden, with drive access through one of the back roads. The block of garages consists of five garages.

AdrianC

mylilangel wrote: »

Yes. The garage is just off the main plot, through the back garden, with drive access through one of the back roads. The block of garages consists of five garages.

So there y'go. That's why they're not on the same lease.