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Any risks for me? (Buying SO / Leasehold to Freehold)

AJ85
AJ85 Posts: 16 Forumite
Part of the Furniture First Post Combo Breaker
edited 7 December 2023 am31 10:29AM in House buying, renting & selling
Hi!

House I'm keen on buying currently owned under shared ownership leasehold. Seller is apparently staircasing so up on completion will be sold as freehold to me (obviously if happened to agree fee etc).

The agent (an centralised office / online type place), suggests this is normal enough and not to worry.

Is that likely the case? Apparently owner has been moved out for a couple of months, I'm not interested in buying leasehold or taking on any kind of shared ownership and only want to buy as freehold. Its being sold as 'no chain' as seller already has situated elsewhere

My position if it makes any odds is to buy with mortgage (not my first home), no chain

Comments

  • kingstreet
    kingstreet Posts: 39,118 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    As long as the HA is happy to sell the freehold interest, this is quite normal. FWIW some HAs don't sell the freehold on certain properties for some reason unknown to me.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • eddddy
    eddddy Posts: 17,539 Forumite
    Part of the Furniture 10,000 Posts Name Dropper

    It would be similar to buying any other freehold house.

    Is it on an estate/development? If so, you'll probably have some covenants which are similar to the covenants for the leasehold houses.

    For example, there could be covenants about...
    • Contributing to the cost of maintaining shared areas (e.g. private roads, car parks, grassed areas, play areas, etc)
    • Changing the appearance of your house
    • Where you can and cannot park
    • Parking vans / commercial vehicles
    • Where you're allowed to play ball games
    • etc

    But leasehold covenants that don't impact other residents should be removed. For example,
    • Banning sub-letting
    • Consent for internal alterations

    One downside of owning a freehold house is that leaseholder protection laws don't apply to you. The main example is that it will be much harder for you to challenge maintenance charges, than for your leasehold neighbours.



  • AJ85
    AJ85 Posts: 16 Forumite
    Part of the Furniture First Post Combo Breaker
    Thanks guys, I've done some further digging (it's on a 3 year old Taylor Wimpey site), been assured they have rights to buy out the lease and complete as freehold which can be written in up on exchange of contracts as a required condition for completion of sale

    New risk sadly - its for sale via Springbok who look to ask for 2.5k deposit prior to exchange, £400 exclusivity agreement contract cost to take it off the market.  Presumably all in an attempt to stop a prospective buyer pulling out, and vice versa, I need to look these up on the forums to see what's mentioned about this company!
  • eddddy
    eddddy Posts: 17,539 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 7 December 2023 pm31 4:52PM
    AJ85 said:

    New risk sadly - its for sale via Springbok who look to ask for 2.5k deposit prior to exchange, £400 exclusivity agreement contract cost to take it off the market.  Presumably all in an attempt to stop a prospective buyer pulling out, and vice versa, I need to look these up on the forums to see what's mentioned about this company!

    Here are some general comments about pre-contract deposits and exclusivity agreements. (I'm not commenting on the company you mention, because I don't know them.)


    I'd suggest, it's generally best to avoid pre-contract deposits and exclusivity agreements - especially when they are drawn up by estate agents.

    The reasons include...
    • There might be some 'nasty' problem with the house which the seller has kept quiet about. When you find out, you'll want to walk away - so you lose your £2.9k
    • The seller might decide they don't want to sell the house after all - so they stall until the exclusivity period is finished - then they walk away - so you lose your £2.9k
    • The £2.5k might go to the estate agent if you walk away. So the estate agent might be keen to help the sale fall though, so that they can get another £2.5k from another buyer, and so on.

    If you're tempted to hand over £2.9k, I'd suggest that you show the deposit agreement to your solicitor first, to see what they say.


  • AJ85
    AJ85 Posts: 16 Forumite
    Part of the Furniture First Post Combo Breaker
    Appreciate the sensible advice. The house in question is only 3 years old and is supported by nhbc warranty so I'm not overly concerned re survey findings. The agent on the phone (only verbally) said to me if seller pulled out I'd get my full 2.5k deposit back, but not the £400 contract fee. Skeptical but like you say, see what the agreement looks like and put under the nose of legal.

    Really glad I nipped on here to ask, very articulate sound responses!!
  • eddddy
    eddddy Posts: 17,539 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    AJ85 said:
    The agent on the phone (only verbally) said to me if seller pulled out I'd get my full 2.5k deposit back, but not the £400 contract fee. 

    As you can imagine, a seller won't necessarily admit that they are pulling out.

    For example, if a seller gets a higher offer from somebody else - the seller might just stall, become unhelpful, and generally mess you about until you give up and pull out (or the exclusivity period expires).

    That way, the seller blames you for pulling out; the seller denies breaching their contract with you; the seller sells to somebody else for more money; and you lose £2.5k.

    (Unless you try taking the estate agent to court to claim your £2.5k back - and you might or might not win.)


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