Buying the freehold help please

SameOldRoundabout

My 95 year old nan wants to buy the freehold on her bungalow. The company who own it say she must pay £650 for their surveyor to come out and value the property and decide how much they’ll charge her for the freehold. Is that something she has to do?! 

AdrianC

Why on earth does your 95yo grandmother want to buy the freehold?

She's got far better things to spend her remaining days worrying about.

SameOldRoundabout

Mainly because there is only 49 years left on the lease, so she is worrying about her children being able to sell it on after her passing. It’s just a question of whether she has to shell out so much money for the freeholders chosen surveyor to assess it, or whether she’s at liberty to choose her own cheaper one (after all, entire building surveys cost less than that here!)

eddddy

SameOldRoundabout said:

My 95 year old nan wants to buy the freehold on her bungalow. The company who own it say she must pay £650 for their surveyor to come out and value the property and decide how much they’ll charge her for the freehold. Is that something she has to do?! 

There are 2 routes to extending a lease:

1. The Statutory route
2. The Informal route 

It sounds like your non and the freeholder are going down the informal route. It's not unusual for the freeholder to ask your nan to pay the valuation fee - but the informal route offers no legal protection for your nan. 

Essentially, it depends how much you trust the freeholder. If they are "decent and honest" paying the £650 makes sense. But if the freeholder isn't "decent and honest", it could be a complete waste of £650.


Here's some info more info: https://www.clarkemairs.com/res-leasehold/enfranchisement-of-houses/

poshpalace

In my part of the world (Cambridgeshire) a RICS surveyor will charge £500 to undertake a site visit and then draft a report on the premium payable to buy the freehold. The freehold company will of course add their own admin charge for dealing with this request.

AdrianC

SameOldRoundabout said:

Mainly because there is only 49 years left on the lease, so she is worrying about her children being able to sell it on after her passing.

Tell her not to worry. Tell her that you'll sort that as and when. Who is executor of her will?

SameOldRoundabout

I’m not sure who the executor is, but all 3 of her children own what used to be my grandfathers half of the house. None of them are sure how leases work or what the process is. My mum asked me to ask on here as we weren’t sure whether the leaseholder (who are a large company who owned the freehold for the whole estate since building in the 50’s, and have never been unfair or a problem to date) was allowed to ask such a high sum for having it valued. If they are that is fine, they are going to ask their solicitor advice too before committing to anything as a lease extension is another option that may be cheaper in the long run. 

 As she ages my nan is sadly becoming more and more worried about....well, everything really, as is I suppose natural, but at least this one issue we can look into helping with. Unlike the possible ant infestation that requires constant poison on the floor in the conservatory, and which is also entirely in her head! 

D_M_E

What has extending the lease got to do with buying the freehold?

SameOldRoundabout

To find out which option would be more cost effective? As I said, none of us know anything about leases, but presumably if buying the freehold is going to cost £x amount and not add a great deal of value to the house then it’s worth finding out how much a lease extension would cost instead! It clearly will be an issue at some point in the future as it is unmortgageable with less than 50 years left on the freehold isn’t it? Limiting to only cash buyers. I and everyone else in the family own freehold houses so it’s all new to us. 

AdrianC

SameOldRoundabout said:

I’m not sure who the executor is

Find out. Does she even have a will?

but all 3 of her children own what used to be my grandfathers half of the house.

So the house is currently owned 50% Grandma, 16.7% each of A/B/C?

None of them are sure how leases work or what the process is. My mum asked me to ask on here as we weren’t sure whether the leaseholder (who are a large company who owned the freehold for the whole estate since building in the 50’s, and have never been unfair or a problem to date) was allowed to ask such a high sum for having it valued. If they are that is fine, they are going to ask their solicitor advice too before committing to anything as a lease extension is another option that may be cheaper in the long run.

OK... Basically a lease is a very long rental tenancy for the land. That's it. When it expires, the leaseholder owns nothing at all. This one is getting towards expiry - 50yrs doesn't sound short, but mortgage lenders don't like <80yrs as a rule of thumb.

You are wanting to extend it. There are two ways to do so:
1. The legal route. This adds 90yrs and takes ground rent to basically £0. The calculation of the price is a set formula. For a £150k house with peppercorn ground rent, you're looking at about £30k. The owners need to have owned it for at least two years - which certainly sounds like the case here.
https://www.lease-advice.org/calculator/
2. The mutual agreement route. This is what you're doing now. You and the freeholder come to an agreement about what's fair. They can ask your gran to wear a rainbow tutu and unicycle down the highstreet while whistling the national anthem, if they wish. They can ask for a million quid, if they wish. They can put the ground rent up to a 22 carat gold hundred-metre statute of Donald Trump payable every Thursday, if they wish. You can always refuse and go down route 1 instead. As she ages my nan is sadly becoming more and more worried about....well, everything really, as is I suppose natural, but at least this one issue we can look into helping with. Help her by distracting her from this non-issue...

eddddy

SameOldRoundabout said:

My mum asked me to ask on here as we weren’t sure whether the leaseholder (who are a large company who owned the freehold for the whole estate since building in the 50’s, and have never been unfair or a problem to date) was allowed to ask such a high sum for having it valued. If they are that is fine...

Just to clarify, your nan is the leaseholder.

It's the freeholder (or their managing agent) who is asking for £650.

They are 'allowed' to ask for any amount they like for a valuation. It may be that the £650 is the fee they will pay a RICS valuer to do the valuation.

Or it may be that the freeholder is charging £650 for doing almost nothing. As a starting point, you should ask exactly what the £650 is paying for.

It might be worth you or you nan talking to a few leasehold enfranchisement specialists to get some advice. There are a lot of potential traps to fall into.