House we are buying as Free Hold turns out to be Leasehold

thyfartismurder

Hi all,
in January, began the purchase of our first house, In the advert and when asking the estate agent we where told it was Freehold, doing a land registry search of the address shows it as Freehold,  we agreed on a price and being getting our mortgage and solicitor. in February we got the sellers declaration back stating that they are paying £3 a year on a 999 year lease. We where concerned and spoke to our solicitor who said that it is probably a mistake from them but the property is definitely freehold and we had nothing to worry about.
fast forward a month, and I have just had a call from the solicitor stating that the house+gardens and garage is definitely Leasehold, and the free hold is just a separate patch of grass by the house. they said the house has been registered wrong with the land registry and it will take up to 2 months to fix this before we can continue.
we have not had any information on the terms of the lease or who the freeholder is.

can anyone tell us what our options are here?
originally we avoided leasehold properties like the plague, we wouldn't have viewed the property if it was advertised correctly!
the sellers where aware that they pay a ground rent so why was the house advertised as leasehold?
how as this devalued the property? we agreed on the price believing it was free hold, we feel duped/tricked/ scammed (we already stretched our budget on this property because we really liked it and the sellers and agents where very stubborn) 

we are waiting for our solicitors to find out more information about the lease terms, as this may affect our plans to extend, and rebuild the old concrete garage.

davidmcn

An ultra-long lease with a trivial ground rent isn't itself going to make much difference to anything. The covenants in the lease might - but then again you can have covenants in a freehold property which could restrict development etc. I would wait to find more information first.

quotememiserable

999 year leases at £3 really don't matter a jot. Almost certainly the freeholder will sell you the freehold for less than £1000.

SensibleSarah

I had pretty much this exact situation when I bought my house a decade ago. Vendors were selling the property on behalf of their mum's estate, had never lived in the house and knew nothing about it - so it was really far down the road before it came to light that it was leasehold and there was some land registry confusion too. I would never have offered on the house had I have known originally but I would have been well out of pocket if I had just walked away - so I decided to proceed. 
Turned out eventually that the freeholder is my local council. Peppercorn rent has never been asked for/collected. 950 ish years left on lease. They have unofficially said that they will sell me the freehold for £1k - which I may do before I sell up, hopefully this year, mainly because leasehold puts people off even if it makes very little practical difference in these circumstances. 

need_an_answer

You ask in your opening post ...how has this devalued the property?
Whats your view on it?
You are buying something that will never need to be handfed back in your lifetime and being asked to pay £3 a year ….
you have a choice...to continue with the purchase on those terms or to walk away losing the money you have already spent an fees etc....

Personally I would carry on but I'm not buying the house...£3 and a 999 lease seems a good situation ...ok its not freehold but neither is it £150 and a 70 year lease

thyfartismurder

For now we will be waiting for more information, and like SensibleSarah says, we would be open to a leasehold provided we had the option to buy the lease, but to me, the house is not worth the agreed price as a leasehold house, I already felt that we overpaid, this feels like abit of a low blow after that.... but unlike Sarahs situation, the sellers have only had the house for 4 years, and have been paying the ground rent, so they definitely new about it, it seems that they hid this fact to get a quick sale

AdrianC

thyfartismurder said:

...but to me, the house is not worth the agreed price as a leasehold house

That's as maybe, and is your prerogative.

But the fact remains that the market as a whole will view a 999yr £3/yr ground rent lease as functionally equivalent to freehold.

As has been said, the cost to buy the freehold will be trivial, and in two years (six quid...) time you'll have the right to buy it for next to nothing. Yes, the vendor probably misled the EA. Deliberately or not? Does it matter?

Your solicitor did their job and determined the true position prior to exchange.
Good solicitor. Pat on head for solicitor. Biscuit for solicitor.

So - what are your options?
Of course you can ask them to drop the price. And, of course, they may refuse.
If they do, of course you can choose to continue with the purchase or you can choose to walk away.
No, you cannot force them to reduce the price.

thyfartismurder

my personal opinion is that we should find out how much it would cost to buy the freehold, then request that the sellers cover this cost / or reduce the price accordingly. but i will speak to my solicitor about this. 


i suspect that the sellers /agents new about this issue as I have already have my doubts about them EG:
Recommending us to use the same solicitor as the sellers (how would this situation be handled if that was the case?????) 
and being very manipulating when negotiating the price,  

thyfartismurder

AdrianC said:

thyfartismurder said:

...but to me, the house is not worth the agreed price as a leasehold house

That's as maybe, and is your prerogative.

But the fact remains that the market as a whole will view a 999yr £3/yr ground rent lease as functionally equivalent to freehold.

As has been said, the cost to buy the freehold will be trivial, and in two years (six quid...) time you'll have the right to buy it for next to nothing. Yes, the vendor probably misled the EA. Deliberately or not? Does it matter?

Your solicitor did their job and determined the true position prior to exchange.
Good solicitor. Pat on head for solicitor. Biscuit for solicitor.

So - what are your options?
Of course you can ask them to drop the price. And, of course, they may refuse.
If they do, of course you can choose to continue with the purchase or you can choose to walk away.
No, you cannot force them to reduce the price.

I am aware I cannot force them to lower the price, my suggestion was to renegotiate or drop out,

and yes, im glad we chose this solicitor with how she has handled this so far

need_an_answer

I don't disagree that the sellers would have known about the ground rent or indeed the fact that its a leasehold property,but £3 a year is hardly a significant amount to pay and quite frankly they probably hardly noticed the payment leaving their bank account on an annual basis....lets be objective on this did you go round and re measure each room to see that it equates to what the agent perhaps put on the details...although most agents do in fact have a disclaimer saying that the information provided by them should nor be relied upon and is something that you should confirm as part of the conveyancing process....

Yes perhaps they should have told the agent selling for them that its a leasehold property but actually sometimes that's the nitty gritty bits that the solicitors deal with...and at least your solicitor has picked it up before exchange
If you feel you have overpaid then presumably that feeling came before you even knew about the leasehold situation...that's buyers remorse  rather than an excuse to shave a little more off the price for what really amounts to a peppercorn lease.


Even if you sell in 20 years time  your loss is £60 ….

davidmcn

There is no material difference in value between a 999 year/£3 leasehold and a freehold, it would be a bit daft to walk away just because you don't get something chipped off the price.