Buying the freehold

cleochan

high new to this, and really looking for some advice from those of you who may have bought your freehold for your home (not flats)

we have aplyied for our freehold, it seems rather high to us, and I was wondering if there is any way we can find out if it is a fair price?

I thought that there was a new law comming into force regading buying the lease but I cant find anything about it!


cleochan

Richard_Webster

If the lease has less than about 200 years to go there will a figure to reflect the amount that would have to be invested over that number of years to bring in the present market value of the property plus a figure related to the ground rent.

If the lease has hundreds of years left then the real value will usually be 20-30 times annual ground rent. On top of that you will have to pay your legal costs and disbursements and those of the freeholder. Reckon on about £500-£750 for that.

So if say the ground rent is £5 p.a. and the lease length remaining is 900 years then value say £100-£150. Add on costs and you get a total figure of between £600 & £900. If freeholder wants say £500 then overall cost to you between £1,000 & £1,250. The figure asked for may seem high but in the overall scheme of things you might think the expenditure was worth it in the long term because freehold houses usually sell more easily (with less potential buyers being put off because Auntie Maud had a flat and that was leasehold and she had a lot of trouble....).

If the figure is significantly over that level then if you have owned the lease for at least 2 years then you can go through all the procedure of requiring a transfer of the freehold under the statutory provisions. This could cost a lot more in terms of legal and other costs and it may be that the freeholder is thinking you won't want to spend the money on going through the procedures and is setting a high price on that basis....

cleochan

thanks for that Richard! Our lease has forty years left on it, we pay £8 ground rent. we wrote and asked for a price for freehold.

We were told £4, 400 plus £500plus for legal fees grand total of £5,000....this offer is for two months only, then we will have to aply and pay £41 for them to send another offer. (£41 is taken of the price)

My question really is it worth getting a solicitor to check it out, or should we just go ahead and pay up?

Cleo

Doozergirl

It's not a solicitor that would value your freehold. You need a surveyor who specialises.

We had a desktop valuation carried out for us for both freehold and lease extensions. It cost about £75 each and that was fast-track I think Used these people http://www.proleagle.com/residentialindex.htm

It might be worth it just to compare and set your mind at ease even, but my gut (which isn't all that clever ) says it doesn't sound astronomical. Trying to work out a price for a lease extension (even with no allowance for de-valuation because of the lease length) brings in much large figures than that :eek: though there is a point at which buying the freehold is the less expensive option - you , I think, are well into that territory. http://www.tenancy-agreements.co.uk/lease.php (5% yield for houses, 50% marriage value)

cleochan

Thanks Toots and Doozergirl! me thinks we could just do nothing...let the kids pay up in 50 odd years time!!

no think we will just pay up now and be done with it! We already have paid the hose off, so its just the freehold now

thanks again

cleo