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  • FIRST POST
    • Marcosc92
    • By Marcosc92 9th Nov 18, 5:16 PM
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    Marcosc92
    Should i buy the freehold on my house
    • #1
    • 9th Nov 18, 5:16 PM
    Should i buy the freehold on my house 9th Nov 18 at 5:16 PM
    I currently live in a new build house which i have been in for almost 3 years. When i bought the house it was sold to us as leasehold.
    I have read a lot in the news about the leasehold scandal which is going on about ground rents doubling every ten years causing leasehold house un-sellable.
    Recently i have been in touch with the builder of the site and asked if it was possible for me to purchase the freehold which they have agreed for a price of 2100 plus 180 legal fees, plus 400 for my solicitors fees.
    We our thinking about selling our house in the next 3-5 years and are worried that if we buy the freehold we wont get any of the money back we spent on it when selling.
    Our ground rent is 105 per year and there is 997 years left on the lease.

    I was wondering if anybody could give me some advice on whether its worth purchasing the freehold or leaving it as a leasehold?

    We also pay service charge for upkeep of the estate we live on, i have read that once you become a freeholder of a property, you have less rights when it comes to service charge price increases.

    I would appreciate feedback.
Page 1
    • HampshireH
    • By HampshireH 9th Nov 18, 5:39 PM
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    HampshireH
    • #2
    • 9th Nov 18, 5:39 PM
    • #2
    • 9th Nov 18, 5:39 PM
    I would always choose freehold over leasehold. As a buyer the freehold would be more attractive. However I think that viewpoint really depends on location. Where I am there are very few leasehold houses and they don't sell anywhere near as quickly as freehold properties.

    Further north its more common and therefore not so much of a resale issue.
    • Tom99
    • By Tom99 9th Nov 18, 5:52 PM
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    Tom99
    • #3
    • 9th Nov 18, 5:52 PM
    • #3
    • 9th Nov 18, 5:52 PM
    2,100 is exactly 105pa valued at a discount rate of 5%.
    That's not too bad, it could be worse, and if 180 is the freeholders total costs that you are paying that's very cheap.
    You might get it cheaper than 2,100 if you exercised a statutory right to buy the freehold but I expect the costs would be a lot higher that 580.
    You might get a better deal if you wait for the proposed leasehold reform legislation but I doubt any saving would be that great.
    Its impossible to say whether it will add 2,680 to the value of your house as that is probably quite a small percentage of it value.
    However given the press outcry about leasehold houses if, when you come to sell, your competition is a similar house which is freehold for a little more money, which would you choose?
    • AdrianC
    • By AdrianC 9th Nov 18, 5:59 PM
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    AdrianC
    • #4
    • 9th Nov 18, 5:59 PM
    • #4
    • 9th Nov 18, 5:59 PM
    I have read a lot in the news about the leasehold scandal which is going on about ground rents doubling every ten years causing leasehold house un-sellable.
    Originally posted by Marcosc92
    The issue there is the doubling clause, not the lease.


    Recently i have been in touch with the builder of the site and asked if it was possible for me to purchase the freehold which they have agreed for a price of 2100 plus 180 legal fees, plus 400 for my solicitors fees.
    We our thinking about selling our house in the next 3-5 years and are worried that if we buy the freehold we wont get any of the money back we spent on it when selling.
    2,680 is neither here nor there in the grand scheme of a house sale. It's the kind of figure that quickly gets waved around in negotiating.


    Perhaps a better question to ask is whether it will make the property easier to sell?
    The answer to that has to be that it cannot make it worse. At the minimum, it's going to be neutral. But I'd hazard a guess that the likelihood is that it will help.


    Our ground rent is 105 per year and there is 997 years left on the lease.
    No problem on the duration. Perhaps the more important question is what increase amount/frequency is specified in your lease?



    We also pay service charge for upkeep of the estate we live on, i have read that once you become a freeholder of a property, you have less rights when it comes to service charge price increases.
    Can't see it making much difference at all. The freehold you are buying is for YOUR plot, and your plot alone. You are still obligated to contribute to the estate maintenance, and you are still one of quite a large number (I suspect) of people doing so.
    • D_M_E
    • By D_M_E 9th Nov 18, 6:15 PM
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    D_M_E
    • #5
    • 9th Nov 18, 6:15 PM
    • #5
    • 9th Nov 18, 6:15 PM
    For a new build property only 3 years old, that price seems cheap.

    Wait until the freehold is sold to some investment company and the price is likely to shoot up to possibly around 30,000 or so plus another 5000 in fees.

    My choice would be to buy it now at the price offered if I had the funds available.
    • ProDave
    • By ProDave 9th Nov 18, 7:03 PM
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    ProDave
    • #6
    • 9th Nov 18, 7:03 PM
    • #6
    • 9th Nov 18, 7:03 PM
    At that price I would buy it. Then again I would never have bought it as leasehold.

    It might not add much to the value, but it WILL increase the number of prospective buyers as there must be lots like me that would never buy a leasehold house.
    • akh43
    • By akh43 11th Dec 18, 11:01 PM
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    akh43
    • #7
    • 11th Dec 18, 11:01 PM
    • #7
    • 11th Dec 18, 11:01 PM
    I am also considering purchasing the freehold on my property but not sure if the best option.

    I moved in property in 2002 and currently pay 4.50 a year ground rent. The documents I got when I purchased the property say there is a underlease of the plot of land my property is built on for the term of 999 years less 10 days, paying 4.10.00 (4.50 new money) document dated 22 May 1913.

    When I first queried the freehold price it was quoted at 441 all inclusive price in 2006, but at that point was not sure what to do so left it.

    When I queried again in 2008 it had increased to 482. Since 2011 they have automatically given a quote to buy freehold but the price jumped up in price 731 and then next increased in 2015 to 739 and for some reason back to 735 in 2016 and the past 2 years it has been 844.55.

    House is worth in the region of 200,000 not many properties sold in our road over the years and last one sold for 250,000 this year. No mortgage and not planning to move in the foreseeable future.

    Now I'm in a position where I can buy, but still dont fully understand the benefit of owning freehold over paying the 4.50 a year ground rent. Any comments appreciated.
    • Tom99
    • By Tom99 12th Dec 18, 9:48 AM
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    Tom99
    • #8
    • 12th Dec 18, 9:48 AM
    • #8
    • 12th Dec 18, 9:48 AM
    Now I'm in a position where I can buy, but still dont fully understand the benefit of owning freehold over paying the 4.50 a year ground rent. Any comments appreciated.
    Originally posted by akh43
    4.50 per year and a 999yrs lease is, in itself, not worth buying out, the cost and fees are likely to outweigh the saving of 4.50.
    However, what makes it much more beneficial to buy the freehold is that your current lease may well put restrictions on what you can do to the property, what use you can put it to and also require you to obtain the freeholders permission for certain works or changes.
    All of that is very worth while buying out, particularly if the price is fairly low as in your case.
    • eddddy
    • By eddddy 12th Dec 18, 10:02 AM
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    eddddy
    • #9
    • 12th Dec 18, 10:02 AM
    • #9
    • 12th Dec 18, 10:02 AM
    Since 2011 they have automatically given a quote to buy freehold but the price jumped...
    Originally posted by akh43
    So it sounds like they're keen to sell freeholds - perhaps because it's not economic to collect GRs of 4.50 per year.

    So if you want to buy the freehold, you could try making them an offer, below the price they're asking.

    Although, the legal fees might end up being higher than the cost of the freehold.
    • TE16
    • By TE16 7th Jan 19, 2:34 PM
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    TE16
    Advice needed!
    Hi! I've been in a new build, leasehold house for 3.5 years and am considering buying the lease but am not sure whether it will add enough value to justify it. The freeholder has given a purchase price of 7.5k including their legal fees. My house is currently valued at circa 420k, I pay 325 per year on ground rent and the lease has 144 years remaining.
    The main reason for potentially buying it now is to avoid having to pay 108 per question regarding alterations to the property plus 300 per change if I'm allowed to go ahead! This seems a massive rip off!
    Would anyone be able to offer some good advice please?
    Thank you in advance.
    • diggingdude
    • By diggingdude 7th Jan 19, 7:57 PM
    • 544 Posts
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    diggingdude
    The best reason to do it is it will help you sell. Many many people, myself included, automatically would discount buying your property as we don't want a leasehold house. Spending that money now will pay off long term when you want out
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    • Continental
    • By Continental 7th Jan 19, 8:05 PM
    • 5 Posts
    • 10 Thanks
    Continental
    I have to agree with other posters here. I wouldn’t for one moment consider buying a house which is leasehold, although would for a flat.

    As far as I understand it, if you own the freehold of a property you own the building and the *land* including the garden(s) up to the property line on the title deeds that the property is sitting on. With leasehold, you may own the building but you will never own the land underneath it.

    I know which I would prefer.....and I’m pretty sure that most purchasers of a house would do so too.....: freehold all the way!
    • hazyjo
    • By hazyjo 8th Jan 19, 10:47 AM
    • 11,255 Posts
    • 14,951 Thanks
    hazyjo
    Hi! I've been in a new build, leasehold house for 3.5 years and am considering buying the lease but am not sure whether it will add enough value to justify it. The freeholder has given a purchase price of 7.5k including their legal fees. My house is currently valued at circa 420k, I pay 325 per year on ground rent and the lease has 144 years remaining.
    The main reason for potentially buying it now is to avoid having to pay 108 per question regarding alterations to the property plus 300 per change if I'm allowed to go ahead! This seems a massive rip off!
    Would anyone be able to offer some good advice please?
    Thank you in advance.
    Originally posted by TE16
    Would have been better starting your own thread really.


    Do a poll if you want on who would buy a leasehold (new-ish) house. I'm another who wouldn't touch them with a bargepole. If you're limiting your house to half the standard number of viewers/buyers, that surely has to go against you. (Appreciate it only takes one to want it...)


    Along with the charge you mention, you'd prob also have to pay for an info pack which may cost in the region of 400 (give or take a couple of hundred). If you still have to pay a service charge, despite buying the FH (common with new build estates), you may still have to pay that fee for an info pack.


    Were you unaware of what LH entails when you bought the property? Don't go expecting other buyers to be so nave, especially all what's to come in the news re LH new build houses. I should imagine many others won't be touching them with bargepoles in the near future after being clued up by the media.


    I would definitely buy the FH.
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    • Slithery
    • By Slithery 8th Jan 19, 10:59 AM
    • 1,154 Posts
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    Slithery
    As far as I understand it, if you own the freehold of a property you own the building and the *land* including the garden(s) up to the property line on the title deeds that the property is sitting on. With leasehold, you may own the building but you will never own the land underneath it.
    Originally posted by Continental
    Nope, if it's a leasehold you don't own the building either. Just think of it as a long rental where you pay upfront for the next 100 years (or whatever the lease remaining is).
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