Purchasing Leasehold on my home.

illuminate

The owners of my leasehold have offered me the opportunity to purchase it from them for £800.
This will include solicitor's fees and is available over 10 interest fee payments.

• Existing ground rent £2.50 p.a.
• Property value approx £200K
• Length of existing lease appears to be 900 years as far as I can gather from the previous owners docs. (mine are held by my mortgage provider)
• I have no dependants 
• Property is Grade 2 listed (no idea if that might have any relevance)

The existing owner of the leasehold doesn't interfere in any insurance or building matters.
As I see it, the only possible benefit might be in protecting it from purchase by another party who might attempt to exploit ownership.
I would appreciate any comments or advice.
Thanks in advance.

eddddy

I'm pretty sure you mean that you own the leasehold, and the freeholder has offered to sell you the freehold.

It probably doesn't make sense looking at just the ground rent - you'd be paying out £800 in order to save £2.50 a year.

But it might free you from other 'undesirable' terms in the lease. For example, your lease might say you need to get the freeholder's consent to do any alterations - and the freeholder might charge £200 to £300 a time, to give you consent.

So that would save you cost, hassle and delay, if/when you do any alterations.

Jeepers_Creepers

Hi illuminate.

Can I ask what type of property it is, and whether there are any other adjoining properties also on lease to the same freeholder?

Anyhoo, my gut says to go for it if you can afford it. It might not make much practical difference, but it also could. Being a Grade 2 listed property, repairs and maintenance are likely to cost more and be more restrictive than that of a non-listed property, and you'd be at the 'mercy' of the freeholder when it comes to this; I think this would be the sort of thing you'd ideally want full control over. This might not be a problem if the freeholder is sympathetic, and you might actually quite like the thought of them taking responsibility for sorting out repairs anyway?! But, my experience of folk with leases is that they often suspect that the freeholder doesn't always honestly try and obtain three quotes for repair work, but instead contrives so that their associates/friends get the work. Obviously this might not be the case here, but as you, yourself, suggests, there's always the chance the freehold is sold on to a less sympathetic person - it seems the current freeholder doesn't want to hold on to it, so will likely sell it on to someone else if you don't buy it.

£800 is cheap for normal freehold purchasing, but that's because it isn't being done to actually extend the lease in this case - this is already nicely long. 

When you come to sell, a freehold property is always more attractive than leasehold. I'm pretty sure I would go for this - unless someone comes up with a good reason to not do so?

zagubov

You've got four good reasons to do it.
The ground rent (okay that's a trivial sum)
The fact that you don't need consent for alterations.
The fact they might sell it to somebody less scrupulous.
The fact that when you come to sell you won't have the word "leasehold" sitting there like a mention of "japanese knotweed" or "floodplain".
Only issue is if it's a flat rather than a house, you're buying a share of the building's freehold - but still a good move.

greatcrested

You mean freehold?

blue_max_3

Is your home the only leasehold under the freehold? I'm wondering why it actually is leasehold if so.

eddddy

blue_max_3 said:

Is your home the only leasehold under the freehold? I'm wondering why it actually is leasehold if so.

There will typically be a large piece of freehold land, with multiple leasehold houses built on it.

If they're 'old fashioned' 999 year leases with low ground rents, the reason that's often mentioned is essentially the 'ego' of landowners.

The landowners liked the 'prestige' of owning the title to large swathes of land, but they wanted to convert the land into cash. So they kept the freehold title for the prestige, and sold chunks of it on 999 year leases to get some cash.

illuminate

eddddy said:

blue_max_3 said:

Is your home the only leasehold under the freehold? I'm wondering why it actually is leasehold if so.

There will typically be a large piece of freehold land, with multiple leasehold houses built on it.

If they're 'old fashioned' 999 year leases with low ground rents, the reason that's often mentioned is essentially the 'ego' of landowners.

The landowners liked the 'prestige' of owning the title to large swathes of land, but they wanted to convert the land into cash. So they kept the freehold title for the prestige, and sold chunks of it on 999 year leases to get some cash.

You've nailed it really.
My property is 1 house as part of 2 semi-detached blocks, which along with a small terrace of cottages were built in and around 1820.
So the freehold on all these was/is owned by 1 individual.
I've no idea if they have sold the freehold to the other leaseholders, but the wording of the letter certainly suggests that they have made an offer.
WFH and being unable to spend my disposable income for 3 months has left me with a bit of spare cash and my gut says just do it to tidy things up.

greatcrested

illuminate said:

• Length of existing lease appears to be 900 years as far as I can gather from the previous owners docs. (mine are held by my mortgage provider

Unlikely.

Whether you decide to buy this freehold or not, I'd suggest you confirm what you own! ie how long IS your lease, and what are its terms? For example, the lease might prohibit keeping a caravan on the land. Or pigs. Or it might require you to get the freeholder's permission before building an extension. As an owner, I'd want to know....

You would almost certainly have been sent a copy of the lease when you bought the property (showing the lease start date and length, as well as its terms) and presumably you kept all the conveyancing documentation?

If you don't have it, for £3 you can download the leasehold Title from the Land Registry, and for another £6 you can apply for a paper copy of the lease itself.

illuminate

greatcrested said:

illuminate said:

• Length of existing lease appears to be 900 years as far as I can gather from the previous owners docs. (mine are held by my mortgage provider

Unlikely.

Whether you decide to buy this freehold or not, I'd suggest you confirm what you own! ie how long IS your lease, and what are its terms? For example, the lease might prohibit keeping a caravan on the land. Or pigs. Or it might require you to get the freeholder's permission before building an extension. As an owner, I'd want to know....

You would almost certainly have been sent a copy of the lease when you bought the property (showing the lease start date and length, as well as its terms) and presumably you kept all the conveyancing documentation?

If you don't have it, for £3 you can download the leasehold Title from the Land Registry, and for another £6 you can apply for a paper copy of the lease itself.

OK ........ downloaded both the Leasehold title and map.
A few interesting things :

1. The plot on which the 9 properties are built changed ownership a couple of years ago. Price paid £1.
2. The address for mine is incorrect on the register. Called it "Road" as oppose to "Lane".
3. The adjoining house was removed from the plot around about the same time. That suggests they have taken the opportunity to purchase their freehold.
4. On the "Schedule of Notices of Leases" the reference to mine actually refers to the family who I purchased the property off as the date is August 1966 which coincides with the date on their mortgage docs which I have. Seems odd. This confirms that the leasehold at that point was 900 years from 1919 and coincides with when ownership of these two cottages was divided in two.

Think I have decided to get it sorted while I can.

princeofpounds

For £800 including legal costs, that's a great price. Yes, it's not worth much, but you'll often find the legal costs alone are that high. So you aren't really paying much at all for the freehold itself.

Whilst there probably isn't huge direct advantage in owning the freehold (I suspect your lease includes all responsibilities for the building, unlike, say, a flat where the freeholder takes an active part), it does make it administratively neater and more appealing if you ever choose to sell.