Buying freehold... or so I thought.

Titus_Wadd

My first two houses (Lancashire) were leasehold, remainder of 999year leases with £2 and £4 p.a. ground rents...and they still are, because there was no ability to increase the ground rent within the terms of the lease.  Such a commonplace way of owning in the NW that I wouldn't bat and eyelid at buying another on the same basis.  If the leasehold the OP is buying doesn't allow for the ground rent to be increased I wouldn't pay to buy the freehold, it's money down the drain at the price quoted.

Fast-forward 20 years and we've owned a couple of freehold houses in Sussex, but the current house was a freehold new build and has a crippling service charge so it's impossible to generalize these days that freehold is better than leasehold, the devil is in the detail.  Just out of curiosity is your solicitor local to the area in which you're buying, or in an area where leasehold is less common?  Wherever they're based I'd rely on their advice.

Holeydel

Titus_Wadd said:

My first two houses (Lancashire) were leasehold, remainder of 999year leases with £2 and £4 p.a. ground rents...and they still are, because there was no ability to increase the ground rent within the terms of the lease.  Such a commonplace way of owning in the NW that I wouldn't bat and eyelid at buying another on the same basis.  If the leasehold the OP is buying doesn't allow for the ground rent to be increased I wouldn't pay to buy the freehold, it's money down the drain at the price quoted.

Fast-forward 20 years and we've owned a couple of freehold houses in Sussex, but the current house was a freehold new build and has a crippling service charge so it's impossible to generalize these days that freehold is better than leasehold, the devil is in the detail.  Just out of curiosity is your solicitor local to the area in which you're buying, or in an area where leasehold is less common?  Wherever they're based I'd rely on their advice.

Hi TW, thanks for the reply. I'm in the NW as are my solicitors. They're looking into the lease agreement so until they scrutinise it it's a waiting game. 

Being as you were in a good spot with your lease agreement, did you ever consider purchasing the freehold as an investment? I would imagine that selling the house on (in my case I'm thinking 20-30 years), the value of the house would be greater including the freehold than without, thus making a return. This is the question I face as to purchase the freehold is 4-6k, would the freehold value make a return?

user1977

Holeydel said:

Titus_Wadd said:

My first two houses (Lancashire) were leasehold, remainder of 999year leases with £2 and £4 p.a. ground rents...and they still are, because there was no ability to increase the ground rent within the terms of the lease.  Such a commonplace way of owning in the NW that I wouldn't bat and eyelid at buying another on the same basis.  If the leasehold the OP is buying doesn't allow for the ground rent to be increased I wouldn't pay to buy the freehold, it's money down the drain at the price quoted.

Fast-forward 20 years and we've owned a couple of freehold houses in Sussex, but the current house was a freehold new build and has a crippling service charge so it's impossible to generalize these days that freehold is better than leasehold, the devil is in the detail.  Just out of curiosity is your solicitor local to the area in which you're buying, or in an area where leasehold is less common?  Wherever they're based I'd rely on their advice.

Being as you were in a good spot with your lease agreement, did you ever consider purchasing the freehold as an investment? I would imagine that selling the house on (in my case I'm thinking 20-30 years), the value of the house would be greater including the freehold than without, thus making a return. This is the question I face as to purchase the freehold is 4-6k, would the freehold value make a return?

The only "return" it makes (as far as we know) is the £8 a year ground rent (minus the admin costs of collecting it). How much would you have to put in the bank to get £8 a year interest? Rather less than £4k, even at current interest rates. I doubt getting the house back in the year 2974 is going to be worth anything at the moment.

This is different from buying out the freehold where, say, the lease would otherwise need to be extended during your lifetime.