Help! Flat advertised as leasehold, turns out to be freehold

bbat

This is exactly like where I live but the other way round. I own leasehold for ground floor. The freeholder lives in first floor and attic. They do not have a lease. They are my freeholder. Theyve just sold so no problems with lenders at all. 

hazyjo

bbat said:

Theyve just sold so no problems with lenders at all. 

Might have sold to cash buyers.

eddddy

bbat said:

 Theyve just sold so no problems with lenders at all. 

Have you discussed this with your neighbour's buyers? Did they say who their mortgage lender is, and whether their solicitor raised any concerns?

I think some mortgage lenders might accept this arrangement - but others are becoming less keen. It seems that lenders are generally becoming more cautious about leasehold arrangements.

jembear

bbat said:

This is exactly like where I live but the other way round. I own leasehold for ground floor. The freeholder lives in first floor and attic. They do not have a lease. They are my freeholder. Theyve just sold so no problems with lenders at all. 

Thanks. eddddy said:

bbat said:

 Theyve just sold so no problems with lenders at all. 

Have you discussed this with your neighbour's buyers? Did they say who their mortgage lender is, and whether their solicitor raised any concerns?

I think some mortgage lenders might accept this arrangement - but others are becoming less keen. It seems that lenders are generally becoming more cautious about leasehold arrangements.

At the moment we are still waiting for our solicitor to hear from the lender to let us know if we can proceed. Its quite worrying and stressful that in the 6 months since we first had the offer accepted, this wasnt picked up until now 😔

eddddy

jembear said:

At the moment we are still waiting for our solicitor to hear from the lender to let us know if we can proceed. Its quite worrying and stressful that in the 6 months since we first had the offer accepted, this wasnt picked up until now 😔

Based on what you say - the problem seems to have started with a very sloppy estate agent.

Most estate agents are members of The Property Ombudsman Scheme - and their mandatory code of practice says things like:

• If the property is registered with LR, the estate agent should download a copy of the title to make sure that their client actually owns the property, and to check it's tenure (leasehold or freehold)

• (If it's not registered with LR, I guess it would be reasonable to ask for other evidence of ownership and tenure.)

Additionally, the code of practice says the estate agent should be asking a leasehold seller questions about:

• Years left on lease
• Ground rent
• Details of service charge, sinking fund etc

Had the estate agent done all that - I suspect the estate agent would have realised that something was not right.

FWIW, here's a link to the Mandatory Code of Practice that the estate agent should be following (if they're a member of the Property Ombudsman Scheme) : https://www.tpos.co.uk/images/Codes_2019_a5/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A5_-_Effective_1_June_2019.pdf

jembear

eddddy said:

jembear said:

At the moment we are still waiting for our solicitor to hear from the lender to let us know if we can proceed. Its quite worrying and stressful that in the 6 months since we first had the offer accepted, this wasnt picked up until now 😔

Based on what you say - the problem seems to have started with a very sloppy estate agent.

Most estate agents are members of The Property Ombudsman Scheme - and their mandatory code of practice says things like:

• If the property is registered with LR, the estate agent should download a copy of the title to make sure that their client actually owns the property, and to check it's tenure (leasehold or freehold)

• (If it's not registered with LR, I guess it would be reasonable to ask for other evidence of ownership and tenure.)

Additionally, the code of practice says the estate agent should be asking a leasehold seller questions about:

• Years left on lease
• Ground rent
• Details of service charge, sinking fund etc

Had the estate agent done all that - I suspect the estate agent would have realised that something was not 

Thank you so much. The estate agent has is definitely at fault here. The property was advertised as a leasehold and we were told that it had a 967 year lease on it. When we found out it was a freehold after 6 months we contacted the estate agent several times to ask for any documentation that states "leasehold" on it. They couldnt provide any and seemed very vague about the whole thing. 
Its been over a week now and we are still waiting on a decision from the lender. I guess the other problem we have is that we need a 95% mortgage and throwing a freehold flat into the mix is making it tricky. Our solicitor has also been pretty rubbish

eddddy

jembear said:

Thank you so much. The estate agent has is definitely at fault here. The property was advertised as a leasehold and we were told that it had a 967 year lease on it. When we found out it was a freehold after 6 months we contacted the estate agent several times to ask for any documentation that states "leasehold" on it. They couldnt provide any and seemed very vague about the whole thing. 

Its been over a week now and we are still waiting on a decision from the lender. I guess the other problem we have is that we need a 95% mortgage and throwing a freehold flat into the mix is making it tricky. Our solicitor has also been pretty rubbish

Don't refer to it as a freehold flat - from what you say, it's not, and that will cause confusion. 

Based on your description, it's a freehold building with the first floor leased out as a flat.


(A freehold flat would be something different - there would be a first floor freehold flat, and a ground floor freehold flat.
In your case, you (or the seller) could solve the problem relatively easily by granting yourself a lease for the ground floor.
You couldn't solve the problem that easily, if it was a freehold flat. )



Anyway, if the estate agent has mis-described the tenure (leasehold/freehold), there are examples of the Property Ombudsman awarding compensation to prospective buyers:

https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/freehold-leasehold-or-commonhold-misleading-omission
https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/cprs-case-3-shared-ownership
https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/freehold-and-leasehold-misleading-omission


But you'd have to follow the complaints procedure.