Buying a leashold house,- should we just walk away? Advise please.

[Deleted User]

Can I ask Alex with all that in mind why you would actually bother with a property with so much baggage and uncertainty before you even get in the front door. Is it a cheap for the area house, all fixtures and fittings included, attractive discount package ? am genuinly interested .

To me as an outsider I wouldnt entertain the idea at all never mind take on something so complicated and potentially ruinous that a solicitor has to wade through the detail ( and you have to hope you have a very hot property solicitor that understands it all ).

Also you may understand what is on the table now but what happens when the terms change which the Freeholder can do. £131 service charge seems attractive now because they are trying to sell you a property, what in 5 years when is has gone up to £3k ?

You may be prepared to wade though treacle if you feel this house is worth pursuing for whatever reason but I very much doubt anyone else will, look at the people on this thread alone saying run and I would hazzard a guess we are all potential homeowners who have bought or are looking to buy / upgrade at some point and no-one has said yes i'll condider it.

moneyistooshorttomention

To me - I assume Alex is considering it in the first place because the pressure is building steadily for things to be rather fairer in this respect.

Personally - I'd hazard a guess that the height/strength of that "wave breaking upon the shores" is such that things will have changed noticeably to the fairer by, say, 10 years time. I think the momentum to put this right is starting to become unstoppable.:T

Having said that though - I personally wouldn't want to put myself in the position of regarding this issue as a "definite winner". At least not unless I planned on the house being a "lifetime" purchase and I'd still feel a bit wary if it was.

So - yep....if OP wants it as a lifetime house and, as we can see, is sensible/cautious enough to insist on buying the freehold (:T kudos for being so sensible:T) then I'd say the odds are better than 50/50 that it will become a "normal" house over time - as more and more people protest about this leasehold malarkey.

getmore4less

https://forums.moneysavingexpert.com/discussion/5598059

this is what has happened to these poor buyers.
No amount of research on the potential cost of the freehold will help if you don't buy it at the same time.


Same with any service charges, you need rock solid list of what can be included, and they all need to be things that you can predict, maintenance of grounds will run in line with labor costs but if they decide to do a load of landscaping it could be £1,000s


If a solicitor is trawling through now to try to alleviate your fears whats it going to cost for the solicitor that you employ when you try to enforce what you though you were getting.

alex_163163

The town I live in and buying in is a relatively new town. There are not many houses that aren't 50s or later style houses. So we either go for a 50s/60s ex council house in not very nice areas of town and we just don't like the majority of the ones we've seen, or we look at the builds that are either from 10-30 years ago (still talking about Barratt/ Taylor Wimpey constructions etc), or the new build estates that are springing up around the town (which we are looking at). To discount new build estates in our town removes probably 40 - 50% of the housing stock!
We have chosen this town as it is a good location in terms of our jobs and commuting for both of us. And the house prices on a whole are relatively cheap so we can afford a 4 bed house, rather than a 2/3 bed in a town a few miles away.


The package we got was attractive to us, yes. Nothing off the asking price, but got stamp duty included, all flooring, kitchen upgrade included. To us after looking at the area, the price and things included was an acceptable price. On some other nearly developments, a similar type house was £20k more expensive so I guess we did think it was a good price for what we are getting. We also did understand that this was likely because it is leasehold so a bit of a cheaper price.
Please don't misunderstand me, I find the practice of selling leasehold houses ridiculous and I understand the pitfalls, but we are doing our research carefully and will not exchange without the details explained that we have asked for. If we don't get that we will walk. Granted we might lose some money on the solicitors if we pull out, but we love the house and location so feel it is worth investigating.


In response to not wanting a solicitor to have to wade through all the detail, I would hope that whatever house I buy the solicitor would wade through all the detail! There could be covenants in place on any house you buy, no matter the age! All house purchase contracts need to be looking at with detail, and to suggest this only applies to new builds is misleading! That's what I'm paying them for!
Can existing house not throw up issues in the contract too?


The future maintenance charges are a concern, yes. But as I said, a lot of the estates around us charge a maintenance fee. It will be hard for us to avoid that unfortunately. As much as it shouldn't be, this seems to be the practice now.


We just feel we want all the legal info before we make a final decision. Is that so wrong? It's great people giving advice on here and that's why I posted too, but some people may not have first hand experience of it so their knowledge is based on what they have read from articles which tell the worst of the stories out there. That's the reason I said for the original poster to look into it more fully so they can make a fully informed decision, rather just rely on what the sales person has told them.

moneyistooshorttomention

getmore4less wrote: »

Same with any service charges, you need rock solid list of what can be included, and they all need to be things that you can predict, maintenance of grounds will run in line with labor costs but if they decide to do a load of landscaping it could be £1,000s

Absolutely:T

You've highlighted one of the biggest glitches to current "state of play" on this bang on the nail.

The word I have in mind is "accountability".

Communal decisions must must MUST be made communally (one of the theme tunes of my life personally) and that includes everyone/but everyone having their say about what constitutes reasonable/necessary maintenance level.

I think/honestly believe this isn't far away from being enshrined in law personally - fingers crossed.

alex_163163

getmore4less wrote: »

https://forums.moneysavingexpert.com/discussion/5598059

this is what has happened to these poor buyers.
Now amount of research on the potential cost of the freehold will help if you don't buy it at the same time.


Same with any service charges, you need rock solid list of what can be included, and they all need to be things that you can predict, maintenance of grounds will run in line with labor costs but if they decide to do a load of landscaping it could be £1,000s


If a solicitor is trawling through now to try to alleviate your fears whats it going to cost for the solicitor that you employ when you try to enforce what you though you were getting.

Please be aware that the terms of the ground rent in the link you posted, and the terms that the original poster talked about are very different.
The people in the link had a ground rent that doubles every 10 years, but the details as explained by this poster are that it goes up every 10 years in line with RPI and the base index. As far as I am aware (please correct me if wrong anyone) but these are vastly different, and the respective increases to each rent will be vastly different.
The below shows how another MSE forum user explained the difference to me on a different thread:


“
Sorry to piggy back on this thread, but I am looking at a house where the ground rent increases every decade, and goes up in line with RPI.
Just want to know if this is different to the doubling talked about in this thread? Does anyone know if this makes the freehold more valuable/ expensive?
I have queried this with the solicitor but just waiting to hear back. Thought I'd ask on here whilst I wait!

Thanks.
Originally posted by alex_163163” It's different, because the RPI is a variable amount that's usually well below doubling. Imagine a ground rent set at £10 in 1915. This is the decade adjustment by RPI and doubling;

Month RPI inc RPI inc double
Jan-1915 4.1 £10.00 £10.00
Jan-1925 6.5 £15.85 £20.00
Jan-1935 5.2 £12.68 £40.00
Jan-1945 7.3 £17.80 £80.00
Jan-1955 10.7 £26.10 £160.00
Jan-1965 14.47 £35.29 £320.00
Jan-1975 30.39 £74.12 £640.00
Jan-1985 91.2 £222.44 £1280.00
Jan-1995 146 £356.10 £2560.00
Jan-2005 188.9 £460.73 £5120.00
Jan-2015 255.4 £622.93 £10240.00

getmore4less

alex_163163 wrote: »

Please be aware that the terms of the ground rent in the link you posted, and the terms that the original poster talked about are very different.

That was not the main point it was you have no control over the freehold and what anyone in the future may ask for it.

you might get an idea of what it should cost but unless you buy it with the property you are stuffed.

The real question is why are they not selling the freeholds with the lease or making all the people on the estate part owners of the overall freehold so they have control over THEIR estate.

in a proper community based ownership which is what we are dealing with here the people that live there would own their destiny.

In the US it it homeowner associations that control the costs and decide what gets done in a community not some 3rd party with no accountability.


if a council packaged up all its community responsibilities of a group of houses, then sold it off to a 3rd party, then adjusted the council tax to not include those costs and let the 3rd party set its own fees and agenda there would be serious resistance to such a policy.

This is effectively what is happening with the new estates and everyone is going for it.

You have checked the council tax is lower for these new houses as the council is not responsible for loads of things included in normal council tax.

NeilCr

I've got a freehold house on an estate which is a mixture of leasehold and freehold properties. We own the freehold of the entire estate and I am a director. We employ our own management company

And it works really well. My partner, who doesn't live with me, hates the idea because she does not want anyone else telling her what to do/what not to do. But it has a lot of upsides. It's very peaceful, there is one private road into the estate, we have no crime/no people wandering in and out, hardly any fliers/knocks on the door/JWs. There are covenants but we try to be sensible about them - they are very useful if there is a problem And the management company weigh in where necessary. And it's in a good and central part of town - with my own parking space which is gold dust!

I completely get why posters are anti them - especially about who owns the freehold. All I am saying, though, is that they be fine. I agree that you are taking a punt when you first buy - when you don't know how it's going to pan out

DoctorRN

I think that is a different situation to here. In your situation, it is the residents that own the freehold. In this situation, it will be a private company.

alex_163163

getmore4less wrote: »

That was not the main point it was you have no control over the freehold and what anyone in the future may ask for it.

you might get an idea of what it should cost but unless you buy it with the property you are stuffed.

The real question is why are they not selling the freeholds with the lease or making all the people on the estate part owners of the overall freehold so they have control over THEIR estate.

in a proper community based ownership which is what we are dealing with here the people that live there would own their destiny.

In the US it it homeowner associations that control the costs and decide what gets done in a community not some 3rd party with no accountability.


if a council packaged up all its community responsibilities of a group of houses, then sold it off to a 3rd party, then adjusted the council tax to not include those costs and let the 3rd party set its own fees and agenda there would be serious resistance to such a policy.

This is effectively what is happening with the new estates and everyone is going for it.

You have checked the council tax is lower for these new houses as the council is not responsible for loads of things included in normal council tax.

No you don't have control but the fact that on the thread you posted the clause states the ground rent DOUBLES every 10 years means that the freehold is much more valuable to the freeholder, as it will be worth so much at the end of the lease term.
So asking £20k for it, rather than the £5k it would be approx. worth if it was a flat-rate ground rent, is understandable. Now please don't think by that statement that I agree with the whole leasehold thing! I wish all houses were sold freehold and was more fair to the house owner.
But just thinking in business only terms, I can see why they would ask so much. The business has made an investment to buy a freehold thinking its going to get doubling ground rent every decade for 999 years. Then the leaseholder asks to buy it, so they want to recoup some of the loss of future earnings. I think it's immoral but I can understand their thinking!


In contrast, ground rent that increases in line with RPI is worth a lot less at the end of the 999 year term than a lease that doubles.
So it is likely that the cost of buying an RPI freehold will be less.


Of course, I take your point that the freeholder can essentially ask for any amount. But you do legally have the right to challenge this and engage your own surveyor and solicitor to negotiate a price. Of course that is an expensive process at a cost to the leaseholder, but the option is there from what I understand. But even if you do this, the cost of buying out a doubling clause vs a RPI clause is going to be valued as more expensive. to do.