Is it a good idea to buy a leasehold house with an absent landlord?

verityelbro

We are first-time buyers looking to purchase a three-bed mid terrace property. We viewed almost 20 houses before finding one we both liked, so it was a long process already.
Just prior to contract signing, our solicitor sent us an email stating that the house was not freehold, as we had been told by estate agent and our survey, but instead leasehold. Not only that, but the landlord is absent, and has been for 30 years; the lease is 850 years and ground rent is £20 with no review for increase.
Is this a good idea to buy the house?!
We're so confused with conflicting ideas from friends and family, who say get out, but our solicitor and our friend (who is also a property solicitor) state it should be ok. Mortgage has been approved, so that's no issue.
We just want some more advice from anyone who has dealt with a situation like this before, or has been through it.
Will be have problems selling the property on?

SmashedAvacado

My main problem with this is wanting to be clear on who is insuring the building? If the building is destroyed by fire - who will rebuild it? is it even insured?

Ask the solicitor / friend to explain what would happen if there was a fire

You can "enlarge" leases with that kind of length - so perhaps that is something you can also ask your solicitor about.

HouseBuyer77

You have an insurable interest in the building so you can insure it.

I can't see any real down sides to this arrangement, you'll need to coordinate with neighbours for maintenance issues that effect the row but that's no different from a freehold terrace house.

I guess if it burnt down are you able to rebuild would be a question. Ultimately there's no freeholder around to complain you've put a new building there and as above I believe you'll can get insurance so you'd receive a payout for the rebuild cost.

G_M

You'd need to read the lease to see what potential issues there may be, but I'd guess few.

as a house rather than a flat in part of a building, insurance is not likely to be an issue. Just insure it.

The lease is long, so not an issue.

The ground rent is fixed, and arrears can only be claimed backdated 7 years, so max is 7 x £20 = £140. Not an issue.

The lease might prohibit building an extension or something, or might require the freeholder's consent. But with an absent freeholder I'd just do it.

Ask your solicitor about indemnity insurance.

Maybe pop in and talk it through with your solicitor, and read the lease, but overall I'd not be put off at this stage.

D_M_E

If the lease has got over 800 years left on it then once the absent freeholder issue is resolved, look at buying the freehold - should only cost around £400 or so plus legal fees, you will probably get change out of £2000 all in for the work and the cost of the freehold.

That's if you decide to proceed.

eddddy

As you were told the property was freehold before you offered, in your position I might now estimate the cost of buying the freehold (including legal costs), and reduce my offer by that amount.


Even with an absent landlord/freeholder, you can still buy the freehold - and the court will hold on to the purchase money until the rightful person turns up to claim it.

You will either need to own the leasehold for 2 years before you can buy the freehold - or the current leaseholder can start the process of buying the freehold for you straightaway.

ThePants999

eddddy wrote: »

You will either need to own the leasehold for 2 years before you can buy the freehold - or the current leaseholder can start the process of buying the freehold for you straightaway.

Just in case this confuses anyone: this is specific to the statutory process for buying the freehold. Anyone can buy any freehold at any time if the current freeholder agrees to sell it to them