New Build leasehold experiences
Discussion
Hi all,
My girlfriend and I are currently in the process of buying a house from Persimmon, the property is a leasehold with a 999yr lease. We have been aware of this from the start of the process and planned on paying it at the earliest opportunity (2 years), we have however recently read a few horror stories involving freeholds being sold to third parties. The stories tell of extortionate fees to purchase and no notice from the developers, this is what I want to avoid.
Does anyone have any experience of the costs involved or have any experience in the field? I just want to avoid having an unsellable house with an unaffordable lease.
Thanks in advance.
My girlfriend and I are currently in the process of buying a house from Persimmon, the property is a leasehold with a 999yr lease. We have been aware of this from the start of the process and planned on paying it at the earliest opportunity (2 years), we have however recently read a few horror stories involving freeholds being sold to third parties. The stories tell of extortionate fees to purchase and no notice from the developers, this is what I want to avoid.
Does anyone have any experience of the costs involved or have any experience in the field? I just want to avoid having an unsellable house with an unaffordable lease.
Thanks in advance.
Timely post for me Baked_bean, as I actually was in a Charles Church sales office today (same group as Persimmon) and was told the properties on their site were LH on 999 year leases.
I was told about buying the FH after two years and enquired about the ground rent and service charge. The latter were another concern to me in terms of the future and how they are controlled and by whom. I wasn't able to see any paperwork on this, but was told the service charge was linked to inflation only, but also that the site would never be adopted by the LA.
My preference would be FH and no service charge, but it does seem quite a few developments are going down this route now. Not sure if it's enough to make me run the other way, so if anyone has any firsthand experience of the above a few years down the line (I.e post development completion once the developer has lost interest and perhaps sold up to a third party), I'd very much welcome your views too.
I was told about buying the FH after two years and enquired about the ground rent and service charge. The latter were another concern to me in terms of the future and how they are controlled and by whom. I wasn't able to see any paperwork on this, but was told the service charge was linked to inflation only, but also that the site would never be adopted by the LA.
My preference would be FH and no service charge, but it does seem quite a few developments are going down this route now. Not sure if it's enough to make me run the other way, so if anyone has any firsthand experience of the above a few years down the line (I.e post development completion once the developer has lost interest and perhaps sold up to a third party), I'd very much welcome your views too.
I own one on leasehold. Its got about 948 years to run. We were offered the freehold in the first year or 2 we moved in (been in 4 years now) and we asked about the cost last year and they said they didnt want to sell it.
We pay £9 a year for the ground rent, and we pay by cheque! I'm looking to do a build in the next couple of years on the house so I could run into problems with the leasehold side of things.
We pay £9 a year for the ground rent, and we pay by cheque! I'm looking to do a build in the next couple of years on the house so I could run into problems with the leasehold side of things.
I am also pondering this - I was in a Bellway development last week. The properties are leasehold, the option to buy the freehold is there from day 1, (just shy of 7k) they will only disclose 1st year ground rent and maintenance charge (175 & 350 respectively)
initially the leasehold thing didn't really bother me as I wasn't planning any mods to the property in question, i figured it might be worth buying in a few years, but this week having read some of the reports on various news sites of massively inflating freehold costs and ground rent increases, now I am not so sure...
initially the leasehold thing didn't really bother me as I wasn't planning any mods to the property in question, i figured it might be worth buying in a few years, but this week having read some of the reports on various news sites of massively inflating freehold costs and ground rent increases, now I am not so sure...
Isnt there usually something in the contract stating how often the price rises are? Just a quick google suggests that anyone who owns a property where people dont live above or below (i.e not a flat or maisonette) has the absolute right in English law to buy the freehold, regardless of whether the management company want to keep it. I'm going to go back to mine to see whether I can buy it, and offer a lower sum than they offered it to me. £9 a year plus the admin costs of having cheques cashed must be a headache for said company so putting an offer forward must be reasonable.
Your ground rent is stated in your lease and any increases.
I.e £300 per annum doubling every 20 years or 10 year RPI being more common now. So your ground rent is known and can't just increase it.
Currently they are selling at avg. 35yp, but depends entierely on the rent review provision and location.
Freeholds are mostly bought by institutional funds. They will appoint a company to manage the collection of ground rents. They do charge additional fees for consents, such as when selling or remortgaging, which they have the right to charge for. The lease may state the minimum they can charge normally.
Service charge is entirely seperate issue. Again management company (which you as leaseholder may hold shares in) appoint a managing agent. If you feel they are charging too much, then you can ask for budgets and challange it.
Generally rents/fees in majority cases are stated up front. The onus is on you to read your leases/contracts. I wouldn't bother just reading "horror stories" and taking it as gospel.
I.e £300 per annum doubling every 20 years or 10 year RPI being more common now. So your ground rent is known and can't just increase it.
Currently they are selling at avg. 35yp, but depends entierely on the rent review provision and location.
Freeholds are mostly bought by institutional funds. They will appoint a company to manage the collection of ground rents. They do charge additional fees for consents, such as when selling or remortgaging, which they have the right to charge for. The lease may state the minimum they can charge normally.
Service charge is entirely seperate issue. Again management company (which you as leaseholder may hold shares in) appoint a managing agent. If you feel they are charging too much, then you can ask for budgets and challange it.
Generally rents/fees in majority cases are stated up front. The onus is on you to read your leases/contracts. I wouldn't bother just reading "horror stories" and taking it as gospel.
Edited by olivebrown on Friday 3rd February 22:32
Edited by olivebrown on Friday 3rd February 22:36
A lot of these buyers who've been stung by these schemes seem to be incredibly naive, but more importantly, seem to have been incredibly badly advised by the solicitors.
I suspect that a good number either used solicitors recommended by the developer, or these 'cheap' online conveyancers who you never meet, and where most of the work seems to be done by the work experience boy.
I suspect that a good number either used solicitors recommended by the developer, or these 'cheap' online conveyancers who you never meet, and where most of the work seems to be done by the work experience boy.
Baked_bean said:
No option to buy at this point sadly. I am prepared to pay down the line but don't want some third party charging an unrealistic price.
Is that because Persimmon don't own the land? You still have the option to revise your offer based on the freehold being provided or reduce your offer on the basis of the current news stories.I suspect the Builders saw this as a way to make more money but may look at it differently if enough potential buyers go elsewhere.
It maybe Persimmon have already sold the land or never owned it in the first place.
I had a leasehold flat many years ago...... My experience, ground rent stayed as "peppercorn" (this is usual, and the ammunition for the managing agents/freeholder to claim they are great people). Maintenance costs were raised by a HUGE percentage, basically at will, with the "evidence" of work done by way of repair invoices (MA and Freeholder in league with contractors). No legal recourse if this happens! I bet they haven't put the "will only ever rise the same as inflation" in print - that will be verbal and denied.
AVOID, or you will forever regret. I handed the keys to my flat back to BSoc... long story.
AVOID, or you will forever regret. I handed the keys to my flat back to BSoc... long story.
olivebrown said:
Service charge is entirely seperate issue. Again management company (which you as leaseholder may hold shares in) appoint a managing agent. If you feel they are charging too much, then you can ask for budgets and challange it.
You may try to challenge it, but from my experienceEdited by olivebrown on Friday 3rd February 22:32
Edited by olivebrown on Friday 3rd February 22:36
a) No solicitor will do anything - because they get work from these people?
b) If you ever try to subsequently sell the question "have there been any legal actions involving the property" will come up and you'll not be able to sell it.
c) The solicitors will say the old chestnut "they are a reputable company"- This holds no water with me, as I am a reputable person, and my word is as good as their's! It has to be said though that in the view of most people if the company is a well known name they believe this BS.
The other one the sellers/agents/solicitors will tell you is "It's a 999 year lease, it won't be a problem, you'll be long dead then"
I wouldn't have a shared drive, and certainly never ever again a leasehold.
Been there, done that got the T shirt.
hornetrider said:
I think this practice by new build house builders is despicable and I'd avoid any such site like the plague.
Agreed, the link below shows the possible consequences - although it looks like these leases were even shorter to begin with.http://www.thisismoney.co.uk/money/mortgageshome/a...
olivebrown said:
Your ground rent is stated in your lease and any increases.
I.e £300 per annum doubling every 20 years or 10 year RPI being more common now. So your ground rent is known and can't just increase it.
Currently they are selling at avg. 35yp, but depends entierely on the rent review provision and location.
Freeholds are mostly bought by institutional funds. They will appoint a company to manage the collection of ground rents. They do charge additional fees for consents, such as when selling or remortgaging, which they have the right to charge for. The lease may state the minimum they can charge normally.
Service charge is entirely seperate issue. Again management company (which you as leaseholder may hold shares in) appoint a managing agent. If you feel they are charging too much, then you can ask for budgets and challange it.
Generally rents/fees in majority cases are stated up front. The onus is on you to read your leases/contracts. I wouldn't bother just reading "horror stories" and taking it as gospel.
Thanks for the answers everybody. I.e £300 per annum doubling every 20 years or 10 year RPI being more common now. So your ground rent is known and can't just increase it.
Currently they are selling at avg. 35yp, but depends entierely on the rent review provision and location.
Freeholds are mostly bought by institutional funds. They will appoint a company to manage the collection of ground rents. They do charge additional fees for consents, such as when selling or remortgaging, which they have the right to charge for. The lease may state the minimum they can charge normally.
Service charge is entirely seperate issue. Again management company (which you as leaseholder may hold shares in) appoint a managing agent. If you feel they are charging too much, then you can ask for budgets and challange it.
Generally rents/fees in majority cases are stated up front. The onus is on you to read your leases/contracts. I wouldn't bother just reading "horror stories" and taking it as gospel.
Edited by olivebrown on Friday 3rd February 22:32
Edited by olivebrown on Friday 3rd February 22:36
My partner and I are just hoping to get an indication of cost of buying the freehold at the 2 year mark (which I believe is when we are allowed to buy it from?). The ground rent charges are minimal ~£140per year but we are thinking long term in terms of selling the property.
Fastpedeller said:
Baked_bean said:
My partner and I are just hoping to get an indication of cost of buying the freehold at the 2 year mark (which I believe is when we are allowed to buy it from?).
Answer..... Too Much!fuzzyyo said:
Fastpedeller said:
Baked_bean said:
My partner and I are just hoping to get an indication of cost of buying the freehold at the 2 year mark (which I believe is when we are allowed to buy it from?).
Answer..... Too Much!".......selling a new home as leasehold, and then selling the freehold separately to an investment company without informing the family living there - is not illegal.
In England and Wales, the "right of first refusal" applies to flats, but not houses. So it was not legally obliged to tell Katie it would do this."
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