Buying freehold... or so I thought.

Holeydel

Hey all, I'm hoping to get some opinions here on my current dilemma. I'm well on my way to purchasing my first BTL in Liverpool and was notified by my conveyancer today that the house in a leasehold property. The house was advertised as freehold. Weeks ago when I was accepted as the buyer, my conveyancer did a land registry search and mentioned the property was a lease. I queried this over the telephone with the selling estate agents and they assured me that the property was being sold as a freehold. Today I learned this was BS and I'm unsure of how to move forward.

The leasehold is 999 years from 1975 and ground rent is charged at £8 per year. The landlord is an investment group so I assume they'll be unwilling to sell the deed, though I have emailed them asking. 

I'm unsure whether to go ahead as I'm not too clued up on leasehold properties. I'm doing my research tonight but maybe I can get some direct opinions here? My main fear is a lack of control of additional costs, such as rising ground rent in the future. So far I've spent £300 on solicitor fees and will probably write this off if I cancel the purchase. The house was purchased for £85k and I doubt at this stage I'll be able to find another for the same price / location etc. I plan to hold onto this home for 40 years or so. Any thoughts?

Sandtree

If your concern is escalating ground rents then what does the lease state about escalations?

Service charges are potentially more of the unknown but again you need to check the lease to see what you're liable for as well as checking with the vendor in terms of what charges have been to date etc. 

Others will advise but would have thought there would become a statutory right to buy the freehold after 2 years without the complexity that comes with a block of flats.

Slithery

Sandtree said:

Others will advise but would have thought there would become a statutory right to buy the freehold after 2 years without the complexity that comes with a block of flats.

I thought that the statutory right only applied to flats, not houses?

canaldumidi

Never believe the estate agent (who relies on his client who may not know) over the advice of your solicitor. That's why you are paying a solicitor - to check the property title for you! With respect, you should have been considering this weeks ago when he did his job and told you.

Having said that, a lease that expires in 2974, at a fixed ground rent of £8 pa is as good as freehold, though a) read the lease or ask your solicitor to check the ground rent is fixed and b) look for any restrictions in the lease about what you can or can't do with the property.

From what you say, the freeholder is not the same as the leaseholder? If they were, you could check if they are in fact selling both the lease and the freehold.

Holeydel

Thank you Sandtree. At the stage don't know anything of the lease agreement, besides what I mentioned. My solicitor will hopefully have more info soon. You're correct when you give the right to buy suggestion however I can't see the company making it easy, given as it's their bread and butter. I can live with £8 a year lease but as it's ridiculously low I can't help but think I'm missing something.

Sandtree

Slithery said:

Sandtree said:

Others will advise but would have thought there would become a statutory right to buy the freehold after 2 years without the complexity that comes with a block of flats.

I thought that the statutory right only applied to flats, not houses?

Leasehold property: Buying the freehold - GOV.UK (www.gov.uk) which sends you off  to I own a leasehold house. How do I buy the freehold? - The Leasehold Advisory Service (lease-advice.org)

Looks simpler than a flat due to the lack of needing the collective element but there are certain quirks like ensuring it meets the definition of a house.

user1977

If the ground rent is only £8 then it's unlikely to rise at all. The length of the term obviously isn't an issue. Which then just leaves you with any odd conditions in the lease. Many leasehold properties are nearasdamnit freehold, despite the scare stories about those which aren't. 

flashg67

Very common in the NW and elsewhere, especially with terraced houses. I've had 4 such properties and never had an issue buying or selling them on. They were often designed to provide an income for life, but I've found that often the cost of collecting the rent outweighs the benefits and I've had some houses where it was never collected. 

Holeydel

canaldumidi said:

Never believe the estate agent (who relies on his client who may not know) over the advice of your solicitor. That's why you are paying a solicitor - to check the property title for you! With respect, you should have been considering this weeks ago when he did his job and told you.

Having said that, a lease that expires in 2974, at a fixed ground rent of £8 pa is as good as freehold, though a) read the lease or ask your solicitor to check the ground rent is fixed and b) look for any restrictions in the lease about what you can or can't do with the property.

From what you say, the freeholder is not the same as the leaseholder? If they were, you could check if they are in fact selling both the lease and the freehold.

It's one of those. I contacted the estate agent weeks ago and told them the house is down as a leasehold according to my solicitor. The response given assured me that the freehold would be included - what more could I do? The leaseholder (individual) and freeholder (investment company) are seperate. I really appreciate your suggestion of finding out the fixed rent and rental restrictions queries as all this is new to me.

Holeydel

flashg67 said:

Very common in the NW and elsewhere, especially with terraced houses. I've had 4 such properties and never had an issue buying or selling them on. They were often designed to provide an income for life, but I've found that often the cost of collecting the rent outweighs the benefits and I've had some houses where it was never collected. 

Thanks for the reply flash? The terrace houses you bought and sold were also a leasehold? It sounds like you've had a bit of a nightmare with your experience??

canaldumidi

You could alwasys pre-empt your solicitor by seeing if the Land Registry has a copy of the lease.

Look at the LR leasehold title (or download it for £3 here) - if they have the lease it will say "copy filed". You then use form OP4 to get the lease posted to you (£7 I think).