Leasehold 1930s semi - 985yrs remaining

Rynat

Hello, I am after some advice… (Translation: HELP!)

We were close to getting a completion date on a 1930s semi, offer accepted June.

Our solicitors then advised last week that the property is actually leasehold (unregistered). 

The owner had passed away and it is his relatives selling (via probate) - so they and the estate agency were all unaware and the house had been listed as freehold. It’s a 1930s semi on a street & we had no idea leaseholds even existed outside of flats and new builds.

The remaining lease is long at 985 years, but the landlord is “absent” - we have been told this means we will be unable to purchase the freehold(?)

We have been advised that due to the 985 year lease the house is “as good as freehold” and that a ‘missing landlord indemnity’ will protect us from surprise ground rents/service charges etc if the landlord does make an appearance in the future.

However, I still feel uneasy about not being freeholders. Leasehold properties get bad press so there must be a reason?

Can anyone advise on whether we are likely to struggle when we sell on (5 years). Is continuing to purchase knowing it’s a leasehold now risky? How much should we reduce our offer by (listed as ‘offers over 230’, offer accepted at 255)? 

Any other advice also welcome. We have two chains below us biting at our heels (we are a couple selling our two separate ‘starter homes’ to purchase this one together) so time is of the essence! 

Thanks 😊 

[Deleted User]

Its as good as freehold.

GDB2222

What is the ground rent on the lease?

MaryNB

The leasehold houses that got bad press were new builds with extortionate ground rent terms that later made them unmortgageable. The leases often had really restrictive terms with charges for everything. The scandal wasn't about much older leasehold houses. I know plenty who own them as if they were freeholds. 

user1977

Rynat said:

Leasehold properties get bad press so there must be a reason?

Certain types of leases get a bad press. This isn't one of them. There is no real difference in value between a freehold interest and a millennium-long leasehold interest.

Countrysider

Period leasehold properties seem to be common in certain areas. I've seen this a lot in Liverpool and Manchester, and other areas might be similar.

People who live in them always say it's fine and nothing to worry about. I'm sure it is fine but it's not something I would be comfortable with unless the property was very special or very cheap. 1930's semis are extremely common so unless a leasehold one was significantly cheaper then I would just drop out and pick a local freehold one instead if i was in this situation. 

House_owner

My first house was a leasehold - only heard from the 'landlord' once a year, when I was sent the annual lease to pay - all of £2!

NameUnavailable

The issue is that you are not buying a house you are buying a bundle of A4 paper that gives you the legal right to live at the property subject to the terms of the lease.

If the freeholder is absent that may be an issue for your lender. There is a process you can undertake (if you do buy) to purchase the freehold from the crown but it will entail taking steps to track down the current freeholder (if they absolutely can't be traced the crown can take over the freehold and then you can purchase from them - I think that's how it works!).

OTOH if the freeholder suddenly pops up, they could start applying all conditions of the lease and undertaking maintenance of the properties that you will have to pay for.

Personally, unless it's a bargain buy, I'd give it serious consideration. At the very least I'd want a reduction in price to allow for the costs of buying the freehold (as it was sold to you as being freehold).

eddddy

As others say, a 935 year lease is often hardly different to a freehold.

But the key thing is to read the lease (and your solicitor's report on the lease) to find out your rights and responsibilities, and the freeholder's rights and responsibilities.

Things to look out for include:

• Things that are prohibited, or you need the freeholders consent for (which would incur a fee) e.g. making alterations, building an extension

• Any restrictions on who you insure the building with - e.g. having to use the freeholder's nominated insurer (there's legislation to override this, but it adds complexity)

• Anything that the freeholder could charge you a service charge for - e.g. maintenance of a shared path, shared bin area etc

• There's also a 'nasty trick' where the roof and roof space isn't demised to you. i.e. the roof space 'belongs' to the freeholder. That introduces problems if you want to buy the freehold.

In theory, once you own the lease for 2 years, you can 'compulsorily purchase' the freehold, even if the freeholder is absent. It's called 'statutory enfranchisement'. But people say it's very complicated if the freeholder is absent, and the legal fees are very expensive.

But is the freeholder really absent and untraceable? Or is the freeholder just disinterested? If the freeholder is just disinterested, you can just serve notice on the freeholder to buy the freehold after 2 years, and it all goes through - even if the freeholder refuses to get involved.

Slinky

It's a semi. Presumably the adjoining semi is also a leasehold property. Go and chat to your new prospective neighbour and find out what they know about the leases.

NameUnavailable

Slinky said:

It's a semi. Presumably the adjoining semi is also a leasehold property. Go and chat to your new prospective neighbour and find out what they know about the leases.

That's assuming they know anything - you'd be surprised how many people don't even know what a lease means.