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Value of 781 year Leasehold

prop
Posts: 19 Forumite


Hi
My 91year Old Father has had a letter off Estate Mangment offering to sell him the Freehold and Headlease of his 3 bedroom Terrace House in Odham for £710.
He owns the House, pays £3.50 a year for Leasehold and the length of the lease is 781 years.
I have rang Estate Management on his behalf and they say that the offer is negotiable.
Can someone give me any guidence if this is a fair price and if not how I should work out what he should offer?
Any advice much appreciated.
Paul
My 91year Old Father has had a letter off Estate Mangment offering to sell him the Freehold and Headlease of his 3 bedroom Terrace House in Odham for £710.
He owns the House, pays £3.50 a year for Leasehold and the length of the lease is 781 years.
I have rang Estate Management on his behalf and they say that the offer is negotiable.
Can someone give me any guidence if this is a fair price and if not how I should work out what he should offer?
Any advice much appreciated.
Paul
0
Comments
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I am unsure if it's good value, but your father would have to live to be 294 before he saw the benefit of purchasing it.0
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I would do it, purely because, from the fact there is also a headlease, your father has an underlease. Therefore should, in the future, the freehold and headlease fall into separate ownership this may create complications.
Also, there are circumstances where, if the headlease comes to an end (day it is ended because of a breach of covenant etc) then subleases also come to an end.0 -
It doesn't make sense purely from the point of view of the rent, but if it simplifies the title (and makes the property more attractive to purchasers) then it might pay for itself. Also avoids future need to e.g. pay fees to freeholders on assignments etc.0
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As someone who has recently purchased a house, a freehold is definitely more attractive than a leasehold, even with that length of time. Owning the freehold may not make your fathers day to day home ownership any easier but if he ever wanted to sell would attract more potential buyers. For that price or lower I would be more than tempted.0
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For a three-figure price, I'd definitely be tempted, just to simplify everything. Sure, it doesn't make sense if you look simply at the cost versus the annual ground rent... But at some stage, it's going to be for sale. And "freehold" in the ad is definitely a tick for many buyers.
If the £700 is negotiable, then... negotiate!
What about legal costs on top?0 -
how much will his legal fees cost him on top of the lease?0
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Family member has a similar type of lease & has negotiated £200 to purchase the freehold plus legal costs, the legal costs the freeholder wants is £400. He's not taking them up on it as he thinks the legal costs are too high
Paul0 -
If he's got money "spare", then he might as well do it as it'll make things easier when he does sell it, or needs to sell it, or you need to ... more buyers are more likely to be more interested in a freehold house than anything that has the word lease anywhere near it.
Get the price as low as you can, then buy it.0 -
Other factors to consider with this is whether for example any fees are payable on lease transfer / mortgage under the lease? Often there are and they can be annoying on a sale.
In terms of the value, its nominal here because the rent is so low. From a capital perspective, they have valued the rent at a 0.5% yield - which is very low. (ie if you were only looking at the financials you'd be better putting £700 in a bank account, earning interest and paying the rent with the interest an d you'd make a profit) I think it would be more realistic, even noting the length of the lease for this to be around 2% which would put my offer at around £1750 -
I would buy it for peace of mind and as others have said it makes everything simpler and more attractive to buyers in the future.
As its negotiable, negotiate the price down as much as possible and if your father is reluctant, maybe you could 'buy/fund' it for him as a present.0
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