Third party companies want to buy my leasehold - why? Should I buy it, first?

MSR01

AdrianC said:

A grand... plus, I presume, legal costs? On both sides...?

Are all the freeholds under a single title currently, or are they already split?
Is it/are they registered with Land Registry?

I think all the houses (about 40) are under the same title. We're registered. Don't know about anyone else.

eddddy

 You've made a lot of incorrect assumptions in your post...

MSR01 said:

My layman's interpretation of this is that it is my job to pay the rent, whether or not there is someone to pay the rent to. And even if I find it impossible to pay the rent (because the freeholder has vanished, and/or the solicitor refuses to take my money, which they did) then it is still my fault that I couldn't pay the rent. In other words, they've got you coming and going!

No - the law says that Ground Rent is only due if it is correctly demanded. i.e. It's only due if you get a bill showing the correct information. If you haven't received a bill it's not payable.

MSR01 said:

My uneducated view is that while I don't think the vultures intend to evict, I wonder if they intend to levy fees/fines/charges for breach of the convenants. In other words, a protection racket. A legal one.

Firstly, it would be illegal for the freeholder to levy a fine or penalty.

But, for example, if you receive a (correct) bill and don't pay - and the freeholder has to spend 15 minutes sending you a reminder letter - they can charge you for 15 minutes work (probably about £15) plus the cost of a stamp, envelope etc.

But if you still don't pay, they might eventually instruct a solicitor - and then you would have to pay their solicitor's fee. So it might start getting expensive.

MSR01 said:

If not that, then can they charge back rent? There's no such provision. Does there need to be? Is that right conferred by other law?

The freeholder can charge up to 6 years o back rent. So 6 x £5 = £30

MSR01 said:
But even if not, they can certainly start charging rent from the moment they purchase the freehold. How much might that be? A few hundred or a few thousand?

Your lease says the ground rent is £5. A new leaseholder cannot change that (unless you agree).

MSR01 said:

I can't find any mention of service charges, or as far as I can tell any other term or phrase that might refer to them.

Service charges is a huge topic - but they have no impact on the cost of the freehold. And it's probably not relevant in your case.

MSR01 said:

As for restrictions, I can't find anything that expressly prohibits or requires the permission of the freeholder be gained before making any alterations or additions. If there is such a requirement, I presume that would constitute a breach of the covenant and possibly open the door to the vultures getting legal redress against the lessee... i.e. money.

Again, the freeholders can't randomly fine you or charge you money for making alterations or improvements.  Again it's a huge topic with lots of legislation. But if, for example, you make improvements like knocking down an internal wall, it might be that you have to agree to rebuilding the wall in 900 years time, before handing the house back to the freeholder.

eddddy

MSR01 said:

I think all the houses (about 40) are under the same title. We're registered. Don't know about anyone else.

So I suspect someone has bought up the bulk freeholds at the market rate of maybe £50 to £100 per house - and is trying to sell them off to the leaseholders at £1000 per house, to make a quick profit.

So their strategy might be to try to get £1000 from the really keen leaseholders, then they'll gradually drop the prices to attract the less keen leaseholders, and maybe even offer bargain basement prices to get rid of the final few. But who knows?

But it's also true that some people buy freeholds to try to make money by harassing leaseholders into paying huge fees for retrospective consent for improvements etc, when the law doesn't really allow them to.

MSR01

I think all the houses (about 40) are under the same title. We're registered. Don't know about anyone else.

So I suspect someone has bought up the bulk freeholds at the market rate of maybe £50 to £100 per house - and is trying to sell them off to the leaseholders at £1000 per house, to make a quick profit.

So their strategy might be to try to get £1000 from the really keen leaseholders, then they'll gradually drop the prices to attract the less keen leaseholders, and maybe even offer bargain basement prices to get rid of the final few. But who knows?

But it's also true that some people buy freeholds to try to make money by harassing leaseholders into paying huge fees for retrospective consent for improvements etc, when the law doesn't really allow them to.

Thanks for your analysis! Happy to be wrong in my assumptions - they were getting pretty dark.

I'm now thinking about asking the freeholder who these companies are, so I can do some research and figure out what their intentions might be. Might be able to deduce whether to hold out for a lower price.

MSR01

I've just tried a leasehold purchasing calculator and it seems to think I should pay exactly £0 for the lease!

Are there any good calculators out there? I'm just trying to get an idea of the value of the leaseholds in this area.

MSR01

Ok, I have more information.

The freeholder's stated price includes costs for a solicitor covering the following:

• transfer of deeds

• transfer of land registry records

• cost of freehold

• all admin costs

• six years ground rent arrears

I'm not up to date with what solicitors are charging these days, but looking around for examples I came across this:

SAM Conveyancing charges £920 for purchase of freehold conveyancing for up to 4 flats.
Undertaking for Freeholder's Costs: £1,500 - £2,000
In addition to the solicitor's legal fees, your solicitor also manages the freeholder's undertaking for reasonable costs which accompany the buying of the freehold, i.e. you have to pay for their costs associated with hiring surveyors and taking legal advice. This cost is likely to be in the range of around £1,500 - £2,000.

Ref: www.samconveyancing.co.uk/news/conveyancing/cost-of-buying-freehold-3519

I realise it relates to flats, but I'm just looking for a sense of the costs involved.

greatcrested

1) you have ignored my suggestion to QUOTE relevant parts of the lease.

2) you don't say if the ground rent is fixed or will rise. (hence 1 above!)

3) I note "The current freeholder gained ownership of the freehold when he bought the old freeholder's house" which suggests rather than some ulteria motive in gaining ownership of the freehold, it simply came as part of the package when they bought the house.

4) Ground rent arrears can only be demanded going back 6 years

5) whatever the lease says, the law says you do not need to pay ground rent if it is not demanded, using the correct format.

6) either the lease does, or does not, restrict what you can do, or it does or does not require you to seek permission for specified things. Read it again. What does it say (exactly) or does it say nothing?

7) if the lease does not say the freeholder can charge service charges, then the freeholder cannot charge service charges. If it says he can charge service charges, it must specify what services will be provided. If those services are then not provided, the leaseholder can challenge this. Read the lease again and QUOTE any relevant clause.

8) based purely on what you've said, (and with the proviso that we've not read the lease and you seem in doubt about its precise content), I see little advantage or value to you in paying £1000 to buy it, other than possibly, making the property marginally (very maginally) more attractive to a future buyer who is as uncertain/confused as you.

9) to confirm much of what I've said (plus much more) look at the gov website here: https://www.lease-advice.org/

eddddy

MSR01 said:

I've just tried a leasehold purchasing calculator and it seems to think I should pay exactly £0 for the lease!

Are there any good calculators out there? I'm just trying to get an idea of the value of the leaseholds in this area.

The calculator is probably rounding to the nearest £100 - so £0 is probably correct. (i.e. The actual number is probably £30 to £50)

Like I said in a previous post, the new freeholder has probably paid £50 to £100 for your freehold (or maybe as low as £30), and is trying to make a quick profit by selling it to you for £1000.

greatcrested

MSR01 said:

I've just tried a leasehold freehold?purchasing calculator and it seems to think I should pay exactly £0 for the lease freehold?!

Are there any good calculators out there? I'm just trying to get an idea of the value of the leaseholds freeholdsin this area.

You need to make sure you understand what is being offered. Almost certainly it is the freehold.

You already own the lease (I assume!).

eddddy

eddddy said:

MSR01 said:

I've just tried a leasehold purchasing calculator and it seems to think I should pay exactly £0 for the lease!

Are there any good calculators out there? I'm just trying to get an idea of the value of the leaseholds in this area.

The calculator is probably rounding to the nearest £100 - so £0 is probably correct. (i.e. The actual number is probably £30 to £50)

Like I said in a previous post, the new freeholder has probably paid £50 to £100 for your freehold (or maybe as low as £30), and is trying to make a quick profit by selling it to you for £1000.

Maybe this will help explain the valuation... Maybe think about these 2 questions

• 1. "How much would you pay for a house that becomes yours to use when a lease ends in 900 years time?"

I think most people would pay maybe 1p or less!  So the freehold reversion is worth 1p or less.

• 2. "I have to pay you £5 ground rent per year. What lump sum do you want today instead of getting £5 each year?"

The legislation says the appropriate lump sum is about £40.


So the cost of the freehold should be about 1p + £40 = £40.01