daiking Posted May 23, 2019 Share Posted May 23, 2019 Our house was build in the mid-60s and is leasehold on a 999 year lease. Didn’t seem to be anything weird in the lease, council looks after the cul-de-sac etc. The ground rent is £12 pa and the freeholder is asking for £1300 to buy the freehold. About 20 houses on the street, some to pay less, we’re paying the max sort of figure as they’ve done their homework and know we have a larger than average plot and have built on it. We would obviously like to buy the freehold but 100x ground rent cost seems excessive. Not sure if this is a fair figure or whether we could realistically negotiate. Any thoughts? Link to comment Share on other sites More sharing options...
lizzie Posted May 23, 2019 Share Posted May 23, 2019 Sounds cheap to me I would buy it. Link to comment Share on other sites More sharing options...
daiking Posted May 23, 2019 Author Share Posted May 23, 2019 6 minutes ago, lizzie said: Sounds cheap to me I would buy it. It’s not a lot in the grand scheme of things but relative to the ground rent it seems steep Link to comment Share on other sites More sharing options...
Mr Punter Posted May 23, 2019 Share Posted May 23, 2019 It is not just the ground rent and there may be other restrictions on what you can do and what you have to pay. Sometimes for example you need freeholder consent to develop and they will often charge a hefty fee to grant this. Are there any service charges? Link to comment Share on other sites More sharing options...
lizzie Posted May 23, 2019 Share Posted May 23, 2019 freehold property is always better than leasehold, buy it while you have the chance. Link to comment Share on other sites More sharing options...
SiBee Posted May 23, 2019 Share Posted May 23, 2019 Our home is a newish build, about 14 years old I think. We pay £50 a year ground rent to the listed owner Simerec. Often in the past the lease would get sold on and we would get the option to purchase it but this would often be in the thousands. I classed this as money I could put to better use but it would be nice to own. As we will be looking to sell up soon I don`t see it is a selling point or a deal breaker either. If mine was £1200 then I would be thinking hard about buying it even at £12 a year land rent and 103 year payback. Link to comment Share on other sites More sharing options...
lizzie Posted May 23, 2019 Share Posted May 23, 2019 @SiBee do you have an escalator on your ground rent? Link to comment Share on other sites More sharing options...
daiking Posted May 23, 2019 Author Share Posted May 23, 2019 I don’t have any service charges and I think it’s fixed. It was owned by the original builders but I think the management co have bought it out and now want to make their money selling to us. We’re going to buy it but I don’t want to have the piss taken. 100x ? Link to comment Share on other sites More sharing options...
SiBee Posted May 23, 2019 Share Posted May 23, 2019 4 hours ago, lizzie said: @SiBee do you have an escalator on your ground rent? Not sure what that is? It is fixed at £50 a year if that’s what you mean. Bernadette just informed me that Simerec sent a letter informing us that we had to request the purchase fee from them and this may be chargeable. From this I am guessing that they can charge what they want for the lease purchase then? Link to comment Share on other sites More sharing options...
lizzie Posted May 23, 2019 Share Posted May 23, 2019 1 hour ago, SiBee said: Not sure what that is? It is fixed at £50 a year if that’s what you mean. Bernadette just informed me that Simerec sent a letter informing us that we had to request the purchase fee from them and this may be chargeable. From this I am guessing that they can charge what they want for the lease purchase then? Yes sounds like you might be in the scandalous situation that a lot of leaseholders are in with the new companies that have bought up blocks of leases. An escalator in your lease is provision to increase the ground rent every few years and in newer leases (in say last 15 years or so) lots of those increases are onerous. I would never buy a leasehold property, I have owned blocks of freeholds but before this latest scam came into being. They are a commodity that can be traded. As a property leaseholder you do not own the land your house is built on you rent it. If you have the opportunity to buy your freehold do it at the earliest opportunity. There are specialist advisors out there if you need help to challenge the Landlord on his price. One of the instances where the English language descriptions are accurate.....Landlord, one who owns the land....Ground rent, the rent the tenant pays to the Landlord for the use and occupation of his land....the leaseholder....the tenant of the land.....the lease....sets out the terms between Landlord (lessor) and Tenant (lessee) the rent and terms of use and occupation. When tenants paid small fixed ground rents and before leasehold reform tenants had less rights but in some ways more protection. My advice to anyone is buy your freehold if you can. Link to comment Share on other sites More sharing options...
Roundtuit Posted May 23, 2019 Share Posted May 23, 2019 2 hours ago, daiking said: I don’t have any service charges and I think it’s fixed. It was owned by the original builders but I think the management co have bought it out and now want to make their money selling to us. We’re going to buy it but I don’t want to have the piss taken. 100x ? To me, it sounds like a reasonable price to secure the freehold. Even if it's 50% over-priced, I wouldn't want to lose the option over a few hundred quid. Express an interest and make an offer! Link to comment Share on other sites More sharing options...
Triassic Posted May 24, 2019 Share Posted May 24, 2019 Have you read the relevant government guidance on valuing your ground tent https://www.lease-advice.org/advice-guide/leasehold-houses-valuation/ Link to comment Share on other sites More sharing options...
Ferdinand Posted May 24, 2019 Share Posted May 24, 2019 Personally if I had the cash I would snap their hand off in those circs. Just the paperwork for something about which there is an argument in 20 years could cost more than that. I would probably interpret the offer as the Freeholder trying to get out with some salvage before the politicians do a random populist stomp on the whole concept of leasehold in individual houses. They think they know what is coming. Ferdinand Link to comment Share on other sites More sharing options...
daiking Posted May 24, 2019 Author Share Posted May 24, 2019 2 hours ago, Triassic said: Have you read the relevant government guidance on valuing your ground tent https://www.lease-advice.org/advice-guide/leasehold-houses-valuation/ It made no sense. AFAIC the value of the freeholder getting the land back in 900 years is nothing To keep it simple, their valuation is about 1% of the land value - assuming that is 1/3 of the property value. approx. 400k -> approx. 133k -> approx. £1300 -> approx. 100x ground rent. Commiserations @SiBee I'm sure that company you mention owns the freehold to a friend's flat. I've previously owned a freehold flat but it was a relatively young, low rise dev owned by a housing association so their were no nasty surprises. Link to comment Share on other sites More sharing options...
Mr Punter Posted May 24, 2019 Share Posted May 24, 2019 In my limited experience the Virtual Freehold (999 year) leases I have seen only have a peppercorn rent. The £12 a year is a low ground rent and not a peppercorn. You will be bound by all the terms of the lease, which gives the freeholder more control than would be the case of, say, a covenant in the title. Could you negotiate and offer half? Bear in mind that fees (legal, land reg, lender consent) can be fairly high for this sort of transaction. Don't focus on the 100 times bit. £1,300 for freehold title would certainly be worth it to me. I would go as far as saying that if there were 2 identical properties in you road I would pay an extra £5k for the freehold one. Link to comment Share on other sites More sharing options...
scottishjohn Posted May 24, 2019 Share Posted May 24, 2019 a no brainer -- when you want to put an extension on you might have to ask his permission possibly ,have you got a copy of the agreement and have you read it - just buy it Link to comment Share on other sites More sharing options...
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