Buying freehold

John-K_3 · 7 March 2018 at 8:23PM

I’m looking at buying a new house that is offered leasehold; can anyone give a simple summary of if and how I can subsequently buy the freehold should the owner of the land not be inclined to sell?

Ground rent is not ridiculous, it starts at £600/ year and is indexed to RPI. Lease is 999years.

Smodlet · 7 March 2018 at 8:29PM

I am not sure but do not think it possible to buy something its owner does not want to sell unless you are a local authority/the government. I know you are a banker, JK but don't think it is possible with freehold.

If the owner does decide to sell, they have to offer the owner of the house first refusal but they have to want to sell in the first place.

I suggest it may be far more straightforward to buy a freehold property, if at all possible, and avoid any faffing around afterwards but appreciate this is nigh impossible in places like London.

John-K_3 · 7 March 2018 at 8:35PM

Thanks. I!!!8217;m strongly averse to buying leasehold, but we like the new development, and if we go there, that!!!8217;s all that!!!8217;s on offer.

999 years and !!!8220;reasonable!!!8221; rent means that I might just put up with it, but I!!!8217;d really rather not.

Unfortunately they are selling well enough to people who don!!!8217;t seem to care that insisting will not likely work.

Smodlet · 7 March 2018 at 8:38PM

It seems most new builds are sold as leasehold these days (never used to be the case) Personally, I would not touch one with a barge pole. I guess you can put up with it or maybe take a step back and ask yourself just what you have against older properties. There was a thread about the pros and cons of just this a month or so ago. If I come across it, should I post the link?

You could, of course, make your own list.

eddddy · 7 March 2018 at 9:55PM

Hi John-K

I think Smodlet is giving you some dodgy info.

You will usually have the statutory right to buy your freehold once you've owned the lease for 2 years.

Here's some info: https://www.lease-advice.org/advice-guide/houses-qualification-valuation/

It might be simpler if you could persuade the developer to sell you the freehold now - but it would increase the price of the house.

Smodlet · 8 March 2018 at 12:52AM

Sorry, John-K. If that is the case, I don't understand why everyone does not buy the freehold if they have a house. Can understand not doing so with a flat, especially in a council-owned block.

AnotherJoe · 8 March 2018 at 1:06AM

Probably two reasons
1. because they are stretched to the limit and the house is only affordable if they dont buy the freehold (or, similarly, they can buy a 2 bed freehold or a 3 bed leasehold and dont really understand the difference)
2. Just before the 2 year period is up, the house builder flogs the freehold to a company that milks all the Ts&Cs to extract every penny and the freehold price becomes unaffordable to most.

oh and 3, buyers of these houses are clueless and have no idea about freehold/leasehold in the first place and since they use the builders solicitor to do the transaction "as its cheaper" that solicitor doesn't exactly go out of their way to explain (one could suspect theres a massive misselling scandal coming along in a few years lets see)

eddddy · 8 March 2018 at 8:23AM

Smodlet wrote: »

Sorry, John-K. If that is the case, I don't understand why everyone does not buy the freehold if they have a house.

Basically - it's the cost.

Especially when the lease has high/escalating ground rents. That can push up the cost of the freehold dramatically.

As an example, this guy bought his leasehold newbuild for £320k. The freehold later cost him an extra £38k. https://www.telegraph.co.uk/property/buy/freehold-cost-38000-now-denied-compensation/

Perhaps the house seemed cheap at £320k (for the leasehold), and would have seemed expensive at £358k (for the freehold).

And most people would have stretched themselves to pay the initial £320k, so don't have £38k spare to buy the freehold.

Smodlet · 8 March 2018 at 9:28AM

It really is a racket, isn't it? Still, if people keep on buying these places, it will continue. I would much prefer to buy an older, freehold house and do it up, probably for a fraction of what buying the freehold on a newer house would cost, which still might need work doing to it.

PLEASE READ BEFORE POSTING

Buying freehold

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free