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Purchasing Freehold

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I think sellers often dont understand buyers positions. We didn't offer on a house we wanted purely because it is leasehold. The location was good the garden was good but the house needed a downstairs extension and an office/shed in the garden before we would move in. If I have to haggle all the points or get permissions with the freeholder who may not be responsive it could take a year or 2. It is not worth me purchasing.

 

Incidentally the house is still on the market 2 months later. Im 100% certain it would have sold within a week if it was freehold. I doubt it would have sold for more money but we certainly would have offered asking+10%.

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None of my properties are leasehold, I only buy freehold and walk away if it's leasehold.

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I think sellers often dont understand buyers positions. We didn't offer on a house we wanted purely because it is leasehold. The location was good the garden was good but the house needed a downstairs extension and an office/shed in the garden before we would move in. If I have to haggle all the points or get permissions with the freeholder who may not be responsive it could take a year or 2. It is not worth me purchasing.

 

Incidentally the house is still on the market 2 months later. Im 100% certain it would have sold within a week if it was freehold. I doubt it would have sold for more money but we certainly would have offered asking+10%.

 

as long as it has a good long lease (more than 100 yrs) then its just as viable as a freehold, asking for permission to alter or extend is not hard or expensive and cannot be unreasonably refused certainly thats what i have found.

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asking for permission to alter or extend is not hard or expensive and cannot be unreasonably refused certainly thats what i have found.

 

...then you haven't dealt with some of the freeholders I have. The 'not unreasonably refused' thing is sometimes but not always built into the lease and some landlords don't answer at all, or ask for a bribe, sorry, 'administrative fee' of several hundred pounds to reply.

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...then you haven't dealt with some of the freeholders I have. The 'not unreasonably refused' thing is sometimes but not always built into the lease and some landlords don't answer at all, or ask for a bribe, sorry, 'administrative fee' of several hundred pounds to reply.

 

true, but "unreasonably refused" is law not the freeholders discretion, if freeholders dont reply you can apply to court and the same for big admin fees they have to be reasonable BY LAW for the purpose just dont be bullied by freeholders AND GET A GOOD SOLICITOR.

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true, but "unreasonably refused" is law not the freeholders discretion, if freeholders dont reply you can apply to court and the same for big admin fees they have to be reasonable BY LAW for the purpose just dont be bullied by freeholders AND GET A GOOD SOLICITOR.

 

You can apply to court but that's hardly inexpensive. Same with getting a good solicitor.

 

I could refuse to pay the big admin fees, but while they never say so I think it's entirely obvious that if I refused I would get a negative to whatever requests I had made. Which they're entirely entitled to do because there's no 'may not be unreasonably refused' anywhere in this contract. They can just say no for any reason or none at all.

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You can find the cost of buying the freehold title for a leasehold house with 900 years lease and £6 ground rent from a recent decision in 2016 by the FTT decision ( First Tier Tribunal ) by Northern Residential Property Chamber under Ref: MAN/ooCA/oAF/2015/0033 .

 

The cost came to £107 ( approx 17 x annual ground rent ) and the legal costs were sset at £250 + VAT.

 

http://decisions.lease-advice.org//app/uploads/decisions/act67/1-1000/959.pdf

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They are not allowed to just name any price to prevent you from being able to buy it, it has to be a sensible figure. The rough rule of thumb is between 15-30 times the annual ground rent.

Er, what you say is true; but there's no law precluding a demand for a price that's unfeasibly high.

The leaseholder's only control is use of the First Tier Tribunal (ne the Leasehold Valuation Tribunal) but the cost of being represented there is also a lot.

 

---------- Post added 04-09-2017 at 17:55 ----------

 

You can apply to court but that's hardly inexpensive. Same with getting a good solicitor.

 

I could refuse to pay the big admin fees, but while they never say so I think it's entirely obvious that if I refused I would get a negative to whatever requests I had made. Which they're entirely entitled to do because there's no 'may not be unreasonably refused' anywhere in this contract**. They can just say no for any reason or none at all.

** No but s.19 of the Landlord and Tenant Act 1927 contains just that wording. See my post #13 on https://www.sheffieldforum.co.uk/showthread.php?p=11707023&highlight=landlord+and+tenant+act+1927#post11707023

Edited by Jeffrey Shaw

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Bought mine from Compton Group in Jan 2014. Ground rent was £8/yr (split into two payments of £4 per 6 months) and had ~850 years to run.

 

Compton wanted £700 to sell the freehold reversion. I engaged a solicitor at £250+VAT (ex disbursements). Overall it cost me £1049 plus a few hours of my time to travel and sign paperwork.

 

I decided to buy because they wanted to enforce their insurance company to cover the house and I wanted to build an extention. Yes I could have filed the paperwork for this to avoid it, but there was nothing to stop them claiming it was incorrectly filed or otherwise invalid - I would then have to engage a solicitor and would start to accumulate costs.

 

Therefore I saw the value in spending ~£1000 to remove this potential future issue and at the same time receive the benefit of holding the freehold.

 

Hope this helps someone.

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Bought mine from Compton Group in Jan 2014. Ground rent was £8/yr (split into two payments of £4 per 6 months) and had ~850 years to run.

 

Compton wanted £700 to sell the freehold reversion. I engaged a solicitor at £250+VAT (ex disbursements). Overall it cost me £1049 plus a few hours of my time to travel and sign paperwork...

 

Therefore I saw the value in spending ~£1000 to remove this potential future issue and at the same time receive the benefit of holding the freehold.

Still sounds expensive!

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Still sounds expensive!

 

Probably, I was offered it at £500 from the previous holder - but missed the deadline (misplaced paperwork). What would your target price have been?

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Bought mine from Compton Group in Jan 2014. Ground rent was £8/yr (split into two payments of £4 per 6 months) and had ~850 years to run.

 

Compton wanted £700 to sell the freehold reversion. I engaged a solicitor at £250+VAT (ex disbursements). Overall it cost me £1049 plus a few hours of my time to travel and sign paperwork.

 

I decided to buy because they wanted to enforce their insurance company to cover the house and I wanted to build an extention. Yes I could have filed the paperwork for this to avoid it, but there was nothing to stop them claiming it was incorrectly filed or otherwise invalid - I would then have to engage a solicitor and would start to accumulate costs.

 

Therefore I saw the value in spending ~£1000 to remove this potential future issue and at the same time receive the benefit of holding the freehold.

 

Hope this helps someone.

 

£8 a year using the basic rule of thumb would come to between £120-£240, plus legal fees.

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