Leasehold House - Freehold purchase?

marshwhitfield

Hi All

Hoping someone can offer some advice on this.

We own the leasehold interest in our property and have recently decided to extend our property. Because we knew that we would have to ask the freeholder for permission to do this we looked into purchasing the freehold interest. The lease is over 999 years from 1935 so has loads of time left on it and we pay less than a fiver a year for the privilege.

We know that our property is managed by Urbanpoint Property Management Ltd (who manage on behalf of G & O Properties (London) Ltd) who we contacted to ask how much it would be to find out how much it would cost for us to buy the freehold interest. To our surprise they eventually got back to us and said it would be £960 for the initial enquiry followed by a costs fee of £2,400 which includes ‘drafting all documentation executing them and taking this up to completion’. Neither of these costs then include the actual purchase cost of the freehold, and we would also have to pay for a solicitor to act on our behalf so the costs then had the potential to spiral out of control.

After balking at these costs, we decided to look into asking permission to make alterations instead. I emailed them again asking for the costs relating to this and this time they came back with a cost of £840. Not as bad we thought but I found a letter from when after we first moved in stating the fee for asking permission for alterations was £120. Naturally I went back to them with this, challenging their costs but they dismissed the letter stating the fees quoted were ‘completely out of date. Our current fee structure reflects the average costs associated with similar firms in the industry. Unfortunately our fee are non-negotiable’***. Better still a new fee appeared in the correspondence for the drafting all documentation previously mentioned in the purchasing of the freehold enquiry, this time it was £1,750.
***at no point, by the way, have we received up to date costs from Urbanpoint for this and therefore didn’t have a clue the prices would’ve gone up.

Anyway as you can all imagine this has left a bitter taste in our mouths. We happen to know someone in a different part of the country to us (they live in South Wales – we live in Tyne and Wear), who is in the process of buying their freehold on their house and the cost for them to find out the how much it could be purchased for was less than £200. How can this be the case that companies are allowed to do this? It seems absolutely ridiculous the disparity in costs. Did I think the leasehold purchase would be buttons? No. But did I think it would be potentially a third of the price of the extension we now wont be getting? Absolutely not no.

We are now having the house valued next week ahead of potentially getting it on the market...kneejerk? Yes of course, we love our house, but we are worried that if we don’t move on now we may be stung with increased costs further down the line if we have to buy the freehold to be able to sell the property. I just wondered if anyone else has had an similar experiences with property management companies with leasehold / freehold situations like this and how you’ve dealt with them. In particular if anyone has dealt with Urbanpoint before or if anyone thinks it’s worth going straight to G & O Properties and therefore cutting out Urbanpoint and if it is has anyone had any dealings with G & O.

Thanks all
Have a nice weekend
Andy

ThePants999

I can't talk much to your actual question. But I'll point out that even if you feel that's a ludicrous sum to purchase the freehold, the costs you'd pay to move home (estate agent, solicitors, removals, stamp duty etc) would be bigger still, by a huge margin. So putting the house on the market is not a sensible solution IMO!

eddddy

It sounds like you have approached the freeholder on an informal basis.... doing it this way, the freeholder can 'propose' any price they want and any fee they want.

(You can also reply proposing any price and any fee that you want.)

But assuming you've owned the leasehold for 2 years - you have the statutory right to buy your freehold. In that case,...

• The price of the freehold would be calculated using a statutory formula
• You would also have to pay your freeholder's (and your own) legal bills.

See: https://www.lease-advice.org/advice-guide/service-charges-other-issues/


Regarding consent to extend...

The law says that the fee the freeholder charges must be 'reasonable' - i.e. it must reflect the time they spend and/or the costs they incur.

So ask them for a breakdown of the £840

TBH, if they intend to get an architect and/or a surveyor and/or a structural engineer to check your plans, and produce a new lease plan etc, the cost might reach £840.

becominganobsessivesaver

What ground rent do you pay? The £2,400 for their fees is not unrealistic. We’ve just completed the freehold purchase of our house in Tyne and Wear (new build 125 year lease) and their initial quoted costs were £2400, we negotiated down to £2,200. The premium was £4,200. We did not have any other fees to pay. I sent the statutory notice through myself without a solicitor. If you send a statutory notice to purchase then they have to give you a price for the premium and fees. The leasehold government website is really useful.

marshwhitfield

Hi becominganobsessivesaver

So did you have to pay money to find out how much the freehold premium would be?

We pay £3.16 a year and we've 916 years left.

Thanks

becominganobsessivesaver

No I didn’t pay anything for that. I think (but am not definite) that if you send a legal statutory notice they have to respond with a price, although this is for them to set and for you to agree, negotiate or take to tribunal. It isn’t a speedy process, and to be honest if they are unable to increase the rent by much and you aren’t likely to extend further, you might be best just paying for permission...