Buying house leasehold after being auctioned

MPJ77

Hi, I wonder if you can help me please. I'm starting a separate thread as most of the advice here seems to be geared towards flats, whereas this is private property with a small mortgage.

I own a semi detached with a 100 year lease taken out in I believe 1966 (the actual house was built in 1968) and pay £32.00 per year in ground rent. It's current value is approx £160k.

I was contacted in September and was informed by the vendor (Cottons) that the freehold of several of the houses in my street were being put up for auction and I could buy it for approx £10,000 plus costs. Obviously I could not afford this at such short notice and after speaking to someone at Cottons that my statutory rights to buy it would not be affected regardless of if the auction proceeded the following month or not.

The auction went ahead the following month (October) and mine and 2 others sold for £17,000 (eg £5,600 each). I duly appointed a representative and they served the new leaseholder of the intention to buy in December (after maniacally scrambling for the finance, I'm on ESA following a nervous breakdown). They have now contacted us back and are asking £12,192 for the interest. On the new leaseholders correspondence they state a sale price of £20,375 so I am not use where the figure of £12,192 comes from.

I have contacted the leasehold advisory service and frankly the woman on the phone was abrupt and worse than useless. It frankly disheartened me though by basically stating I have no statutory rights and the vendor can charge what they want.

I'm aware there are currently 2 methods for calculating a leasehold value and the government is currently introducing legislation do away with them and introduce a new method. As far as I can gather that the next step is to get a RICS valuation and use this as a basis for tribunal, as a 114% increase seems excessive, especially given the short notice involved. Thank you for any advice I an extremely grateful.

eddddy

Just to clarify the terminology - based on what you say - it sounds like you own the leasehold of your house (so you are the leaseholder), and you want to buy the freehold (from the freeholder).

In simple terms, there are 2 ways for you to buy the freehold…

1. The informal route
2. The statutory route (also called statutory enfranchisement)

It sounds like you're trying the informal route. So there are no rules. The freeholder can ask for any price they like, you can offer any price you like - and if you can negotiate and find a price that you're both happy with, you can go ahead.

You can investigate going down the statutory route, if you want. Normally you would start by getting a RICS valuer to give you an estimate of what you might have to pay for the freehold.

(The valuation formula will be based on length of lease, value of the house, and amount of ground rent.

It doesn't matter what the freeholder paid at auction - that's irrelevant. A tribunal would ignore that.)

Legal/valuation fees for the statutory route might be £2K to £4K on top. Legal/valuation fees for the informal route should be lower.

JM68

Not an expert but when we extended our lease on our old flat I found online calculators helpful. There don't seem to be many online calculators for freehold purchase but I did find one. It suggests the premium could be quite a bit higher than you currently anticipate (and uses lower legal costs than I personally would expect). If it's correct then 12k might be a bargain. A good first step might be to instruct a professional valuer.

https://salarysacrificecalculator.uk/freehold-purchase-calculator/