Doubling Ground Rent every 25 years

araki

Tom99 wrote: »

[FONT=Verdana, sans-serif]Your solicitor is talking out of their backside, there is no way buying out £475pa doubling every 25yrs is going to only cost £5,000.[/FONT]

I agree. I tried to challenge her with this question. I admittedly used the solicitors recommended by the seller. I tried to find someone else, but nobody I know has been able to recommend a solicitor expert in Help to Buy and New Buildings (tight timeframe to exchange) And, the agents pressured me right after the reservation. I thought that at least she would have been quick. (We do have 21 days to exchange)

Tom99 wrote: »

[FONT=Verdana, sans-serif]You need to find out who you are buying from, is this through an estate agent or are you negotiating direct with the developer?[/FONT]

I followed this development for a while, it was a period building that has been demolished. I guess the developers bought the freehold in 2017 when they started working on it. Now looking at the name on the contract, I am sure I am buying directly from the developers but I am not able to know exactly when they have bought the freehold. I am not sure the agent would answer this question. Maybe I could try to ask my solicitor. There is an estate agency involved, they publicised the development and took care of the reservation. Now my solicitor is negotiating with the developer's solicitors. [/QUOTE]

Tom99 wrote: »

[FONT=Verdana, sans-serif]Was the lease from Jan 2017 granted to the seller who is selling the lease to you? Ie will you be the 2nd owner of the property?[/FONT]

I don't know, they have surely demolished the building that was there before to construct the new development. I have to find out in some way.

araki

ThePants999 wrote: »

Bloody negligent of the solicitor to make up a number that's so clearly wrong. If they're that clueless about the costs of lease extension, they should just refuse to guess. But it's not exactly hard to see that an asset that pays £475pa is worth more than £5,000.

I agree with you, I do feel she is not probably doing my interests.

Tom99

araki wrote: »

I followed this development for a while, it was a period building that has been demolished. I guess the developers bought the freehold in 2017 when they started working on it. Now looking at the name on the contract, I am sure I am buying directly from the developers but I am not able to know exactly when they have bought the freehold. I am not sure the agent would answer this question. Maybe I could try to ask my solicitor. There is an estate agency involved, they publicised the development and took care of the reservation. Now my solicitor is negotiating with the developer's solicitors.

Do a Land Reg property search here:

https://eservices.landregistry.gov.uk/eservices/FindAProperty/view/QuickEnquiryInit.do

Search using just the postcode if you have one then by a full property address here:

https://eservices.landregistry.gov.uk/eservices/FindAProperty/view/DetailedEnquiryInit.do;jsessionid=Cm5UhZ4YOCRa_EwMSQxW0UGiXNbvsZOshjMFJoez.f955f32b:frontend-web-0

Between the two you should come up with the freehold title to the block and, if the lease you are buying already exists, then a leasehold title for that as well.
Download both titles for £3 each. That will tell you the registered legal owner of the freehold, when they bought it and for how much.
If the leasehold title is registered then that will give you the same information about the flat and some detail about the lease.

araki

Tom99 wrote: »

Do a Land Reg property search here:


Search using just the postcode if you have one then by a full property address here:

Between the two you should come up with the freehold title to the block and, if the lease you are buying already exists, then a leasehold title for that as well.
Download both titles for £3 each. That will tell you the registered legal owner of the freehold, when they bought it and for how much.
If the leasehold title is registered then that will give you the same information about the flat and some detail about the lease.

Hi Tom, thank you so much.
Only one title is available. As you say, I could only find the title through the search of the house number but not the search of the number of the flat, which means that there is not leashold yet.
The title shows that the freehold was bought in 2016 and the registered owner coincides with the seller.

Thank you for this!

Tom99

araki wrote: »

Hi Tom, thank you so much.
Only one title is available. As you say, I could only find the title through the search of the house number but not the search of the number of the flat, which means that there is not leasehold yet.
The title shows that the freehold was bought in 2016 and the registered owner coincides with the seller.
Thank you for this!

OK so at least you know the situation now. This 125yr lease with a ground rent of £475pa may have been drafted but has not yet been granted so you can try and negotiate different terms. But as I said above it's likely the developer will want to keep all the leases as identical as possible.

In theory there is nothing stopping the developer selling you a 125ys lease at a peppercorn rent, the only reason to try and insert a rent of £475pa doubling every 25yrs is for the developer to retain some of the full open market value for themselves. They can then sell that interest on if they want to or retain it and receive the ground rent and any lease extension premium the tenant chooses to pay in the future.

[Deleted User]

Join the National Leasehold Campaign on Facebook and get some really good advice from people who have been in your situation and gone ahead with purchases.


Its an eye opener

araki

Tom99 wrote: »

OK so at least you know the situation now. This 125yr lease with a ground rent of £475pa may have been drafted but has not yet been granted so you can try and negotiate different terms. But as I said above it's likely the developer will want to keep all the leases as identical as possible.

In theory there is nothing stopping the developer selling you a 125ys lease at a peppercorn rent, the only reason to try and insert a rent of £475pa doubling every 25yrs is for the developer to retain some of the full open market value for themselves. They can then sell that interest on if they want to or retain it and receive the ground rent and any lease extension premium the tenant chooses to pay in the future.

Yes, I highly doubt they will accept anything, because the general feeling is that they want to squeeze as much money as possible from us. I suspect the estate agents will also be in charge of the management fees, I asked this and the agent told me: "we still don't know, but possibly, yes" and if this is the beginning, it will be a constant fight with them.

Am I walking into a trap? Also, if I'll have to experience difficulties in selling the flat because of the clause, I don't know if all this effort is worth it.

Anyway, thank you very much for your help!

araki

BBH123 wrote: »

Join the National Leasehold Campaign on Facebook and get some really good advice from people who have been in your situation and gone ahead with purchases.


Its an eye opener

Thank you so much! I am waiting to be approved in the group!

[Deleted User]

Post what you have written here and you'll get some insight from others in the same position.

Tom99

araki wrote: »

Yes, I highly doubt they will accept anything, because the general feeling is that they want to squeeze as much money as possible from us. I suspect the estate agents will also be in charge of the management fees, I asked this and the agent told me: "we still don't know, but possibly, yes" and if this is the beginning, it will be a constant fight with them.

Am I walking into a trap? Also, if I'll have to experience difficulties in selling the flat because of the clause, I don't know if all this effort is worth it.

Anyway, thank you very much for your help!

[FONT=Verdana, sans-serif]If you buy the 125yr lease with rent of £475pa doubling every 25yrs then in 2yrs time you will be able to extend the lease by another 90yrs and reduce the rent to a peppercorn.[/FONT]
[FONT=Verdana, sans-serif]You will have a statutory right to do that, so there is no risk of you being stuck with the current lease in the long term.[/FONT]
[FONT=Verdana, sans-serif]The price you will pay will be a fair one, possible in the range £13,000 to £15,000 plus both sides costs.[/FONT]
[FONT=Verdana, sans-serif]There is presently a Law Commission consultation paper being discussed called 'Leasehold home ownership: buying your freehold or extending your lease'[/FONT]
[FONT=Verdana, sans-serif]The consultation paper sets out a number of options for leasehold reform which will make it simpler and in some cases cheaper to the extend the lease and buy out the ground rent.[/FONT]
[FONT=Verdana, sans-serif]So you already have a guaranteed way forward in 2yrs time, but that may further improve or be cheaper, if revised legislation is then in place.[/FONT]
[FONT=Verdana, sans-serif]Providing I had factored in the total cost of the buy out, let say £17,000 - £20,000 including fees I would not let the lease put me off.[/FONT]