Cost of Purchasing the Free Hold

RedHitman

Hi guys

It's quite a simple question (which I can't find any answer for!)..... is there a maximum or average cost to purchase the free hold title of a house?
I feel I am being asked for an extortionate amount of money to purchase the free hold title to a house I'm about to purchase. The lease is for 999 years from 1984 (so 966 remaining).... my parents own the house next door and purchased their freehold for 10x the ground rent, which is £25 a year (so they paid £250). This was a few years ago.

I am now buying next door and want to do the same. I've contacted the leaseholders and they're now asking for £1000. This is FORTY times the ground rent!!

My simple question is, are they allowed to do that and basically charge whatever the hell they want, and charge different owners different amounts? (The houses are exactly the same).

Thanks!:beer:

zagubov

They could, as you're buying before living there. Once you've owned it for a couple of years, you can go through the statutary route where the price is capped.
Two thoughts:
could the current owners put in a freehold purchase application with you as the beneficiary?
And secondly, at that price am I the only person that would be tempted to hand over what they're asking for just to get it over with?

RedHitman

zagubov wrote: »

They could, as you're buying before living there. Once you've owned it for a couple of years, you can go through the statutary route where the price is capped.
Two thoughts:
could the current owners put in a freehold purchase application with you as the beneficiary?
And secondly, at that price am I the only person that would be tempted to hand over what they're asking for just to get it over with?

I've tried searching Google for lots of things but can't find anything!
What is is statutory route?

There is no current owner, it was an old lady who passed away about 4 months ago. I'm not sure of the legalities with regards to who is now the owner (there were 4 children who now own 25% each I guess!)

Hoploz

Well it looks like the current owners won't start it for you. As an aside, is probate sorted yet? If not be prepared it can sometimes be a long wait.

I'm wondering what the benefit will be to buying the lease?

But yes I'm kind of thinking just pay the grand and be done with it if it's important to you. It's a small amount compared to the value of the house, unless you're in some dirt cheap area of the country where houses sell for £10k

lee111s

Think yourself lucky. Ours cost £6800

RedHitman

Hoploz wrote: »

Well it looks like the current owners won't start it for you. As an aside, is probate sorted yet? If not be prepared it can sometimes be a long wait.

I'm wondering what the benefit will be to buying the lease?

But yes I'm kind of thinking just pay the grand and be done with it if it's important to you. It's a small amount compared to the value of the house, unless you're in some dirt cheap area of the country where houses sell for £10k

Yeah probate is sorted now. Obviously had to wait until it was.
The benefit to buying the lease is because it has some ridiculous clauses in it, like:
You can't park a van or motor home on the drive (although it's a private double drive)
You can't have a garden fence higher than 4ft 6
You can't have a hedge
Etc etc etc. Just stupid stuff. My parents bought a motor home and it was then that they had to buy the lease.

I'm buying the house to rent out, not to live in. So I don't want any prospective tenants having to adhere to ridiculous rules.

I know £1000 isn't a big amount in the grand scheme of things, but I thInk it's just simply the principle of it. My parents paid £250 but they're asking me for £1000. That's 40 years worth of ground rent. I won't even be alive then! Haha.

RedHitman

lee111s wrote: »

Think yourself lucky. Ours cost £6800

Ouch! Was that the going rate though?
My issue is the vast difference between what others have paid and what they've quoted me.

lee111s

RedHitman wrote: »

Ouch! Was that the going rate though?
My issue is the vast difference between what others have paid and what they've quoted me.

Yeah, greedy b4stard builders. Wouldn't have not though for the value of property we purchased!

da_rule

http://www.penningtons.co.uk/expertise/business/real-estate/property-entrepreneurs/property-entrepreneurs-faqs/faqs-buying-the-freehold-of-a-leasehold-house/

Here's an article that gives some info.

zagubov

RedHitman wrote: »

I know £1000 isn't a big amount in the grand scheme of things, but I thInk it's just simply the principle of it. My parents paid £250 but they're asking me for £1000. That's 40 years worth of ground rent. I won't even be alive then! Haha.

That's my point. Life's a short trip. That £1000 would pay for years uncertainty, and could well be a bargain. I strongly think that using the legal pathway would be time-consuming and maybe much more expensive.

This might be the smartest £1000 the OP's ever spent, but, hey, those principles!

By the way the main part of this very forum has a guide to buying freeholds.

da_rule

Why argue it? At the end of the day, if you wait the 2 years and they decide to contest it you could spend a lot more on legal costs.

Your parents only paid £250, but when was this? Also, its supply and demand, they have something you want and they're asking a price for it. If there's 4 beneficiaries then they each end up with £250.

If you do go ahead and do it and you are buying with a mortgage, don't forget to keep your lender informed as they will be lending against a leasehold property. If you merge the leasehold and freehold titles into one the property will end up as being a freehold property which isn't what the lender would be expecting. Before you take it any further it might be an idea just to check that they are agreeable in principle.

In terms of your question as to whether they can charge what they want, then at this stage yes they can. It's only after the 2 years of ownership that the formula kicks in. And even if this is cheaper, there may be legal and tribunal costs if they decide to be awkward or refuse to sell it.