Buying Leasehold House BUT Lease Is Missing - Advice Needed!

HampshireH

gab3x said:

davidmcn said:

gab3x said:

Don't buy it, never buy a leasehold, let alone a leasehold with a missing lease.

It's not just about the ground rent it's a lot more than that - from maintenance, to issue resolve with other leaseholders to selling process where you need input from freeholder. 

That's a bit of a sweeping statement - would you say that applies where there's an ultra-long lease, the rent is a peppercorn, and there's never any involvement required from other leaseholders or the freehold for maintenance or anything else?

Well our OP doesn't know this as there is no lease to find out.

More generally I would say never buy a leasehold even if it were as you describe above.
This is because as a lessee you are never really owning property and your lease can always be forfeited. Most leases contain a clause which allows the freeholder to forfeit the lease - or exercise a right of re-entry to the property - if the lease is breached by the lessee. Just so we're clear what this means - it means you lose all the £s you paid for the lease! Do you think it doesn't happen? Google it.

Through the lifetime of your possession of the lease you will face different points in which you will require actions on behalf of the freeholder. Say you want to sell - you won't find a buyer unless you get a LPE1 document from your freeholder as buyer's conveyancers will insist on it. But here's the catch - the freeholder is under no legal obligation to give it to you. If you don't know who the freeholder is or they are unwilling to issue you one then your only recompense is to go to court who will isssue one for you. This takes time and you're likely to lose your buyer. What usually happens is that you end up paying a lot of money to freeholder for them to issue you one. It is a perfectly legal case of blackmail.

Another complication is insurance. Freeholder is responsible for insuring the building - you are never 100% sure if they have done it and if they have got a fair deal for you. An example in London is freeholder of large luxury building charging leaseholders £1m annually for insurance premium yet £750k of that £1m he gets back from insurance as commission. This example is perfectly legal although very unfair.

Just because current leaseholder doesn't pay maintenance charges does not mean in future they won't appear and they won't be substantial. Buildings have to be maintained, problems need to be fixed but when you own a leasehold you are never in control of that process yourself so you don't decide on when to fix, how to fix or how much to pay for it. For example your freeholder might charge you £0 annually for maintenance but one year the roof needs replacing. That year you will pay thousands for the new roof as the cost is shared between all leaseholders (not the freeholder, unless they have a leasehold in that building). Look at the cladding scandal where individual leaseholders are now facing bills in 100s of thousands if they will ever have a chance to sell on their leasehold or remortgage.

Restrictive Covenants - you have to have a carpet, you cannot have a dog, you cannot have a window plant, you cannot dry your washing in your own garden (reminder that it is never 'your' garden)... as a leaseholder you are subject to a long list of covenants you must adhere to or you are in danger of forfeiting your lease with ultimate penalty of being kicked out and losing all the money you paid for that lease. 

Finally the price differential between freehold and leasehold is never so large as if to compensate for all the above. As a leaseholder you are nothing more than a tenant because you don't own the property you are living in.

Unusual to have these restrictions on a house leasehold 

AdrianC

HampshireH said:

gab3x said:

Restrictive Covenants - you have to have a carpet, you cannot have a dog, you cannot have a window plant, you cannot dry your washing in your own garden (reminder that it is never 'your' garden)... as a leaseholder you are subject to a long list of covenants you must adhere to or you are in danger of forfeiting your lease with ultimate penalty of being kicked out and losing all the money you paid for that lease. 

Unusual to have these restrictions on a house leasehold 

And, of course, (real-world) restrictive covenants are common on freehold, too.

firsttimebuyer33

Thanks for the advice and opinions all!

Quick update - it’s now been a month since the lease issue came to light. Our solicitor still has over 10 oustanding enquiries with the sellers solicitors. There seems to be a lot of back and forth between them with no resolve, sellers solicitor not really cooperating or getting back to sellers either, no apparent attempt to locate the lease and a big push for us to accept the indemnity policy and exchange within the next few weeks (which seems like madness when we know how much of an issue the lease is and all the enquiries outstanding and wont fall into trap).

We’re getting really frustrated at the process as we have had no real update for a month now or no resolve/next steps explained to us.

Appreciate everyone will say walk away on this one. However would really like to know what happens if we decide to go ahead, take the indemnity policy (provided our lender will still lend) and purchase the property (albeit we would look no negotiate price down due to all of the above and risk involved).

My view personally is to go for it, its the right property & location and only one we have both loved after nearly a year of looking and in the 4 months since putting a bid in. 

Surely we are not the first or last people this has happened to. Say we stay there for 5 years, struggling to understand how we can’t work on acquiring some sort of paperwork or legal documentation in that time that will be sufficient enough for future buyers, even if it costs a few thousand surely that is better than losing money on the property if left unresolved. Fully understand the risks however advice on this topic would be appreciated and anyone who has done this.