Can I sell my Freehold but keep property on leasehold?

robmob

Earlier this year we purchased the freehold of my wifes parents house for £16k as we were all going to sell up and move to one larger house. This has now not worked out and I would like to re-coup our £16k. Is there a market for selling the freehold element of the property and allowing us just to maintain the house on a leashold basis to put them and us back into the same position as previous?

Many thanks

Rob

Richard_Webster

How long is the lease now? What is the value of the house in the open market?

If you paid £16K that indicates the lease was probably less than 100 years and would cause me to wonder how saleable the lease would be on its own now. Your freehold reversion might well be saleable but your wife's parents might then be stuck with a very unfriendly landlord.

robmob

Richard

Thank you for responding. The length of the lease at the time we did the enfrnachisment (I think thats what it was called) was about 42 years on a £160k house - hence the price.

If we extended the period presumably this would then de-value it and we may not get our £16k back out?

Regards

Rob

Doozergirl

robmob wrote: »

If we extended the period presumably this would then de-value it and we may not get our £16k back out?

You're absolutely right. A freehold with a new lease attached to it would be worth very little indeed. That £16k investment will pay off for you, because the house would have probably have been devalued by more than that with a 42 year lease!

phead

robmob wrote: »

Richard
If we extended the period presumably this would then de-value it and we may not get our £16k back out?

Correct, but the value of the house depends on having the longer lease. If you sold the freehold now, extending the lease later on would cost more than you will get now for the freehold

I guess the question is, do you expect to get a share or all of the leasehold property at a later date?

If I were you I would just keep hold of the freehold, selling it would be a big mistake. The property basically cannot be sold for anything like a true market value without the freehold or an extended leasehold. Keeping hold of it will be a good investment.

KiKi

Also, you could end up with a very difficult freeholder (as someone else pointed out) who potentially could cause a lot of problems when it comes to maintenance of the property. I've been there before, and I would have given anything to have bought the freehold. The £16K will be worth it, as you'd
a) pay a significant amount anyway to extend the lease if you're not the freeholder
b) have control over the property's maintenance
c) make the house much more sell-able in the future

Richard_Webster

I agree with most of the comments above.

Extending the lease would devalue the freehold. It really depends on the extent to which you want to help your parents in law or profit from their situation.

The leasehold would be unmortgageable so would only be open to cash offers and I suspect therefore a buyer would pay significantly less than £144K (£160K-£16K).

In broad terms (assuming house prices stay the same) the value of the freehold should virtually double in 10 years.