Buying a freehold

webjaved

Hello,

I've seen the article on MSE about buying freehold, but it mentions only flats and purchasing the freehold on them could cost you a couple of thousands in pounds.

I've spoken to a few homeowners and most of them have said that they've paid around £250 to buy the leasehold so they end up owning the land the property is on. Is there a way to find out what the cost would be if you were to potentially purchase a property that is on leasehold?

How is the final price worked out?

Thanks in advance.

davidmcn

webjaved wrote: »

How is the final price worked out?

Mainly on the remaining duration of the lease and the rent payable - freehold of a lease where the rent is high and it doesn't have long to run is going to be worth much more than one with 900 years to go and a peppercorn rent. Think there are (rough) calculators available online.

webjaved

Do you have any links to these calculators?

I'll take a look later too.

Tom99

webjaved wrote: »

Do you have any links to these calculators?

I'll take a look later too.

https://www.freeholdcalculator.com/freehold.php

webjaved

I'm confused, maths has never been my strongest point! LOL!

You pay £54 in total for the remainder of the lease which I think will be around 936 years?

To make it easier, this is the property: https://www.medlockestates.co.uk/property-details/28742909/lancashire/oldham/denton-lane

So would I have to pay £54 in order to purchase the leasehold meaning I own the land the house sits on? https://gyazo.com/76f06033267315f8a59fb87abc92d53d

eddddy

webjaved wrote: »

I'm confused, maths has never been my strongest point! LOL!

You pay £54 in total for the remainder of the lease which I think will be around 936 years?

To make it easier, this is the property: https://www.medlockestates.co.uk/property-details/28742909/lancashire/oldham/denton-lane

So would I have to pay £54 in order to purchase the leasehold meaning I own the land the house sits on? https://gyazo.com/76f06033267315f8a59fb87abc92d53d

Yes - the freehold is worth practically nothing (i.e. £54) on a 936 year lease with a ground rent of £3.25 per year.


It's misleading to talk about "owning the land the house sits on".

In simple terms:

• The leaseholder will have the right to exclusive use of the house and land for the next 936 years. That's a valuable right, which is why it costs £150k.

• After 936 years, the freeholder will have the right to take the house and land back - and use it. But that right is pretty much worthless - who's interested in a house and land they can't use for 936 years?

But they'll also be a chuck of legal/professional fees you'll have to pay to buy the freehold.

Tom99

Have a read here re the statutory process for buying the freehold. You will need to own the property for 2yrs before you can apply using that procedure:
https://www.lease-advice.org/advice-guide/houses-qualification-valuation/
Many people would try the informal route with a lease like yours but there is no obligation on the freeholder to sell to you that way nor any way to 'fix' the price other than by agreement.
With both methods you are likely to have to pay the freeholders legal and surveying costs as well as your own and these will be far more that the say £54 premium you might pay.

oxfordowl1

Hi webjaved, I'm in a similar position to you, with just over 900 years left on a 999 years lease at £4 ground rent a year. The freeholder of my house offered me the freehold for about £900 (including their costs). I may be wrong, but in such a long lease I don't think there is a way of forcing the freeholder to sell to you for the £54 figure in your post.

webjaved

eddddy wrote: »

Yes - the freehold is worth practically nothing (i.e. £54) on a 936 year lease with a ground rent of £3.25 per year.


It's misleading to talk about "owning the land the house sits on".

In simple terms:

• The leaseholder will have the right to exclusive use of the house and land for the next 936 years. That's a valuable right, which is why it costs £150k.

• After 936 years, the freeholder will have the right to take the house and land back - and use it. But that right is pretty much worthless - who's interested in a house and land they can't use for 936 years?

But they'll also be a chuck of legal/professional fees you'll have to pay to buy the freehold.

That is why I think the property is not selling, there have been a few properties on that same road that have sold within 2-4 weeks of it coming on the market. Houses on that street are quickly snapped up, but this property has now been on the market for around 3 months. The estate agents have said that they've had loads of offers on the property that is close to the asking price, why hasn't this been sold then? Clearly, the estate agents are talking nonsense.

Tom99 wrote: »

Have a read here re the statutory process for buying the freehold. You will need to own the property for 2yrs before you can apply using that procedure:
https://www.lease-advice.org/advice-guide/houses-qualification-valuation/
Many people would try the informal route with a lease like yours but there is no obligation on the freeholder to sell to you that way nor any way to 'fix' the price other than my agreement.
With both methods you are likely to have to pay the freeholders legal and surveying costs as well as your own and these will be far more that the say £54 premium you might pay.

That is why it's putting me off from making an offer on the property, it's ready to move in and of adequate size. I showed it to my sister and her husband and they've told me to stay away from the property, I guess wiser heads advice should be taken note of. My mum wasn't too keen on the property, now I know why. Mums are right.

oxfordowl1 wrote: »

Hi webjaved, I'm in a similar position to you, with just over 900 years left on a 999 years lease at £4 ground rent a year. The freeholder of my house offered me the freehold for about £900 (including their costs). I may be wrong, but in such a long lease I don't think there is a way of forcing the freeholder to sell to you for the £54 figure in your post.

I've been reading about it online and generally it can cost you thousands in purchasing the freehold, I guess it all depends on the person/company that owns the land. A cousin of mine purchased a property round the corner from me and he had the leasehold transferred over to him meaning he owned the land the property was on all for £250.

Ah well, I'm going to keep an eye on the property and see how long it takes before they drop the asking price. I'm going to look around for properties that are freehold, I can't be doing with forking thousands in fees etc just to get the tenure on freehold.

davidmcn

webjaved wrote: »

That is why I think the property is not selling

Because buyers would insist on also buying the freehold? Why, if there are 900+ years left and the ground rent is three quid a year? There are other far more likely reasons for it not selling.

webjaved

davidmcn wrote: »

Because buyers would insist on also buying the freehold? Why, if there are 900+ years left and the ground rent is three quid a year? There are other far more likely reasons for it not selling.

I'd insist on buying the freehold. Let's see how much longer it takes for the property to sell, the estate agent did say that the sale of the property fell through when a buyer pulled out before signing contracts so the property is still up for sale. It's a lovely house, I think I'm going to pass on it.

Thank you to those that have taken the time in getting back to me, it's very much appreciated.