Anyone else trapped by recent changes to Leaseholds?
Discussion
Or rather, the mortgage and legal industry's reaction to recent press ?
We have tried and failed to sell our flat twice, because the previous owner opted for a cheap lease deal with the freeholder - paying £480pa ground rent rather than paying the £10k plus for a statutory extension.
When we bought it in 2012 it wasn't an issue and as the flat had no service charges worked out less than most in the area.
Now, an IFA has approached every mortgage provider at his disposal and all have said they will not be able to mortgage it. As such the sale has fallen through.
I for one feel trapped. The reason they won't mortgage it at the moment is because :
-Ground rent greater than 0.1% of property value (this varies per lender)
-It goes up with RPI every 10 years which is too frequent for their liking
-If ground rent is more than £250 (£1,000 in London) it becomes an 'assured tenancy' . In short if we failed to pay the ground rent the freeholder can repossess without the mortgage company knowing therefore making it high risk for them.
The way out ? Tried a deed of variation, as expected they plucked a figure out of thin air to reduce the ground rent.
So now looking at a £15k Inc costs statutory lease extension, breaking the chain and remarketing in 6 to 9 months (would you believe, how long it takes to extend). The years remaining on the lease are mid 90s so wasn't anticipating this during our ownership.
Absolute nightmare. Hope to recoup some of this with a better sale price.
Not really looking for an answer as I've had appropriate legal advice, but thought I'd vent and hopefully make others aware of the pitfalls at the moment.
It stems from significant negative press about new builds sold as leasehold but with the promise to allow the purchase of the freehold after 2 years for approx 2k. The freeholders sell it on before then and the new company scams 10s of 1000s out of them for it. Often the same directors of each company etc. , A proper racket.
If you have a leasehold property with high ground rent or onerous service charges that increase on a schedule you may have trouble selling. If you're buying, get proper legal advice and make sure you don't end up in this situation.
We have tried and failed to sell our flat twice, because the previous owner opted for a cheap lease deal with the freeholder - paying £480pa ground rent rather than paying the £10k plus for a statutory extension.
When we bought it in 2012 it wasn't an issue and as the flat had no service charges worked out less than most in the area.
Now, an IFA has approached every mortgage provider at his disposal and all have said they will not be able to mortgage it. As such the sale has fallen through.
I for one feel trapped. The reason they won't mortgage it at the moment is because :
-Ground rent greater than 0.1% of property value (this varies per lender)
-It goes up with RPI every 10 years which is too frequent for their liking
-If ground rent is more than £250 (£1,000 in London) it becomes an 'assured tenancy' . In short if we failed to pay the ground rent the freeholder can repossess without the mortgage company knowing therefore making it high risk for them.
The way out ? Tried a deed of variation, as expected they plucked a figure out of thin air to reduce the ground rent.
So now looking at a £15k Inc costs statutory lease extension, breaking the chain and remarketing in 6 to 9 months (would you believe, how long it takes to extend). The years remaining on the lease are mid 90s so wasn't anticipating this during our ownership.
Absolute nightmare. Hope to recoup some of this with a better sale price.
Not really looking for an answer as I've had appropriate legal advice, but thought I'd vent and hopefully make others aware of the pitfalls at the moment.
It stems from significant negative press about new builds sold as leasehold but with the promise to allow the purchase of the freehold after 2 years for approx 2k. The freeholders sell it on before then and the new company scams 10s of 1000s out of them for it. Often the same directors of each company etc. , A proper racket.
If you have a leasehold property with high ground rent or onerous service charges that increase on a schedule you may have trouble selling. If you're buying, get proper legal advice and make sure you don't end up in this situation.
joropug said:
The years remaining on the lease are mid 90s so wasn't anticipating this during our ownership.
That's the bit that always gets me... If the lease was 20 years and someone wants a 25 year mortgage I could understand. When I lived in London it wasn't uncommon to see "999 year lease" in the particulars in estate agents' windows.And this is why we bought our freehold as soon as we had been there 2 years, despite many people telling us it was a waste of money.
I'm sure you're already aware of this site - https://www.lease-advice.org/ - it was invaluable to us.
IANAL, but from first hand experience, there is a lot of legislation in your favour as a "tenant"
I'm sure you're already aware of this site - https://www.lease-advice.org/ - it was invaluable to us.
IANAL, but from first hand experience, there is a lot of legislation in your favour as a "tenant"
Thanks will check it again in case I've missed anything but think the statutory route is the only (without significant risk) way out.
We can't buy our freehold as the person below us wouldn't . They have a long lease with no ground rent so no benefit.
I listened to a R4 show about it the other day, one guy got stung with 40k legal costs trying to fight his unfair leasehold through the courts. It's a David Vs Goliath battle. I would never buy a leasehold property again.
We can't buy our freehold as the person below us wouldn't . They have a long lease with no ground rent so no benefit.
I listened to a R4 show about it the other day, one guy got stung with 40k legal costs trying to fight his unfair leasehold through the courts. It's a David Vs Goliath battle. I would never buy a leasehold property again.
There is a very good solicitor in Sheffield (where leasehold has seemingly been the norm for 200 years) where a lot of freeholds have subsequently been bought by two ruthless outfits. He has helped hundreds of local residents buy the freehold, even in cases where one occupant has refused. Ours is a house, so no other occupants to get in the way!
Jeffrey Shaw - Nether Edge Law - 0114 268 7643 - http://solicitors.lawsociety.org.uk/person/106261/...
Jeffrey Shaw - Nether Edge Law - 0114 268 7643 - http://solicitors.lawsociety.org.uk/person/106261/...
We're currently looking at buying a flat in a block of six, where a leasehold is in place.
Does the aforementioned changes apply to this as well?
If so, that might well explain why it's not sold yet (been on the market for a while).
I had thought the recent changes only affected houses that were built and sold on a leasehold basis?
Does the aforementioned changes apply to this as well?
If so, that might well explain why it's not sold yet (been on the market for a while).
I had thought the recent changes only affected houses that were built and sold on a leasehold basis?
TonyRPH said:
We're currently looking at buying a flat in a block of six, where a leasehold is in place.
Does the aforementioned changes apply to this as well?
If so, that might well explain why it's not sold yet (been on the market for a while).
I had thought the recent changes only affected houses that were built and sold on a leasehold basis?
What are the details of the lease ?Does the aforementioned changes apply to this as well?
If so, that might well explain why it's not sold yet (been on the market for a while).
I had thought the recent changes only affected houses that were built and sold on a leasehold basis?
You need to know
-Years left
-Ground rent now
-Grount rent review period (frequency)
-How the review is calculated. Usually RPI, sometimes they double, sometimes with market value.
Your solicitor should advise you accordingly, if it's a long lease with peppercorn ground rent there'll be no review period. Mines similar to new builds where the previous owner elected to go this route as a cheaper option (for him).
OP I feel your pain...…...we have just gone down the Statutory Extension route as the deal offered to us by the freeholders was not good at all - in the long term.
£18.5k on a £280K property.....that included paying the freeholder's legal costs!!
I used an ALEP surveyor and solicitor.....maybe could have done it a bit cheaper but if you're in for a load of money anyway I reckoned it would be a false economy to cut corners.
Good luck with yours.
£18.5k on a £280K property.....that included paying the freeholder's legal costs!!
I used an ALEP surveyor and solicitor.....maybe could have done it a bit cheaper but if you're in for a load of money anyway I reckoned it would be a false economy to cut corners.
Good luck with yours.
It does seem crazy- like its going to get to the stage where no one buys any leasehold!
The home ownership process in the UK does seem nuts and over complicated/costly.
I had a leasehold flat a few years back and although it was a new 999 year lease, £100 a year ground rent, various issues meant it was a right PITA! Glad i managed to get rid and would never touch any leasehold again.
I hope the OP gets their lease issues sorted and put it all behind them.
The home ownership process in the UK does seem nuts and over complicated/costly.
I had a leasehold flat a few years back and although it was a new 999 year lease, £100 a year ground rent, various issues meant it was a right PITA! Glad i managed to get rid and would never touch any leasehold again.
I hope the OP gets their lease issues sorted and put it all behind them.
I'm a developer and sell leasehold from time to time. We however have always sold the freehold into a separate management company which is owned by the leaseholders. ie each flat or sometimes house has a share in the company.
Sometimes you have to use a leasehold structure dependent on the set up and layout.
Where it has fallen down is where people has tried to make money out of it.. We were approached numerous times to sell our freeholds on but always gave them(via the management co) to the residents..
I does appear I maybe in a minority though.
Sometimes you have to use a leasehold structure dependent on the set up and layout.
Where it has fallen down is where people has tried to make money out of it.. We were approached numerous times to sell our freeholds on but always gave them(via the management co) to the residents..
I does appear I maybe in a minority though.
Nothing wrong with leaseholds provided you go through the lease with a fine-toothed comb beforehand. My first flat was a leasehold from the 1980s, and had only about 70 years left on the lease when I bought it. When I came to extend it I went via statutory route and maintained the same peppercorn rent and terms that it previously had despite it costing more (about £23k all-in). I spoke to some residents who had negotiated with the freeholder directly for about half that and signed up to £400 ground rent, doubling every ten years. I really wonder how they are going to sell their flats in the future.
lyonspride said:
Oh the worst thing is these freeholds are all owned by shell companies based in the cayman islands, so the f**kers avoid paying tax.
This is basically the elite looking after their own, the govt should ban this sh*t but they never will.
the number of properties in the uk owned by companies like you describe is absolutely minuscule - something like 0.0009%This is basically the elite looking after their own, the govt should ban this sh*t but they never will.
tinnitusjosh said:
lyonspride said:
Oh the worst thing is these freeholds are all owned by shell companies based in the cayman islands, so the f**kers avoid paying tax.
This is basically the elite looking after their own, the govt should ban this sh*t but they never will.
the number of properties in the uk owned by companies like you describe is absolutely minuscule - something like 0.0009%This is basically the elite looking after their own, the govt should ban this sh*t but they never will.
slow_poke said:
tinnitusjosh said:
lyonspride said:
Oh the worst thing is these freeholds are all owned by shell companies based in the cayman islands, so the f**kers avoid paying tax.
This is basically the elite looking after their own, the govt should ban this sh*t but they never will.
the number of properties in the uk owned by companies like you describe is absolutely minuscule - something like 0.0009%This is basically the elite looking after their own, the govt should ban this sh*t but they never will.
owners of 23,000 of the 25 million UK properties are registered in the BVI - I was a bit overzealous with my zeroes, should have been 0.09%. The number of properties owned by overseas companies more generally is closer to 100k, which is about 0.4%
PV7998 said:
OP I feel your pain...…...we have just gone down the Statutory Extension route as the deal offered to us by the freeholders was not good at all - in the long term.
£18.5k on a £280K property.....that included paying the freeholder's legal costs!!
I used an ALEP surveyor and solicitor.....maybe could have done it a bit cheaper but if you're in for a load of money anyway I reckoned it would be a false economy to cut corners.
Good luck with yours.
if you don't mind me asking what was the deal offered by the freeholder and what did the stat ext conclude? was the end result £18.5 on a £280k property for a 999 year?£18.5k on a £280K property.....that included paying the freeholder's legal costs!!
I used an ALEP surveyor and solicitor.....maybe could have done it a bit cheaper but if you're in for a load of money anyway I reckoned it would be a false economy to cut corners.
Good luck with yours.
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