Buying the Freehold of a Flat (Currently Leasehold)
Discussion
My mother owns a modest flat, value in the region of £80k. It's an old purpose-built ground-floor flat with one other above it, terraced style, separate entrances.
She pays a peppercorn ground rent, £10 per year, and the lease has 61 years left. It will more than see her out. The current freeholder has offered to sell it for £1000 but she'd have to pay all associated fees. The solicitor of the current freeholder has been contacted and would do it for £649, which is best part of £499 for their efforts, and £150 for filing the necessary forms.
She wants to buy it so that we don't have any hassles selling the flat 'when the time comes'.
She would also be in a position to charge the upstairs neighbour ground rent, as the letter she has received states it covers both properties. They also pay £10 per year, and she has no desire in charging anything else.
In theory, it sounds like a good idea to go ahead and purchase it, but I'm not sure if I'm missing any obvious drawbacks. Has anyone done similar? Google only seems to return results based on blocks of flats and sharing a leasehold, so hasn't turned up anything decent.
Any advice appreciated.
She pays a peppercorn ground rent, £10 per year, and the lease has 61 years left. It will more than see her out. The current freeholder has offered to sell it for £1000 but she'd have to pay all associated fees. The solicitor of the current freeholder has been contacted and would do it for £649, which is best part of £499 for their efforts, and £150 for filing the necessary forms.
She wants to buy it so that we don't have any hassles selling the flat 'when the time comes'.
She would also be in a position to charge the upstairs neighbour ground rent, as the letter she has received states it covers both properties. They also pay £10 per year, and she has no desire in charging anything else.
In theory, it sounds like a good idea to go ahead and purchase it, but I'm not sure if I'm missing any obvious drawbacks. Has anyone done similar? Google only seems to return results based on blocks of flats and sharing a leasehold, so hasn't turned up anything decent.
Any advice appreciated.
solo2 said:
My end of terraced house was leasehold when I bought it. We paid £12 pa and they sold it to us for around £6K if I recall correctly
I can only say positive things about now owning the land my home is built on.
I cannot think of any negatives.
Thanks. It's more wondering if she has any obligations to upstairs. The way they operate at the moment, she's responsible for the drains, etc., he's responsible for the guttering and roof. The current freeholder doesn't maintain anything.I can only say positive things about now owning the land my home is built on.
I cannot think of any negatives.
The only thing I would add would be perhaps to get a solicitor involved that is not connected to the seller to make sure that all the Freeholder responsibilities Ts are crossed and Is dotted.
In my old flat (2 maisonette flats one above the other) the freeholder was responsible for everything outside of our internal boxes which meant drains AND roof. What the leasholder in the upstairs flat is responsible for will be set out in their lease so again, I'd get an independent solicitor on this if you want to be fully covered against potential vested interests.
Do it, this is a no brainer.
My Gran had an upstairs maisonette and was offered her share of the freehold but didn't buy it a good few years ago. After she passed away, in order to sell we had to extend the lease for £30k which is a lot more than buying the freehold even with inflation.
Leasehold properties are at the moment getting a lot bad press so converting to freehold will make it easier to sell if the time comes.
My Gran had an upstairs maisonette and was offered her share of the freehold but didn't buy it a good few years ago. After she passed away, in order to sell we had to extend the lease for £30k which is a lot more than buying the freehold even with inflation.
Leasehold properties are at the moment getting a lot bad press so converting to freehold will make it easier to sell if the time comes.
E36GUY said:
The only thing I would add would be perhaps to get a solicitor involved that is not connected to the seller to make sure that all the Freeholder responsibilities Ts are crossed and Is dotted.
In my old flat (2 maisonette flats one above the other) the freeholder was responsible for everything outside of our internal boxes which meant drains AND roof. What the leasholder in the upstairs flat is responsible for will be set out in their lease so again, I'd get an independent solicitor on this if you want to be fully covered against potential vested interests.
+1 good adviceIn my old flat (2 maisonette flats one above the other) the freeholder was responsible for everything outside of our internal boxes which meant drains AND roof. What the leasholder in the upstairs flat is responsible for will be set out in their lease so again, I'd get an independent solicitor on this if you want to be fully covered against potential vested interests.
Including fees I'm paying circa 20k Inc costs to renew lease on my flat, and it has 93 years! Issue is our ground rent.
This is beyond a bargain.
You can calculate lease extension value online easily
Yours comes out at:
The price of your lease extension is likely to be around £11000 plus costs.
You have 60 years unexpired. Because your lease has less than 80 years left, marriage value has been included in the price
Side note. Costs are also mental and you pay both sides, including both valuation fees. It's odd they want to sell you the freehold when they have no reason to, given that lease is ripe for a renewal - you won't ever be able to sell it like that they're just throwing away the whole point of holding a leasehold investment. Make sure there's nothing underhand going on.
This is beyond a bargain.
You can calculate lease extension value online easily
Yours comes out at:
The price of your lease extension is likely to be around £11000 plus costs.
You have 60 years unexpired. Because your lease has less than 80 years left, marriage value has been included in the price
Side note. Costs are also mental and you pay both sides, including both valuation fees. It's odd they want to sell you the freehold when they have no reason to, given that lease is ripe for a renewal - you won't ever be able to sell it like that they're just throwing away the whole point of holding a leasehold investment. Make sure there's nothing underhand going on.
For what they’re worth, my thoughts are:
1. As said in other responses, at this price this looks like a no brainer in principle - so go for it if everything checks out.
2. The freeholder’s solicitor should not be offering to act for you also. I suspect that either they are not (and the price quoted is for you to pay for their client’s legal cost without them actually advising you) or that they are being a bit dodgy (and trying to get two fees for one job) but it would seem like an automatic conflict of interest situation in breach of the SRA Code of Conduct for the same individual solicitor to act for both sides in such circumstances - not your problem, but it may reduce the likelihood of good independent advice being given to you.
3. It would be a good idea to get proper independent legal advice from your own solicitor to check there are not any hidden liabilities which the freeholder would pick up in respect of the building. It’s easy to view this as wasted money, but it’s not.
4. Dependent on the form of the lease of each flat, the Landlord and Tenant Act 1987 may require certain procedures (such as the freehold to be formally offered to BOTH tenants) before the freehold can be validly transferred to your relative. This is something your own lawyer will be able to advise you on after they have looked at copies of both leases.
It does sound like a good deal though. Good luck
1. As said in other responses, at this price this looks like a no brainer in principle - so go for it if everything checks out.
2. The freeholder’s solicitor should not be offering to act for you also. I suspect that either they are not (and the price quoted is for you to pay for their client’s legal cost without them actually advising you) or that they are being a bit dodgy (and trying to get two fees for one job) but it would seem like an automatic conflict of interest situation in breach of the SRA Code of Conduct for the same individual solicitor to act for both sides in such circumstances - not your problem, but it may reduce the likelihood of good independent advice being given to you.
3. It would be a good idea to get proper independent legal advice from your own solicitor to check there are not any hidden liabilities which the freeholder would pick up in respect of the building. It’s easy to view this as wasted money, but it’s not.
4. Dependent on the form of the lease of each flat, the Landlord and Tenant Act 1987 may require certain procedures (such as the freehold to be formally offered to BOTH tenants) before the freehold can be validly transferred to your relative. This is something your own lawyer will be able to advise you on after they have looked at copies of both leases.
It does sound like a good deal though. Good luck
Has she considered buying it jointly with the owner above and splitting costs? That could also be the time to amend the current lease to 999 years, adding value (remember freeholders have to have leases too...) and make sure that anything structural/communal is 50/50 on costs. You all depend on the roof/walls/drains equally etc
Lots to it but happy to advise based on my experience and am just extending the 3 leases now to 999. 12 months in with the solicitors on this relatively simple process so if you want to know who I WOULDN'T recommend!!!
Lots to it but happy to advise based on my experience and am just extending the 3 leases now to 999. 12 months in with the solicitors on this relatively simple process so if you want to know who I WOULDN'T recommend!!!
In the letter, he advises he's recently sold the leases of some of the adjoining properties, all to the downstairs flats, so seems like he's just disposing of assets.
Some of the costs you guys are paying almost sound extortionate. Definitely a bargain if everything is on the level.
I'm also now wondering if there's any mileage in me buying the freehold. Not for any financial gain, but to leave the current lease agreements unchanged. Probably an unnecessary complication in me doing that, though.
Some of the costs you guys are paying almost sound extortionate. Definitely a bargain if everything is on the level.
I'm also now wondering if there's any mileage in me buying the freehold. Not for any financial gain, but to leave the current lease agreements unchanged. Probably an unnecessary complication in me doing that, though.
I did it when I had the opportunity when I had a flat some years ago. Was a damn sight more than a grand mind!
I’d be ripping their hand off for what it’s worth, and given the info provided, of course take some legal advice, your Mum would need to anyway, but seems a really good deal.
I’d be ripping their hand off for what it’s worth, and given the info provided, of course take some legal advice, your Mum would need to anyway, but seems a really good deal.
WRumbled said:
In the letter, he advises he's recently sold the leases of some of the adjoining properties, all to the downstairs flats, so seems like he's just disposing of assets.
Some of the costs you guys are paying almost sound extortionate. Definitely a bargain if everything is on the level.
I'm also now wondering if there's any mileage in me buying the freehold. Not for any financial gain, but to leave the current lease agreements unchanged. Probably an unnecessary complication in me doing that, though.
IANAL but if you buy the freehold then when the time comes there might be an IHT benefit (depending upon other estate considerations of course)?Some of the costs you guys are paying almost sound extortionate. Definitely a bargain if everything is on the level.
I'm also now wondering if there's any mileage in me buying the freehold. Not for any financial gain, but to leave the current lease agreements unchanged. Probably an unnecessary complication in me doing that, though.
I work in the industry and this does strike me as being a little unusual.
I’ve not known a Landlord willingly relinquish a freehold for what is effectively a nominal sum, unless they just want out since they’re disposing of other freeholds too and they can’t be bothered with the responsibility any longer.
As previously stated on this thread, do not use the same solicitor as the vendor as this has conflict of interest written all over it and you require independent and impartial advice.
The suggestion of extending the lease to 999 years is a very good one. This makes the demise hugely more saleable than something even with the standard 125 years on.
Will be interested to hear how this pans out. Good luck!
I’ve not known a Landlord willingly relinquish a freehold for what is effectively a nominal sum, unless they just want out since they’re disposing of other freeholds too and they can’t be bothered with the responsibility any longer.
As previously stated on this thread, do not use the same solicitor as the vendor as this has conflict of interest written all over it and you require independent and impartial advice.
The suggestion of extending the lease to 999 years is a very good one. This makes the demise hugely more saleable than something even with the standard 125 years on.
Will be interested to hear how this pans out. Good luck!
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