Freehold, any hope for my elderly parents?

letour

My parents bought in 1960 and have 10 years unexpired left on their lease.
Houses on their street are selling at 400k,
Details are

Low value 1967 test passed so no marriage value
Terraced house Greater London
10years unexpired
Current Rent £5 pa
Value of a freehold if developed on their street £400k (their house is very undeveloped and even with freehold would only achieve £300k but it seems as though in the calculation for freehold value this doesn't matter it goes on what is achievable in that location.

The freeholder keeps this up to date and is still around, they just get a letter every year saying please pay the £5 for this year.
I checked and the freeholder owns quite a few different freeholds so knows what he's doing.

I have done a ton of reading including valuers books.
I've come to the very rough estimate of say 35% of value of house assuming the value of the freehold then takes on 50 years at 7% for ground rent.

Roughly the freehold will cost them say £120k

Their other alternative is to extend by 50 years but then I gather the Freeholder will make their rent P.A around £5k


Anyone have any other ideas on low value housing under 1967 ruling.

2 things I dont understand is their anything stopping the landlord putting the ground rent to £5k p.a immediately or more? if they go for an extension of 50 years.

Also I gather when my parents pass under a 50 year extension the house immeadietly becomes the freeholders?

xylophone

Have you read the lease?

Are you in a position to borrow the money required and lend it to your parents so that they can buy the freehold?

xylophone

And see https://forums.moneysavingexpert.com/discussion/5475602 post 20.

eddddy

At some point you'll probably have to instruct a valuation surveyor, so maybe bite the bullet and do it now - they'll then be able to answer your questions.

You don't say so explicitly, but I guess the challenge would be raising £120k.

If your parents are prepared to sell, one option might be to negotiate a joint sale agreement with the freeholder.

i.e. The property sells for £300k freehold - with £120k going to the freeholder and £180k going to your parents (and the lease is determined/terminated.)

missbiggles1

How old are your parents?

letour

Thanks so much for your replies they are almost 80 years old

I think that was quite a good suggestion to maybe try and talk to them about moving to a more simple bungalow sell the house and pay the landlord his share plus maybe £10k for his understanding.

The other option I do not have a house I own so could not borrow agains it, have probably 30 k savings maybe look at options of borrowing money say borrow 80k refurb the house a bit then sell at full price I then get my borrowing money back providing I can convince my parents to move to a smaller house.

Cakeguts

Get onto your local council and find out if there is a waiting list for council properties for over 60s. There often isn't a very long list for retirement properties. Put their names down on it and then wait. If they are 80 now in 10 years time they will be almost 90 if they live that long so if they buy a bungalow and move now there is a chance that one of them will have to move again later. If you can get them settled into council owned retirement housing with a warden they won't have to move again unless they need a nursing home. I know two people who live in council owned or retirement housing run for local councils which is very nice.

letour

ok great will look at council housing too.

I think I should still think about buying the freehold in addition to this, the reason.

I pay £120k we then have a 350 - 400k house

I leave it it reverts to landlord, that money my parents paid there whole life paying the mortgage goes wasted.