Leasehold where the Freeholder is "absent"

Davewils82

I'm at the final stages of buying my 'dream' home, but at the 11th hour my solicitor has told me that : 

"On perusing the paperwork I have noted that the property that you are purchasing is a leasehold house.  I am not sure as to whether you were aware of that.  Usually houses are freehold and flats are leasehold but there are hundreds of properties in Bristol which are leasehold houses and this is one of them. 
In practical terms the fact that the property is a leasehold house does not actually make much difference to you.  The only terms of the Lease are that you must pay the rent on a yearly basis but that is only £3.15 a year (set up in 1895) and cannot be increased.  The Lease also states that you must keep the property in good repair and condition and keep the property fully insured but you have to comply with all of those terms and conditions under your mortgage anyway...A lot of freehold houses in Bristol also have those same terms registered on them.
...the property is only registered with a Good Leasehold Title, which means that no one has any information in respect of the freeholders."

Based on this information i went back to the solicitors and asked if, being a leasehold property, we would be able to do any building works, extensions etc, and I recevied this reply:

"Because your property is a house rather than a flat then the Lease is a very short document with only a few terms and conditions in it.  ...the Lease dates back to 1877 and states that you are not to make any alteration or addition to the property without the prior consent of the freeholders.  However as previously confirmed the freeholders are absent so in practical terms you obviously will be unable to obtain such consent.  You cannot get consent from somebody who is not actually identifiable. 
Subsequently, and in practical terms, I would suggest that throughout your period of ownership you continue as if the house is a freehold house, i.e. you do any works that you want to do, but please just be aware that when you sell the property you will need to explain that the landlord is absent and that is why consent was not obtained and you are likely to have to provide an indemnity insurance policy in respect of the breach of the Lease, which will cost about £200-£300."

Has anyone else been in a similar situation? Loads of the houses on this street have had work done to them, and I cant beleive that a single terraced house on a row of like 100 would be the only one to have a leashold on it, would it?

AdrianC

As your solicitor says...
"Subsequently, and in practical terms, I would suggest that throughout your period of ownership you continue as if the house is a freehold house"

In reality, the chances are that the freeholder doesn't even know that they're the freeholder.

If it was a person, rather than a company, 150 years ago - they're dead. Several generations of their descendants are dead. The paperwork may well have been lost in the war or a fire or simply through bad filing. It would be just about impossible to trace the current freeholder.
Likewise, if it was a company, they've almost certainly merged multiple times over the years - or closed. Who took over their assets? Did they sell their freehold(s) at some stage?

So what's the downside? Somebody might come along and say "I'm the freeholder, you shouldn't have done that. Slappy wrist. And can I have £19, please, for the ground rent owed for the last six years?" - how do they prove they're the freeholder?

Or, yes, you could spend a couple of hundred quid on an insurance policy that might perhaps pay something out if hell freezes over. The solicitor would like that option, because it covers his backside whilst generating him a little bit of commission.

Davewils82

Thanks for replying.  I'm not sure how much it costs but i'll certainly be investigating buying out the Freehold. It will just make the place more sellable later on. 

davidmcn

Davewils82 said:

I'm not sure how much it costs but i'll certainly be investigating buying out the Freehold. It will just make the place more sellable later on. 

You can only buy it if you find the freeholder. Otherwise I expect there'll eventually be some sort of statutory conversion of these sorts of leaseholds to freehold.

eddddy

davidmcn said:

Davewils82 said:

I'm not sure how much it costs but i'll certainly be investigating buying out the Freehold. It will just make the place more sellable later on. 

You can only buy it if you find the freeholder. Otherwise I expect there'll eventually be some sort of statutory conversion of these sorts of leaseholds to freehold.

The Leasehold Reform Act 1967 gives leaseholders the statutory right to buy their freehold - and it should apply even if the freeholder cannot be found.

But if the freeholder can't be found, it's a lot more complex and expensive. For example, you have to demonstrate to the court that you have made efforts to find the freeholder.  Some people say that the process is so difficult, that it's not worth doing - especially in this case, as the benefit is limited.

But if you do proceed, you pay the price for the freehold to the court, and they 'look after the money', in case the freeholder turns up.

This is on the list of things to simplify, when the next set of leasehold reforms eventually get done.

Some info: https://www.lease-advice.org/faq/i-own-a-leasehold-house-my-freeholder-has-gone-missing-what-do-i-do-if-i-wish-to-acquire-the-freehold/

dimbo61

I think you have a Rentcharge of £3.15 a year and rentcharges run out in 2037 !
We received a letter last year asking for 6 years back payments and the current year so about £20 all together but also offering us the opportunity to buy the Rentcharge for £85 which covered all payments till 2037.
This company has bought the rentcharge from a relative of the original leaseholder at auction. I believe.

ratechaser

dimbo61 said:

I think you have a Rentcharge of £3.15 a year and rentcharges run out in 2037 !
We received a letter last year asking for 6 years back payments and the current year so about £20 all together but also offering us the opportunity to buy the Rentcharge for £85 which covered all payments till 2037.
This company has bought the rentcharge from a relative of the original leaseholder at auction. I believe.

I'd agree that on the face of it, the non-escalating £3.15 amount (presumably 3 Guineas in the old money?) sounds a bit like a rentcharge. 

But if the solicitor has confirmed that the property is leasehold, then this would be ground rent and not a rentcharge - which would normally only be charged against a freehold property (well, unless of course it had not been paid and the rentcharge owner had previously gained a lease on the property... but it's an unlikely scenario)

Davewils82

OK. I've had through the original text of the lease. It is between a "Gentleman" of Bristol city, George John Hobbs (the lessor) and a "builder" with a stated address, Charles John Adams (the lessee).

The lease applies to my potential house and the neighbouring property only. 

It refers to rent: 

...Yeilding and paying during the said term the yearly rent (clear of all deductions) of Three pounds and three shillings in respect of each of the said plots of land...by equal half-yearly payments

So I assume the decendants of Mr Hobbs, if there are any, have no idea they hold the freehold on these properties.

rainbow_fountains

The ground rent might be cheap but check the leasehold doesn’t come with monthly service charges for communal areas like greenery, roads etc which can be quite expensive (more common in new build developments).

OP please be aware of the difference between leasehold and freehold. When you have a freehold property you own your house and the land beneath it, when it’s leasehold you don’t own it, you just rent it (for the length of the lease) and the freeholder can take the property back from you if you fail to pay rent or your lease expires (note: take it off you, not buy it off you). Buy the freehold as soon as possible if you can.

davidmcn

rainbow_fountains said:

The ground rent might be cheap but check the leasehold doesn’t come with monthly service charges for communal areas like greenery, roads etc which can be quite expensive (more common in new build developments).

It's a lease from 1895. Besides, if there were anybody carrying out such services then the freeholder wouldn't be absent, they'd be making themselves known and merrily collecting the money.

rainbow_fountains

Probably all good then, unless a new company has bought the freehold/ground rent which does sometimes happen