Reduce offer on leasehold repossession billed as freehold?

cziffra

Hi,

To give the short version, a purchase of a house that was claimed as freehold had almost gone through and came back as leasehold. It's an expensive yearly fee of £480 and probably around ten thousand to buy the freehold after two years.

The agent had previously said another offer had come in and was originally pushing for more. This wasn't confirmed though and I have doubts as to whether it was genuine. Either way they're now saying nobody else is interested and they've actually offered to drop the price to 125k from the offer of 126k.

In real terms this still amount to around 9k more than the house should have cost, in the basis that we agreed. If anything, a 1k reduction seems like a pretty token gesture. What would others do here? I'm thinking of offering to meet them halfway and asking for it to drop to 121k. However, the original listing price was 115. As it's a repossession and there are now no other offers on the table (with solicitors work in position to be ready quickly), would I be in a strong position to even suggest that the price should drop by the whole cost of the freehold? Presumably they can't refuse unless a credible offer comes in? Could they stall the process in hope of a new offer or would they basically have to accept the terms? The previous offer that I exceeded had been 125k but that almost certainly wouldn't be on the table for leasehold, even if they might otherwise have retained an interest.

armchaireconomist

I'd go straight in at £110,000-115,000 take it or leave it personally, or wait for repossession and gamble on it being cheaper at auction.

If your house is being repossessed you're in no position to be demanding £10k above asking price and mis-selling it.

cziffra

armchaireconomist wrote: »

I'd go straight in at £110,000-115,000 take it or leave it personally, or wait for repossession and gamble on it being cheaper at auction.

If your house is being repossessed you're in no position to be demanding £10k above asking price and mis-selling it.

Any thoughts on legal issues? I did get the impression they're on the back foot and making a really lame attempt to keep us on board. I don't believe they can outright refuse, but can they deliberately slow down the process (which is probably virtually there for exchange of contracts) on the basis of trying to secure a better bid?

cziffra

Also, what difference would there be in a formal valuation, on leasehold vs freehold? The full cost of freehold? Or is it a little more complex? It's a 110 year lease.

armchaireconomist

Have you exchanged yet? If not, you're under absolutely no legal obligation to buy the property. You've agreed a price in principle based on what you believed the property to be worth, which evidently now isn't the case as they've led you to believe it's freehold.

I'm sure they'd rather sell to you at the ASKING PRICE than the stress of it being repossessed, auctioned and potentially covering any pitfall. I presume that's what you meant anyway? Not that it's actually a repossessed property and the mortgage lender is "selling" you it?

With regards to leasehold vs. freehold, value is negligible (unless it's a very short lease) but many buyers won't touch a leasehold. While we're at it £480 a year isn't cheap. I wouldn't want to buy a house for hundreds of thousands and be told i need to pay the land owner indefinitely.

hazyjo

tbh, I'd not be buying it at all now. A lot of others would pull out too. Have a serious think about it - don't buy it for the sake of saving what you've spent already. Do you actually want a LH house? If you're not fussed, or if they're common where you are, go for it, but I'd want more than a grand off!

Jx

cziffra

To clarify, it's being sold by a building society (already repossessed, I believe) through an estate agent. It's also part owned by the council though. Under the terms of repossession, they have to be open to new offers prior to exchange of contracts although I believe that could come rather quickly now. For that reason, one of my main concerns would be if they could stall things under a reduced offer. I'm tempted to offer 120 for a little extra security against sudden outside bids although I'm not sure if it's really necessary not to shave off the full costs of bringing it to how it was advertised.

cziffra

Also, I don't mind a couple of years on leasehold and would have been willing to go up to around 130k if it was as advertised. I think I'd be fine with it coming to 120 but I think I'll try for less first. It seems pretty clear that, as I suspected, offering a grand off is an insult rather than a genuine goodwill gesture, given the position we're in.

Hoploz

Make sure your lender is aware if you're getting a mortgage. Their valuation may be affected and your offer may need to be reviewed or re-issued which presumably could delay an imminent exchange.

cziffra

Also, I'm aware of the fact there's no legal obligation, but I'm looking at not exactly in terms of etiquette but in terms of what might be regular accepted practise here. I don't want to feel like some kind of shark who's out to screw them to the max, but I'm not willing to get casually screwed by them either .

EDIT sorry, I did mention legal issues but the thing I'm unsure of on the legal side is whether they can reasonably stall things on the basis of a reduced offer, in the hope of someone else outbidding.

cziffra

Hoploz wrote: »

Make sure your lender is aware if you're getting a mortgage. Their valuation may be affected and your offer may need to be reviewed or re-issued which presumably could delay an imminent exchange.

It's okay, there won't be a mortgage on the property.