Specialist in purchasing the freehold

20122013

I have asked my Freeholder via the informal route about purchasing the Freehold of my leasehold  terrace HOUSE (not a block of flats or a house converted into flats) and they are not looking to dispose of the freehold of the property.  I believe I can still purchase the freehold via the formal route?

As I have not yet found a 'specialist' in purchasing freehold in my local area but have found a few solicitors that do leasehold extensions.  Will they be suitable in putting an application for purchasing the freehold? I am querying this, as they all have said that I need to get at least 50% from the other leaseholders to agree to buy the freehold  which I do not think this is correct, so I am think I need  a specialist in Freehold purchase.  Is there another (quicker) way to find a  local solicitor who specialise in this? as I am going through each solicitor on the Law Society Directory and it takes time to hear back from them.    

Is it better to instruct separately:  a solicitor who specialises in purchasing freehold and also a local valuer? or use the solicitor's own valuer ?    

When I start the process of purchasing my Freehold can the completion be transferred to the buyer  ? or does the Freehold purchase needs to be completed before I can sell  ?

Appreciate your comments.

eddddy

20122013 said:

I am querying this, as they all have said that I need to get at least 50% from the other leaseholders to agree to buy the freehold  which I do not think this is correct, 

As you're talking about a house - you are correct.  (If you were talking about a block of flats, the "more than 50% of leaseholders" rule would apply.)

It's very strange that multiple solicitors are getting that wrong. Are you clearly stating that you own a leasehold house and not a flat?

I guess it may be that a junior clerk is responsible for replying to initial emails, and is sending out the wrong standard reply. So it might be worth querying, to see if your query gets passed on to somebody more knowledgeable.

20122013 said:

Is it better to instruct separately:  a solicitor who specialises in purchasing freehold and also a local valuer? or use the solicitor's own valuer ?    

There are some companies that specialise in freehold purchases and lease extensions - and they have their own legal person/team and their own valuation person/team. So they can do the whole process for you.

Alternatively, some solicitors might suggest valuers who they've worked with before - but they'll probably be happy to work with your choice of valuer as well.

20122013 said:

When I start the process of purchasing my Freehold can the completion be transferred to the buyer  ? or does the Freehold purchase needs to be completed before I can sell  ?

In theory, you can transfer the benefit to the buyer.

But do you mean do the transfer part way through the process? If so, that's probably not be a sensible plan.

Or do you mean that you just serve the initial notice (between exchange and completion of your sale), and the buyer then takes over?  If so, there's no longer any need to do that. the "2 year ownership rule" has been abolished.

So you probably wouldn't want to transfer the benefit to the buyer anyway.

20122013

eddddy said:

20122013 said:

I am querying this, as they all have said that I need to get at least 50% from the other leaseholders to agree to buy the freehold  which I do not think this is correct, 

As you're talking about a house - you are correct.  (If you were talking about a block of flats, the "more than 50% of leaseholders" rule would apply.)

It's very strange that multiple solicitors are getting that wrong. Are you clearly stating that you own a leasehold house and not a flat?

I guess it may be that a junior clerk is responsible for replying to initial emails, and is sending out the wrong standard reply. So it might be worth querying, to see if your query gets passed on to somebody more knowledgeable.

MY REPLY.

Yes, I did not speak to any solicitors.

20122013 said:

Is it better to instruct separately:  a solicitor who specialises in purchasing freehold and also a local valuer? or use the solicitor's own valuer ?    

There are some companies that specialise in freehold purchases and lease extensions - and they have their own legal person/team and their own valuation person/team. So they can do the whole process for you.

Alternatively, some solicitors might suggest valuers who they've worked with before - but they'll probably be happy to work with your choice of valuer as well.

MY REPLY.

Great to know, if I was to do it, I may look for a local valuer and see whether they know of any specialists.

20122013 said:

When I start the process of purchasing my Freehold can the completion be transferred to the buyer  ? or does the Freehold purchase needs to be completed before I can sell  ?

In theory, you can transfer the benefit to the buyer.

But do you mean do the transfer part way through the process? If so, that's probably not be a sensible plan.

Or do you mean that you just serve the initial notice (between exchange and completion of your sale), and the buyer then takes over?  If so, there's no longer any need to do that. the "2 year ownership rule" has been abolished.

So you probably wouldn't want to transfer the benefit to the buyer anyway.

MY REPLY.
Good point! Yes, I did mean 'do the transfer part way through the process?'

So if I put the property on the market and describe it as 'in the process of buying the Freehold, it will still need to be listed as a Leasehold property'? So the asking price should not be listed as the market value of a Freehold, as it is a higher value than a leasehold property?

Or find a buyer who will pay the asking price of a freehold property and I start the buying the freehold process and agree with the buyer to complete it? (I think this is unlikey to happen,as it seems to be a lot of risk. 

In addition, as the Freeholder seems to be difficult, I am guessing buying the Freehold will take the maximum time of 2 years? So I either wait till the completion of the Freehold purhcase then sell it.

Now, I am thinking of leaving the lease as it is and / not buy the Freehold. Instead find an agent who understands the buying of the freehold process and will tell the buyers these options and they can do it after owning the property (and not longer need to wait as the 2 years no longer applies)?

My options for selling (without making a loss):

1. sell it now as a leasehold with 84 - 85 year lease ?

2. start the lease extension and then transfer the completion to the buyer?

3. unlikely to find a buyer without withdrawing to start the process of buying the freehold (as the agents do not seem keen on this)

I would be interested to find out whether there are any other options, please ? 

eddddy

20122013 said:

... they can do it afrer owning the property for 2 years?

As I mentioned, the 2 year ownership rule has been abolished (as of 31st Jan). The buyer can start the process immediately after they purchase.

20122013 said:

so if I put the property on the market as 'in the process of buying the Freehold, it will still need to be listed as a Leasehold property'? So the asking price should not be listed as the market value of  Freehold, as it is a higher value than a leasehold property

I'm not sure that I completely understand what you're wanting to do.

You can list the property as being "Freehold on Completion" if you want to. But you can't be sure of a date when you'll own the freehold - it could be 6 months or 18 months.

So you'd need to find a buyer who doesn't mind waiting anything between 6 months and 18 months for completion (which seems unlikely).



Or are you talking about selling part way through the freehold purchase process?  If so, that's unlikely to be acceptable to most buyers because...

If you start the process...

• You will choose the solicitor
• You will choose the valuer
• You might instruct the valuer how you want them to negotiate

Then it might be hard to find somebody who

• Wants to buy your house 
• Is happy to inherit your choice of solicitor (there could be a conflict of interests)
• Is happy to inherit your choice of valuer
• Is happy to trust that you haven't messed up the negotiation so far

Alternatively, the buyer could try to transfer the process over to their choice of solicitor and valuer - but it would be very messy, changing part way through the process.

20122013

eddddy said:

20122013 said:

... they can do it afrer owning the property for 2 years?

As I mentioned, the 2 year ownership rule has been abolished (as of 31st Jan). The buyer can start the process immediately after they purchase.

Thank you for understanding my post and you are spot on.

I want to check that 2 year ownership rule has been abolished (as of 31st Jan) also apply to extending the lease? So the buyer can start the process immediately after they purchase? If so, I will leave the lease as it is and not buy the freehold.

eddddy

20122013 said:

I want to check that 2 year ownership rule has been abolished (as of 31st Jan) also apply to extending the lease? So the buyer can start the process immediately after they purchase? If so, I will leave the lease as it is and not buy the freehold.

Here's some info on the 2 year rule being abolished - both for buying freeholds and lease extensions:
https://www.lease-advice.org/news-item/leasehold-reform-abolition-of-the-two-year-rule

20122013

eddddy said:

Here's some info on the 2 year rule being abolished - both for buying freeholds and lease extensions:
https://www.lease-advice.org/news-item/leasehold-reform-abolition-of-the-two-year-rule

Appreicate this - very helpful. As I am leaving the lease as is, would it help to sell my property due to low lease by asking the agent to let buyers know about '2 year rule being abolished for both for buying freeholds and lease extensions' or would it create more 'mess' ? As the agents they do not seem to know about the option of buying the freehold.

eddddy

If it were me, I might do the following...

• Get a valuation from a RICS valuer for extending the lease

• Then tell the estate agent to say something like this to prospective buyers:

"The leasehold house has an asking price of £x

An RICS valuer has estimated the cost of buying the freehold to be £y (plus fees)

So you have 2 choices...

1) If your budget is tight, you can just buy the house for £x now - and take a few years to save up to buy the freehold

2) Or if you have the funds, you can buy the house for £x, and immediately start the freehold purchase process, and expect to pay approx £y for that"

But I agree that if your estate agent doesn't understand about buying a freehold, they might get confused about this, and so they might confuse (and mislead) prospective buyers even more.

And if a buyer gets too confused, they might decide it's all too complicated and walk away. 

(TBH, if you haven't instructed an estate agent yet, I would specifically look for one who has enough knowledge to "talk sensibly" about buying a freehold to a prospective buyer.)

20122013

eddddy said:

If it were me, I might do the following...

• Get a valuation from a RICS valuer for extending the lease

• Then tell the estate agent to say something like this to prospective buyers:

"The leasehold house has an asking price of £x

An RICS valuer has estimated the cost of buying the freehold to be £y (plus fees)

So you have 2 choices...

1) If your budget is tight, you can just buy the house for £x now - and take a few years to save up to buy the freehold

2) Or if you have the funds, you can buy the house for £x, and immediately start the freehold purchase process, and expect to pay approx £y for that"

But I agree that if your estate agent doesn't understand about buying a freehold, they might get confused about this, and so they might confuse (and mislead) prospective buyers even more.

And if a buyer gets too confused, they might decide it's all too complicated and walk away. 

(TBH, if you haven't instructed an estate agent yet, I would specifically look for one who has enough knowledge to "talk sensibly" about buying a freehold to a prospective buyer.)

I agree and I have just spoke to one agent, and I did not get the answer from him, but have concluded that maybe not to mention the option on Freehold (as I cannot dictate what they say) and the buyer's solcitor should let them know of this option.

This agent also suggest the buyer would like to know the costs of extending the lease. As I have used the informal route to ask the Freeholder about extending the lease and their fee was more than the Leasehold calculator. What are my next steps to get a quote or price?  as they have not stated their solicitors fees? and I prefer not to contact them as the fee may increase.

I need to find out, is there anything else need to be in my price to potenital buyers?

- Freeholder price to extend the lease

- Freeholder Solicitors's fees to extend the lease

- Disbursements

- My solicitors's fees to extend the lease

eddddy

20122013 said:

This agent also suggest the buyer would like to know the costs of extending the lease. As I have used the informal route to ask the Freeholder about extending the lease and their fee was more than the Leasehold calculator. What are my next steps to get a quote or price?  as they have not stated their solicitors fees? and I prefer not to contact them as the fee may increase.

A Statutory Lease extension for a house is free. (You only pay legal fees.)

But it's probably a bad idea - because the extended part of the lease will have a dramatically higher ground rent.

I guess you must have been using a lease extension calculator intended for flats.

Buying the freehold is a better option.

Tell the estate agent not to talk to people about extending the lease, because the estate agent doesn't seem to understand this stuff.


For what it's worth, if you haven't already instructed this estate agent, I would give up with them and find another estate agent who understands.

20122013

eddddy said:

20122013 said:

This agent also suggest the buyer would like to know the costs of extending the lease. As I have used the informal route to ask the Freeholder about extending the lease and their fee was more than the Leasehold calculator. What are my next steps to get a quote or price?  as they have not stated their solicitors fees? and I prefer not to contact them as the fee may increase.

'A Statutory Lease extension for a house is free. (You only pay legal fees.)'

MY REPLY: Thank you for this. Last year, the Freeholder response to a leasehold extension was :

'we will offer a Statutory 50 year lease extension for a consideration of £8500  and our solicitor fees of £1200 +VAT + Disbursements (if any)  whether the matter proceeds to completion or not.'  Just as well this offer has already expired.

'But it's probably a bad idea - because the extended part of the lease will have a dramatically higher ground rent.'

MY REPLY: Agreed.

'I guess you must have been using a lease extension calculator intended for flats.'

MY REPLY: Yes, a few agrents had showed me the same site  as I did not know any better, and I do now.

'Buying the freehold is a better option.'

MY REPLY:  Yes, if I was not selling I would have opted for buying the Freehold.

As I am seeling so I need to get at one quote for the lease extension and ; one for buying the freehold so there is information for the buyer.

'Tell the estate agent not to talk to people about extending the lease, because the estate agent doesn't seem to understand this stuff. 

For what it's worth, if you haven't already instructed this estate agent, I would give up with them and find another estate agent who understands.
'

MY REPLY: I am in the process of instructing a different agent and it has not been as easy as I had hoped.  It will be a challenge to them not to talk about the lease extension as they seem to be on auto pilot mode and I sense that my property is priced at the lower end and their fee is the same regardless of the SOLD price..

I wonder how to get around this, tell them to speak to  their solicitor about they will not to pay for the legal fees for all parties but not for extension the lease and also option to buy the freehold?