Leasehold with Peppercorn rent,advice needed

Smithy22

Hi, 

We have just started house hunting and are getting to grips with the leasehold/freehold business so looking for some advice. 

We have done some research on the ‘leasehold scandal’ relating to new build houses with doubling ground rents and the like so have decided to steer clear of these as it seems more trouble than it’s worth. 

My question is more relating to older houses (I think ex council) where they are leasehold with a peppercorn rent. Do these present less problems in terms of buying the freehold? Also every time I see one of these the current homeowner seems to know precious little about the freehold or who owns it etc. If they are ex council houses is it likely the council own the freehold? Do I have to apply to the land registry and pay the fee each time to find out? Are
councils usually open to selling the freehold to you? 

I suppose I just don’t understand why older houses are leasehold if there is no ground rent to pay. I understand that the new build leasehold were a money making exercise for profit which I suppose makes more sense to me. I just don’t get what the council/someone gets out of owning a freehold of they don’t collect any rent on it or make any money? 

Thanks in advance 

AdrianC

Councils didn't build a house here, a house there. They developed streets and suburbs of housing - and they retained the freehold because... well, why not? They were also retaining the lease, after all.
It's only with RtB that the lease and freehold have been separated. And the RtBers were just happy to be buying their home... Many of them have probably not even considered whether the property is lease or freehold, and would be hard pressed to explain the difference.

"Doubling" ground rent is not, itself, a problem. It's the frequency where it might start to become one - 25yr doubling is historically below inflation. 10yr doubling makes a property pretty much unmortgageable these days, so is not going to be a problem for a buyer now.

Unless unusually restrictive, I certainly wouldn't let the tenure dictate which property I was buying - I'd go with which property I wanted to live in...
Yes, I probably would then go on to try to buy the freehold. But I'm not sure I'd lose sleep if I couldn't, if it was peppercorn to start with. And, of course, there's statutory extensions.

gwynlas

Some areas of the country have housing that was built for employees such as the National Coal Board etc and these might be leasehold. A long lease with a peppercorn rent is not in itself a disadvantage, it can mean lieterally a peppercorn or a couple of pound a year that the freeholder only bothers to collect every 5 years or so and they are often more than happy to sell freehold at a reasonable cost.

Slithery

gwynlas said:

A long lease with a peppercorn rent is not in itself a disadvantage, it can mean lieterally a peppercorn or a couple of pound a year

No, it means an actual peppercorn. If it's any amount of money, no matter how small, then it isn't called a peppercorn rent.

HCIMbtw

I live in a house built in 1905.. has a leasehold that costs £2 per year.. has never inflated and wont while we live here, no real issues with it at all.. another 885 years on the lease 
not all leases are equal

NameUnavailable

Slithery said:

gwynlas said:

A long lease with a peppercorn rent is not in itself a disadvantage, it can mean lieterally a peppercorn or a couple of pound a year

No, it means an actual peppercorn. If it's any amount of money, no matter how small, then it isn't called a peppercorn rent.

Apparently if the freeholder doesn't like pepper it can be something else, like a flower or piece of fruit.

Of course that's quaint tradition as most don't bother collecting their peppercorns at all.

NQManchester

One thing to be wary of is that companies buy up these leases and I always wondered why bother when it’s a few pounds a year for them but if you want to extend you need permission and they can charge hundreds of pounds to deal with it. 

I’m buying a freehold house with a £7 a year rent charge so don’t have the issue with extending etc but they still charge daft fees like £70 to transfer the names on it.

frayedknot

When my mum bought her council house it was freehold, although the council did add some covenants about the size of sheds.