Leasehold Being Advertised as Freehold

dappadanboy

Hello all,
We are currently looking as FTB's to purchase a house which is advertised with the following wording:
"The vendor informs us that the property is believed to be FREEHOLD. Interested parties should gain verification from their solicitors."
We have asked agents at the viewing why it's worded as 'believed to be' and they suggested it was Freehold but that is what the vendors advised.
We are considering an offer so I have done a land registry check and it actually appears to be a leasehold, 600-700 years left.
Seller is a landlord although doesn't appear to be the owner of multiple properties, it's currently empty has had new carpets and been painted throughout, new roof etc. Seems to be in good condition but also has definitely had a recent paint job to cover up anything that might be untoward.

My question is - is the deliberately vague wording on the leashold a red flag as to the seller being somewhat disingenuous, surely they know it's a leasehold and have been paying ground rent or at least must recall from their process purchasing the house 10 years ago.

(p.s. this is in Sheffield where a lot of properties are leasehold)

Grumpy_chap

The seller may own both the leasehold and the freehold but not merged the titles.  Did you check both with LR?

princeofpounds

The vendor may own the freehold as well as the leasehold. It is not necessary (and sometimes not possible) to merge the two titles.

The vendor may be offering to start the statutory process for buying the freehold. If they have owned the property for over 2 years then they are able to do so and a potential purchaser can wait for it to complete or be assigned the process part-way through if their circumstances permit. 

Or, the vendor may be a bit shady and hoping to attract interest at freehold prices then muddle through the process with that as an initial price anchor. But the price difference between a leasehold house with 6-7 centuries left and a freehold is going to be minimal, unless there is appreciable amounts of ground rent or particularly onerous covenants (which can also exist in freeholds anyway, though less usually).

If the EA was any good at selling the property, they should find out all this and relate it back to you. Prompt them to ask the questions, point out that there's no way you can make an offer that hold much validity without it. But you're doing the right thing by doing some basic due diligence before shelling out on lawyers, surveyors etc. 

Tiglet2

If you look at any properties on Rightmove/Onthemarket etc, they nearly all have this disclaimer.  The EA asks the vendor whether the property is freehold or leasehold.  The vendor may say freehold, but the EA will still state on the sales particulars that it is believed to be freehold but you should check with your legal representative.  EAs do not download the title from Land Registry to confirm (as it's not part of their job), so they make this statement to cover themselves.

user1977

Even if they don't also own the freehold and only have an ultra-long leasehold, that's as nearasdamnit freehold for most practical purposes. Any ground rent is likely to be purely notional, or so low as to not be worth collecting (if the freeholder is even still around).

AdrianC

dappadanboy said:

We are currently looking as FTB's to purchase a house which is advertised with the following wording:
"The vendor informs us that the property is believed to be FREEHOLD. Interested parties should gain verification from their solicitors."
We have asked agents at the viewing why it's worded as 'believed to be' and they suggested it was Freehold but that is what the vendors advised.
We are considering an offer so I have done a land registry check and it actually appears to be a leasehold, 600-700 years left.
Seller is a landlord although doesn't appear to be the owner of multiple properties, it's currently empty has had new carpets and been painted throughout, new roof etc. Seems to be in good condition but also has definitely had a recent paint job to cover up anything that might be untoward.

My question is - is the deliberately vague wording on the leashold a red flag as to the seller being somewhat disingenuous, surely they know it's a leasehold and have been paying ground rent or at least must recall from their process purchasing the house 10 years ago.

No.

The EA have said "Is it freehold or leasehold?". The vendor has said "Umm, freehold, I think".

It's a recently-tarted ex-let with a long lease on it. How much is ground rent? Peppercorn? Probably nobody's paying it.

There's nothing suspicious in what you've said at all.

eddddy

Tiglet2 said:

If you look at any properties on Rightmove/Onthemarket etc, they nearly all have this disclaimer.  The EA asks the vendor whether the property is freehold or leasehold.  The vendor may say freehold, but the EA will still state on the sales particulars that it is believed to be freehold but you should check with your legal representative.  EAs do not download the title from Land Registry to confirm (as it's not part of their job), so they make this statement to cover themselves.

Most EAs are members of The Property Ombudsman Scheme.

The Ombudsman's code of practice is mandatory for member EAs, and it makes it clear that EAs should be downloading title information from Land Registry. It says:

5e You should take reasonable steps to satisfy yourself that the seller is entitled to instruct you (such as obtaining title information from the Land Registry; declaration of trust; deed of variation; power of attorney) and to sign on behalf of all co-sellers. 

7k In accordance with paragraph 5e, where the title is registered at HM Land Registry, you should seek to obtain title information to verify the tenure of the property

Link https://www.tpos.co.uk/images/Codes_2019_a5/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A5_-_Effective_1_June_2019.pdf

(The Ombudsman has ordered some EAs to pay prospective buyers compensation, were EAs haven't done this, and it's inconvenienced buyers.)

Tiglet2

eddddy said:

Tiglet2 said:

If you look at any properties on Rightmove/Onthemarket etc, they nearly all have this disclaimer.  The EA asks the vendor whether the property is freehold or leasehold.  The vendor may say freehold, but the EA will still state on the sales particulars that it is believed to be freehold but you should check with your legal representative.  EAs do not download the title from Land Registry to confirm (as it's not part of their job), so they make this statement to cover themselves.

Most EAs are members of The Property Ombudsman Scheme.

The Ombudsman's code of practice is mandatory for member EAs, and it makes it clear that EAs should be downloading title information from Land Registry. It says:

5e You should take reasonable steps to satisfy yourself that the seller is entitled to instruct you (such as obtaining title information from the Land Registry; declaration of trust; deed of variation; power of attorney) and to sign on behalf of all co-sellers. 

7k In accordance with paragraph 5e, where the title is registered at HM Land Registry, you should seek to obtain title information to verify the tenure of the property

Link https://www.tpos.co.uk/images/Codes_2019_a5/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A5_-_Effective_1_June_2019.pdf

(The Ombudsman has ordered some EAs to pay prospective buyers compensation, were EAs haven't done this, and it's inconvenienced buyers.)

Well, I have to say I'm surprised.  You only have to look at the rightmove et al sales particulars - vast majority advise purchasers to check this via their conveyancer.  Perhaps EAs need to be reminded of this.

dappadanboy

Thanks for the responses.
It does appear the freehold is held separately by a company that holds many of the leaseholds in Sheffield and the freehold document is for whole sections of the street (no 1-20 even numbers etc).
The leasehold document is then in the current owner's name.