Freehold purchase

Macgirl78

I did find a post on this but it was over a year old so thought I’d start another. Hope that’s okay.

We’ve been in our house for 20 years and I’m desperate to pay off the mortgage. Hubby less bothered. But I’m doing alright with it.

In the current financial climate and the desire of certain huge companies to buy houses and rent them out in the USA becoming a probability here, my husband’s concern is that should we pay off the mortgage and own the house, the fact the land is owned by someone else could be problematic. 

Is there anything stopping our current ‘landlord’ from selling the plots (the current bought it off the previous and doubled the fees (£4 but..)) and that new company charging us a fortune per year or demanding we move for them to sell to a developer? I’m not a property solicitor so don’t know if this is a silly question. 

The freehold is £970 ish to buy and they state that’s for all formalities and they sign the freehold to us.

Is it worth investing in that or paying chunks off the mortgage? Is there a chance the land rent charge could be become huge?

Thanks in advance 

user1977

Macgirl78 said:

Is there anything stopping our current ‘landlord’ from selling the plots (the current bought it off the previous and doubled the fees (£4 but..)) and that new company charging us a fortune per year or demanding we move for them to sell to a developer?

Yes - the fact you've got a lease. The freeholder can't unilaterally change its terms.

Sandtree

Macgirl78 said:

Is it worth investing in that or paying chunks off the mortgage? Is there a chance the land rent charge could be become huge?

Your lease will tell you how and when the ground rent escalates, that's the only way it can/will.

Service charges are a separate thing but they can only cover actual reasonable costs and there are plenty of protections to stop spurious large costs being claimed (though that doesn't mean some backhanders occur)

ciderboy2009

How long is left on the lease?  Based on the fact that it's only £4 (presumably per year) and the cost of buying the freehold is less than £1k then I assume that you've got 100 years+?

Read the terms of the lease - that is where you will find out if/how they can increase the fees (you might also discover that the doubling you mention went against the terms of the lease).

Slithery

Whether or not you still have a mortgage is irrelevant and makes no difference to the terms of your lease.

Macgirl78

Fab. Thank you, everyone.

NameUnavailable

Macgirl78 said:

I did find a post on this but it was over a year old so thought I’d start another. Hope that’s okay.

We’ve been in our house for 20 years and I’m desperate to pay off the mortgage. Hubby less bothered. But I’m doing alright with it.

In the current financial climate and the desire of certain huge companies to buy houses and rent them out in the USA becoming a probability here, my husband’s concern is that should we pay off the mortgage and own the house, the fact the land is owned by someone else could be problematic. 

Is there anything stopping our current ‘landlord’ from selling the plots (the current bought it off the previous and doubled the fees (£4 but..)) and that new company charging us a fortune per year or demanding we move for them to sell to a developer? I’m not a property solicitor so don’t know if this is a silly question. 

The freehold is £970 ish to buy and they state that’s for all formalities and they sign the freehold to us.

Is it worth investing in that or paying chunks off the mortgage? Is there a chance the land rent charge could be become huge?

Thanks in advance 

Just for clarity, you own a lease. A lease is essentially a long term rental agreement. You don't own the house, just a right to live there. If you buy the freehold then you will own the house (the bricks and mortar and roof etc.) and the land it occupies.

Macgirl78

NameUnavailable said:

Just for clarity, you own a lease. A lease is essentially a long term rental agreement. You don't own the house, just a right to live there. If you buy the freehold then you will own the house (the bricks and mortar and roof etc.) and the land it occupies. 

So even if we pay off the mortgage we still don’t own the house? 

So buying the freehold would be worth it then?

user1977

Macgirl78 said:

NameUnavailable said:

Just for clarity, you own a lease. A lease is essentially a long term rental agreement. You don't own the house, just a right to live there. If you buy the freehold then you will own the house (the bricks and mortar and roof etc.) and the land it occupies. 

So even if we pay off the mortgage we still don’t own the house? 

So buying the freehold would be worth it then?

How long is left on the lease? If it's, say 900 years, then owning the freehold will reassure you that you'll still be able to occupy the house after the year 2922. Otherwise it's likely that all you'll be doing is saving yourself the ground rent. Paying £970 in order to not pay £4 a year isn't really worth it.

But as advised above, read your lease - we're just guessing what it says. Presumably this was explained to you when you bought?

Slithery

Macgirl78 said:

So even if we pay off the mortgage we still don’t own the house?

Correct.

A leasehold property is the same as a rental, you just usually pay for for all of your rent upfront by getting a mortgage.

The land and the property that's on it still belongs to the freeholder.

Macgirl78

user1977 said:

Macgirl78 said:

NameUnavailable said:

Just for clarity, you own a lease. A lease is essentially a long term rental agreement. You don't own the house, just a right to live there. If you buy the freehold then you will own the house (the bricks and mortar and roof etc.) and the land it occupies. 

So even if we pay off the mortgage we still don’t own the house? 

So buying the freehold would be worth it then?

How long is left on the lease? If it's, say 900 years, then owning the freehold will reassure you that you'll still be able to occupy the house after the year 2922. Otherwise it's likely that all you'll be doing is saving yourself the ground rent. Paying £970 in order to not pay £4 a year isn't really worth it.

But as advised above, read your lease - we're just guessing what it says. Presumably this was explained to you when you bought?

I don’t remember it being explained other than you’ll pay £2 a year to the owner of the land. 

We can’t afford a solicitor, is there a way of getting the term of the lease or working out what is best without getting one involved? Land registry? Bank with whom we have the mortgage? 

Thanks.