Buying Leasehold on Council Properties

dander

Hello

What do you all know about buying the freehold on a house? I live in a leasehold ex-council and pay the princely sum of £10 a year ground-rent and had always thought at that price it wasn't something I would ever worry about.

But I've recently had a leaflet through the door about changes to Leasehold Reform legislation, saying that "recent case law will require landlords to amend the valuations carried out each time someone applies to buy the freehold of their house..." - and warning that it's likely this means prices for buying freeholds/extending leases will go up.

Now I'm wondering does this mean the ground rent could go up too? Would I be sensible to consider buying the freehold to protect myself, or are they just putting the wind up me? They charge £50 to get a calculation of how much it would cost to do - so I'm not in a rush to get the valuation if there's really no point doing it!

Any thoughts greatly appreciated!

terryw

dander wrote: »

Hello

What do you all know about buying the freehold on a house? I live in a leasehold ex-council and pay the princely sum of £10 a year ground-rent and had always thought at that price it wasn't something I would ever worry about.

But I've recently had a leaflet through the door about changes to Leasehold Reform legislation, saying that "recent case law will require landlords to amend the valuations carried out each time someone applies to buy the freehold of their house..." - and warning that it's likely this means prices for buying freeholds/extending leases will go up.

Now I'm wondering does this mean the ground rent could go up too? Would I be sensible to consider buying the freehold to protect myself, or are they just putting the wind up me? They charge £50 to get a calculation of how much it would cost to do - so I'm not in a rush to get the valuation if there's really no point doing it!

Any thoughts greatly appreciated!

FWIIW, many years ago I was in a house built by a well-known builder and there was the same offer to buy the leasehold to avoid the annual ground-rent of about £10. I took the view then, that it was probably well worth the capital sum of £200 or so to buy the lease-hold just on the off-chance that when I came to sell, if the market was sticky then my free-hold dwelling was marginally better than a similar dwelling on the estate. I went ahead without employing solicitors and after I had bought it merely took the paperwork to the land registry who changed the LR certificate without any problems.

In retrospect it was probably a waste of time and money.......I would have been better off just paying the annual ground rent. Your choice really.

I doubt (but don't really know) if the ground rent can be increased, but have a look at the lease to see if this is possible. You can obtain a copy of the lease (if you do not hold this already) for a small fee from the land registry on-line.

terryw

dander

Hi Terry

That's really helpful - I hadn't even thought about looking at the lease! I've got it in the filing cabinet - so will have a look.

£200 though! I assumed it would be in the £1000s to buy a freehold. I think you've only added to the dilemma there :-)

poppysarah

Just ring a local solicitor and ask for an estimate of their costs.

You can write to the council (who presuambly own your freehold) and ask them how much it is. They tell you for free.
Compare with costs of renewing it (they can prob also tell you that)
They may tell you over the phone.

Leaflet through the door = spam almost certainly some money grabbing company. Ignore it.

Shorter leases - less than 70 years may make remortgaging difficult.

terryw

poppysarah wrote: »

Just ring a local solicitor and ask for an estimate of their costs.

You can write to the council (who presuambly own your freehold) and ask them how much it is. They tell you for free.
Compare with costs of renewing it (they can prob also tell you that)
They may tell you over the phone.

Leaflet through the door = spam almost certainly some money grabbing company. Ignore it.

Shorter leases - less than 70 years may make remortgaging difficult.

Some good advice here, but these low ground-rents on houses are not in the same league as leasehold flats in a block. The usual length of the lease is 999 years, and in the case of the the house that I had, the ground rent was originally given to charity.



terryw

puddy

i live in a private block, its always been private, the ground rent is 60 and maintenance usually works out around 1000 a year. my lease is 80 years left and thats sort of pushing it as i have it up for sale at the moment. i would love to extend it but i know someone else in the block who investigated it, she wants to sell hers but her lease is very short, about 55 years i think, and i think she was quoted figures around 27k to extend it. she could go down the route of a tribunal to get it valued properly but she was put off so didnt persue it any further. i havent made enquiries about mine

edited to say that these are flats in london, not a house

Richard_Webster

First of all, lets get some clarity. Will OP tell us whether this is a house or a flat involved.

Generally ground rents can't be increased unless there is wording in the lease that says so.

dander

Definitely a house!

Consequently don't have any other contact with leaseholders other than the yearly £10 cheque - they aren't involved in maintenance, insurance or any thing else.

Oh and the leaflet isn't spam - it's all above board! It's from another local leaseholder, who has the lease on a lot of private houses in the area. Plus they own pretty much all the public buildings, town centre etc. I'm 100% sure that the facts are correct - just not very clear!

My question, really is less about the specific costs of the transaction, and more about whether there is any point, bearing in mind, even if I live in the house for another 50 years, if the ground rent stays as it is, I'll only spend £500 in total on ground rent.

Ps. I can't check the lease until I get home much later tonight.

puddy

ive never heard of leasehold houses. i think a freehold property is worth a lot more than a leasehold

dander

Fished the lease out - It's possibly even more complicated now! I've got a sublease of 118 years for the sum of £10 a year, from the council. There's nothing in the lease to say that can increase.

They in their turn have a head lease for 999 years for the whole plot of land my estate is built on.

So now I'm not even sure who I'd have to approach to buy the freehold! But I'm certainly leaning more and more towards just staying leasehold. Having been reassured that the ground rent is fixed, I can't see that there are any real disadvantages to doing so.

Richard_Webster

As the lease is only 118 years the sum for the freehold (if it was easily obtainable) would be say about £200-£300 to reflect the value of the ability to receive the ground rent and a further sum of a few hundreds or low thousands to reflect the ability to recover the property in 118 years time - i.e what sum when invested at around 4.5-5% for 118 years would bring in the present market value of the house?

It really depends how long you plan to stay in the house. There will come a time say in the 80s of years that switched on buyers will start to think about future mortgageability and will want a longer lease or the freehold.

The other issue is typified by this post:

ive never heard of leasehold houses. i think a freehold property is worth a lot more than a leasehold

Because people don't really understand about leasehold houses and may be know people who have had trouble with leasehold flats they think anything leasehold is strange/to be avoided. This means that a leasehold house is that much more difficult to sell because a percentage of potential buyers simply won't look at them. If anything, that is more of a reason to try to acquire the freehold if this can be done without too much hassle and expense. (Sometimes the freeholder has disappeared and this makes the acquisition of the freehold expensive in legal costs.)