Has anyone purchased their new build Freehold?

jdc23

We live in a new build house and the property is currently Leasehold. The developer that built the house owns the Freehold. The lease has 997 years left and we pay a ground rent of £150 per year, and this increases every 10 years in-line with RPI.

Local estate agents have told us that if we owned the Freehold the house would gain better interest and should achieve a slightly better price when we come to sell. We have contacted the developer and have asked if we could purchase the Freehold from them. They have said they will sell for £3750 plus £200+VAT for their legal fees. They have also said that we can get a surveyor to value the lease and if the price differs then they will sell for the lower price. All this seems reasonable. We have contacted a couple of surveyors and they want £500-£600 for a valuation, so we have decided that it probably isn’t worth getting a valuation.

We are unsure however on what sort of price we should be looking at for our legal fees. We have contacted our local solicitor and they say that the purchase will need to be treated as effectively a new full house purchase and want £1600.

Has anyone else purchased their new build Freehold? Would be useful to know what sort of process was followed and what sort of fees were involved.

Many thanks.

cooltt

jdc23 wrote: »

We live in a new build house and the property is currently Leasehold. The developer that built the house owns the Freehold. The lease has 997 years left and we pay a ground rent of £150 per year, and this increases every 10 years in-line with RPI.

Local estate agents have told us that if we owned the Freehold the house would gain better interest and should achieve a slightly better price when we come to sell. We have contacted the developer and have asked if we could purchase the Freehold from them. They have said they will sell for £3750 plus £200+VAT for their legal fees. They have also said that we can get a surveyor to value the lease and if the price differs then they will sell for the lower price. All this seems reasonable. We have contacted a couple of surveyors and they want £500-£600 for a valuation, so we have decided that it probably isn’t worth getting a valuation.

We are unsure however on what sort of price we should be looking at for our legal fees. We have contacted our local solicitor and they say that the purchase will need to be treated as effectively a new full house purchase and want £1600.

Has anyone else purchased their new build Freehold? Would be useful to know what sort of process was followed and what sort of fees were involved.

Many thanks.

And now you know why you should never buy a leasehold property.


Bottom line is yes your going to be royally ripped off buying the leasehold but there is absolutely nothing you can do about it. However it will save you a lot of stress and money further down the line. Other developers refuse point blank to sell the leasehold, buy it and don't look back.

AnotherJoe

Buy it now before it gets sold to someone else and the price goes up tenfold.

Socajam

I agree bite the bullet and buy it now.
If not you will be back on these boards complaining that you wished you had.

zagubov

This is a perfect illustration of the principle that you can regret what you don't do more than you regret what you do.

In your shoes, I would buy this toot-sweet. No questions asked. I'd just do it ASAP.

If anyone came on here and suggested otherwise, I'd want them to have a checkup from the neck up.

rachel230

Yes it is definitely advisable to buy but you need to be aware and be careful. You need to instruct a solicitor who has experience with this type of transactions. When buying the freehold your solicitor must ensure that all covenants/permission fees in your lease are removed. If not you will be left with a "fleecehold" house (google).
Go onto the National Leasehold Campaign group for more information.

da_rule

rachel230 wrote: »

Yes it is definitely advisable to buy but you need to be aware and be careful. You need to instruct a solicitor who has experience with this type of transactions. When buying the freehold your solicitor must ensure that all covenants/permission fees in your lease are removed. If not you will be left with a "fleecehold" house (google).
Go onto the National Leasehold Campaign group for more information.

Not necessary, the simplest route is to simply determine (end) the lease by merging it back into the freehold. Therefore the lease simply comes to an end and you have a ‘traditional’ freehold property.

If you have a mortgage on the property you won’t be able to merge without your lenders consent. Alternatively, you can keep it as two separate titles until you sell it (and clear the mortgage) and the buyer can then merge the title (and secure their mortgage against the new, merged title).

I would definitely buy the freehold. You may, depending on how complex the title is, be happy doing the work yourself. As, if your house has its own freehold title (i.e. it does not have to be carved out of a larger title) and there are few, if any, covenants in it, it could be as simple as signing the deed. The standard point for this kind of transaction is that the buyer registers the transfer with the Land Registry, however this is only standard practice, so you could ask the seller to deal with registration (you’d have to pick the bill up but this may be cheaper than instructing or trying to deal with registration yourself).

rachel230

da_rule wrote: »

Not necessary, the simplest route is to simply determine (end) the lease by merging it back into the freehold. Therefore the lease simply comes to an end and you have a ‘traditional’ freehold property.

If you have a mortgage on the property you won’t be able to merge without your lenders consent. Alternatively, you can keep it as two separate titles until you sell it (and clear the mortgage) and the buyer can then merge the title (and secure their mortgage against the new, merged title).

I would definitely buy the freehold. You may, depending on how complex the title is, be happy doing the work yourself. As, if your house has its own freehold title (i.e. it does not have to be carved out of a larger title) and there are few, if any, covenants in it, it could be as simple as signing the deed. The standard point for this kind of transaction is that the buyer registers the transfer with the Land Registry, however this is only standard practice, so you could ask the seller to deal with registration (you’d have to pick the bill up but this may be cheaper than instructing or trying to deal with registration yourself).

Unfortunately this is incorrect. You could still be left with all the restricting covenants and permission fees unless a clued up solicitor negotiates with the freeholder to have them removed.

da_rule

rachel230 wrote: »

Unfortunately this is incorrect. You could still be left with all the restricting covenants and permission fees unless a clued up solicitor negotiates with the freeholder to have them removed.

No, because you will be the freeholder. Therefore, even if for some reason you opted to not determine the lease and any covenants etc did persist which resulted in you having to give notice or make a payment to the freeholder you’d be giving it to yourself.

I would suggest that you read up on determination by merger: https://www.gov.uk/government/publications/leases-determination/practice-guide-26-leases-determination#determination-on-merger

What people get confused about is the service charge element that comes with most new build estates (i.e.the costs of maintaining the open spaces, unadopted roads etc). This is generally secured by a covenant on the property (both freehold and leasehold titles are usually bound). It is relatively straightforward, and should be covered as part of the conveyancing, to ensure that an appropriately worded deed of covenant is executed to bind the new freehold title (if it isn’t bound already).