Very long lease (800+ years)

RandomTourist

Looking at buying a property. It's leasehold from the council, but the lease has 870 years still to run with a ground rent of less than £10 per year. This seems not to be unusual in the area, but all the same is a bit weird. Why would anyone imagine setting up a lease for that long would be a good thing?

Any advice or experience of this would help. Presumably buying out the lease might be possible, but would that be of any benefit?

DullGreyGuy

RandomTourist said:

Looking at buying a property. It's leasehold from the council, but the lease has 870 years still to run with a ground rent of less than £10 per year. This seems not to be unusual in the area, but all the same is a bit weird. Why would anyone imagine setting up a lease for that long would be a good thing?

Any advice or experience of this would help. Presumably buying out the lease might be possible, but would that be of any benefit?

No matter how long the lease it can still be forfeited and the freeholder retains a certain level of control. Whilst the present system only came in in the 1920s it traces back to the rich owning the land and allowing tenant farmers to use the land in exchange for grain etc. Win win for the landowner and the tenant farmer gets long term use of land that he'd never be able to afford to buy outright.

You would need to look at the lease and see what sort of things you need permission from the freeholder for and if having free control of your property without having to pay for the freeholders permission is preferable -v- the cost

eddddy

You say 'property', I'm assuming it's a house - as opposed to a flat or maisonette, etc.

It's unusual for a council to sell leasehold houses if they own the freehold - they would normally sell them as freehold.

Do you know if the council are the freeholders? Or is the freeholder someone different, and the council have a head lease - and therefore you are buying a sub-lease?



FWIW, once you've owned the leasehold house for 2 years, the law (almost always) lets you compulsorily purchase the freehold.

Based on an 800 year+ lease and a ground rent of £10 per year, the cost of the freehold should be under £200.  But the legal fees might be £2k plus


(The Freehold and Leasehold reform act is planned to remove the 2 year ownership rule, at some point. It might also reduce the cost of your legal fees, but increase the cost of your freehold slightly.)

RandomTourist

Thank you for feedback.

To put some flesh on the bones of the question - terraced house, early 20th century, most other houses in the development are in the same situation, leasehold with the council being the ultimate landlord, lease amazingly long, ground rent under £10. Zoopla says it's been sold 4 times in the last 25 years. 

The risk may well be forgetting to pay the ground rent and so breaking the lease and being evicted, but that can't possibly be the original intention.