Freehold purchase advise

neilied

hi all. Have read various topics and found some info on reforms. Mum asked us to look into her property as she’s 91 and wanting to get ‘things in order’ she has owned along with my late dad the property since the late fifties and the mortgage was paid off in 79.

We found that it is a leasehold and mum has a direct debit set up to a solicitors for ground rent which is currently less than £15/year. It appears on land reg search that the freehold is owned by an investment corp within a portfolio and as such we reached out to the solicitor to enquire about purchasing the freehold.

we were copied into a forwarded email to their contact and awaited a reply. We can see that the lease has less than 30 years remaining and believe this would make it unmortgageable when the time to sell comes. We are aware there is all some issues with the property and lack of upkeep so without getting a valuation we think at best it would be worth £130-150k.

Imagine our surprise when we received a reply offering the purchase at £30k plus fees. Although we have the deeds to the property we do not have the lease details to start looking into this. I am wondering how they came to this valuation and it appears far higher than the average based on this site and on a property with such a low value.

We have since asked about renewal but have received no reply. Any advice would be gratefully received.

JM68

It will be quite a complex formula, but given if you don't extend the lease or buy the freehold they will get the whole property in 30 years for nothing that will be where the value to them (and cost to you) will mostly arise from, not the loss of a low annual ground rent.

When I looked into it I found very few online calculators for freehold purchase costs.

However, to extend a lease by the statutory term for a similar property would be over £30k (plus the leaseholder and freeholders professional and legal costs, maybe another £5k in total).

As buying the freehold would seem to be better for the owner than just extending the lease (particularly for a house) it does not on the face of it seem bad value.

NB We used the connaughts lease extension calculator when we extended our lease on our previous flat and it was pretty accurate to what we ended up paying. Also, it is one of the few to give costs when leases get very short in remaining terms.

https://connaughtlaw.com/real-estate/lease-extension-calculator/

JM68

Just to add you will probably get more engagement with your post if you ask the mods to move it to the house buying, renting and selling forum, which is where most lease/freehold issues are posted.

neilied

thanks for the reply. Crazy isn’t it that you buy the house and pay the mortgage but at the end of it the ownership is at risk because of this. I remember dad getting an offer around the late 90,s would have had more time remaining on leasehold and house values would have been less than half but the offer was around £1k should have done it.