Selling a freehold

G_M

There are 2 possibilities:

30 years ago they owned both the lease and freehold to a house. For some reason, they did not revoke the lease so as to just own the freehold (which would be the obvious thing to do if owning both).

1)
They then sold the lease, then 73 years remaining, but decided to keep the freehold which would, in time, become valuable. Their buyers at the time were happy to buy a 73 year lease. Perhas over the years that lease was sold on several times - though that seems unlikely as at some point a buyer would have requested to buy the freehold.

2)
or 30 years they sold the house. They either did not realise at the time that there were both a lease and ffreehold, or they did realise and wanted tto sell both. But for whatever reason, only the lease was transferred to the buyer (who may also have thought he was buying a freehold (or both). Effectively this was an error at the time done by all cconcerned (buyer, seller, mortgage lender + solicittors!).

If 1) above iss the case, then they planned well and their goose has now been cooked and they can eat it (poor metaphor - but they are quids-in). They can offer to sell the freehold, or to extend the lease (eg to 99 years) either of whic will earn them some decent money.

If 2) above is true, the honourable thing to do would be to transfer the freehold as requested. But they could, instead, still offer to sell, or extend, or refuse and do nothing - leaving tthe current leaseholder with a pretty valueless leasewhich he'll never sell.

As for tax, if they 'gift' the lease, and then die within 7 years, the value of the freehold would be inccluded in therr Estate for Inheritance Tax purposes. Though they could argue to HMRC that it was not a gift, but a corrrection to the error from 30 years before.

Lokolo

Someone else can comment on my calculation. With 43 years left the relativity is 62%

https://www.freeholdcalculator.com/leasehold_extension.php

Therefore based on a freehold value of £155k, the property is currently worth around £96k and therefore the freehold is worth £59k.

That is based on the above calculator.

edit - I think I may have calculated it incorrectly as this was based on lease extension, but someone else will surely comment

G_M

Even if you are 30% out Lokolo, the point is well-made. The freehold is potentially valuable........

StumpyPumpy

It sounds to me like your parents need to engage a solicitor to look into this, the original one if at all possible though after 30 years that's probably unlikely. They'll need to find out what the original terms of the sale were, there was either a big mistake during that transaction, in which case I'd be asking for the current owners to pay my expenses to rectify it (It may not be their fault, but they have the most to lose if people play awkward) or it could be them trying it on and hoping to get a big asset transferred to them without paying for it. Either way, in my opinion, you need a proper legal assessment to work it all out.


SP

eddddy

Cathm wrote: »

The letter is from the solicitors of the potential buyers, rather than the current house owners. The [STRIKE]freehold[/STRIKE] lease actually only has 43 years left.

You need to find out more.

Somebody could be seriously ripping-you off here.

• The buyers could by buying a house with a 43 year lease for £155k.

• Your parents give them the freehold for "free", and they instantly have a house worth £255k

i.e. Your parents generosity makes a stranger (perhaps a hard-nosed property investor) £100k richer.


Your parents own a freehold that is very valuable - perhaps worth £50k. I'd suggest they take legal advice before thinking about giving it away, or selling it cheaply.



Edit to add...

Cathm wrote: »

They have enclosed a transfer deed for them to sign.

I would be extra suspicious about this, as it sounds like a random solicitor has sent you a 'deed of transfer' through the post, and is asking your parents to sign it - without even advising them to seek legal advice.

It almost sounds unethical for a solicitor to do that.

davidmcn

They'll want a surveyor as well to value the freehold - a solicitor can't tell them what it's worth.

Cathm

Thanks everyone, I really appreciate your input. I am now looking at solicitors - the original firm my parents used no longer exist. I just don't want my parents to be penalised, whatever they decide to do

G_M

eddddy wrote: »

I would be extra suspicious about this, as it sounds like a random solicitor has sent you a 'deed of transfer' through the post, and is asking your parents to sign it - without even advising them to seek legal advice.

It almost sounds unethical for a solicitor to do that.

Good point. Any decent solicitor would advise you to obtain your own legal advice. Indeed I suspect they have a professional duty to advise this.

I recently had a Deed drawn up, after discussion with my neighbour, granting me (my property) the right to use the septic tank in his garden (which we'd been sharing for 20 years and previous owners before that). It was simply to formalise the arrangement so as to avoid issues if/when I come to sell.

My solicitor drew up the Deed and sent it to him to sign (he was expecting it), but advised him in the letter to obtain his own legal advice if he wished before signing.

Is tthe solicitor genuine? See

http://www.lawsociety.org.uk/

https://sra.org.uk/consumers/consumers.page

Cathm

The letter does say "you may wish to obtain your own legal advice" but does not "advise" them to do so and I thought that was strange. The letter does feel like the are pushing my parents to just sign the paperwork, which I don't like. The solicitor is genuine - a small firm - but I do feel as though they know this is an elderly couple and are trying to taking advantage. Will definitely be taking legal advice!

SalsaDanca

Let's say that the parents decide to give away the freehold because they think it should have been transferred when they sold the house. The parents are in their 70s - as well as tax implications of giving away the freehold, there might be problems with Deprivation Of Assets if they need to go into a care home in the future.