New Build leasehold experiences
Discussion
ben_h100 said:
The ground rent is fixed at £150/year, so not too bad. With this being in the news we called the developer to see what the status of the freehold is. What do you know, they are in the process of negotiating with an investment company to sell all of the freeholds on the estate. No doubt meaning that if we wanted to buy at a later date, it will be well in excess of the £2k we 'saved' when moving in. Ground rents are also likely to rise as per other peoples experiences, meaning that in 50 yrs it could cost in excess of £6k just to live in the house, before mortgage payments.
You say at the start of this paragraph that the ground rent is set at £150 a year, this will either be linked to RPI or one of the doubling rates, hopefully the former and not the latter. This is fixed and can't be changed by a new freeholder unless you agree to it by signing a new lease agreement with them. So they couldn't just decide to change your ground rent to be £6k per year unless you agreed to it first, which you seem to be alluding to at the end of the paragraph. Unless of course you have a doubling ground rent in place where it doubles every 10 years, in which case, yes, in 10 years time it would be £300 and 50 years time it would be £4800.Not a new build, but a house we bought just over 2 years ago was leasehold. We have just bought the freehold in the last month or so - it had about 850 years left, and GR was only £15, however the current freeholders are conniving sharks. They want £150 for every minor alteration, or be held in breach of the lease - when we put planning permission in for the garage, they demanded £500 + a premium + survey fees to grant permission.
We reminded them that such charges were not in the original lease, and we were only at planning stage, so no alterations had been made at that point.
We bought the freehold ourselves - my other half deals in commercial leases as her job, so knows the process. We had a budget in mind that we would go up to, otherwise we would force a leasehold tribunal. It didn't take much persuasion for them to agree to a low ball figure, as we know a few other neighbours are applying for freehold, and so far there hasn't been a tribunal precedent set. The freeholders are very keen to avoid that , and now know that we have all been talking to each other and comparing figures
I'd never have another leasehold property again - the dealings with them from start to finish have been painful.
We reminded them that such charges were not in the original lease, and we were only at planning stage, so no alterations had been made at that point.
We bought the freehold ourselves - my other half deals in commercial leases as her job, so knows the process. We had a budget in mind that we would go up to, otherwise we would force a leasehold tribunal. It didn't take much persuasion for them to agree to a low ball figure, as we know a few other neighbours are applying for freehold, and so far there hasn't been a tribunal precedent set. The freeholders are very keen to avoid that , and now know that we have all been talking to each other and comparing figures
I'd never have another leasehold property again - the dealings with them from start to finish have been painful.
Steve Evil said:
ben_h100 said:
The ground rent is fixed at £150/year, so not too bad. With this being in the news we called the developer to see what the status of the freehold is. What do you know, they are in the process of negotiating with an investment company to sell all of the freeholds on the estate. No doubt meaning that if we wanted to buy at a later date, it will be well in excess of the £2k we 'saved' when moving in. Ground rents are also likely to rise as per other peoples experiences, meaning that in 50 yrs it could cost in excess of £6k just to live in the house, before mortgage payments.
You say at the start of this paragraph that the ground rent is set at £150 a year, this will either be linked to RPI or one of the doubling rates, hopefully the former and not the latter. This is fixed and can't be changed by a new freeholder unless you agree to it by signing a new lease agreement with them. So they couldn't just decide to change your ground rent to be £6k per year unless you agreed to it first, which you seem to be alluding to at the end of the paragraph. Unless of course you have a doubling ground rent in place where it doubles every 10 years, in which case, yes, in 10 years time it would be £300 and 50 years time it would be £4800.TA14 said:
A fixed ground rent is just that - fixed, £150pa now, £150pa in 2027, £150pa in 3037. There are plenty of Victorian rents at a shilling or a florin a year still going.
Ours was originally 1 Guinea per year, but was revised to £15 pa at some point in the past. Clearly that isn't enough to sustain an amoral business model, so the freeholders have tried their luck with exorbitant permission fees.... TA14 said:
A fixed ground rent is just that - fixed, £150pa now, £150pa in 2027, £150pa in 3037. There are plenty of Victorian rents at a shilling or a florin a year still going.
Indeed. My first house was 86p per year. What the FH owners used to do was to bill 6 years' ground rent in one go, obviously to save on postage costs. However, at some point they stopped invoicing. I assume because it just wasn't worth their while in terms of admin time and postage.My dad had a similar amount of GR on his property.IIRC he bought the FH for £50.
For anyone in a leasehold house (not flat) it is well worth buying the freehold at the earliest opportunity - 2 years after purchase. Have a read of this - http://www.johndwood.co.uk/content/surveyors/guide... to get an idea of the process and prices.
S11Steve said:
For anyone in a leasehold house (not flat) it is well worth buying the freehold at the earliest opportunity - 2 years after purchase. Have a read of this - http://www.johndwood.co.uk/content/surveyors/guide... to get an idea of the process and prices.
One of the biggest issues with this leasehold scandal is housebuilders selling the freehold once the development is complete. So when the home owner applies to buy the freehold after 2 years they find its already been sold to a private equity company and they want £50k rather than the £3-4k the housebuilder originally suggested it would cost.
My last house was leasehold - 999 year lease fixed at £90 per year
Typically they wanted top dollar for any alerterations, conservatories were particularly lucrative.
Thing is, i had paid the developers to brick up the internal garage and install a window - at the time they never insisted i paid for their permission. After all, why would they, surely the permission was implied being that they did the work!
When i came to sell 5 years later, they suddenly decided they wanted £500 + vat for their written permission.
They also found another income stream with solar panels. £500 + Vat for their permission to install, plus an additional £200 charge for them to survey the roofs that they had constructed.
If you already had the panels installed, then they wanted £1500 for the retrospective permission plus the same survey fee.
Typically they wanted top dollar for any alerterations, conservatories were particularly lucrative.
Thing is, i had paid the developers to brick up the internal garage and install a window - at the time they never insisted i paid for their permission. After all, why would they, surely the permission was implied being that they did the work!
When i came to sell 5 years later, they suddenly decided they wanted £500 + vat for their written permission.
They also found another income stream with solar panels. £500 + Vat for their permission to install, plus an additional £200 charge for them to survey the roofs that they had constructed.
If you already had the panels installed, then they wanted £1500 for the retrospective permission plus the same survey fee.
Steve Evil said:
ben_h100 said:
The ground rent is fixed at £150/year, so not too bad. With this being in the news we called the developer to see what the status of the freehold is. What do you know, they are in the process of negotiating with an investment company to sell all of the freeholds on the estate. No doubt meaning that if we wanted to buy at a later date, it will be well in excess of the £2k we 'saved' when moving in. Ground rents are also likely to rise as per other peoples experiences, meaning that in 50 yrs it could cost in excess of £6k just to live in the house, before mortgage payments.
You say at the start of this paragraph that the ground rent is set at £150 a year, this will either be linked to RPI or one of the doubling rates, hopefully the former and not the latter. This is fixed and can't be changed by a new freeholder unless you agree to it by signing a new lease agreement with them. So they couldn't just decide to change your ground rent to be £6k per year unless you agreed to it first, which you seem to be alluding to at the end of the paragraph. Unless of course you have a doubling ground rent in place where it doubles every 10 years, in which case, yes, in 10 years time it would be £300 and 50 years time it would be £4800.RaymondVanDerDon said:
One of the biggest issues with this leasehold scandal is housebuilders selling the freehold once the development is complete.
So when the home owner applies to buy the freehold after 2 years they find its already been sold to a private equity company and they want £50k rather than the £3-4k the housebuilder originally suggested it would cost.
That's where the leasehold tribunal service comes in - there is a calculated value that they use to resolve differences, however the freeholders do not like this as it sets a precedent in the street. So when the home owner applies to buy the freehold after 2 years they find its already been sold to a private equity company and they want £50k rather than the £3-4k the housebuilder originally suggested it would cost.
The freeholds were being sold in our street for £7.5k, despite having 800 years or something left on them. Once we mentioned going to First Tier Tribunal, it came down to £800+ legal fees. A number of neighbours are now going through the same process.
There is also the matter of Right of First Refusal under the Landlord and Tenant Act 1987 - this is a statutory requirement when freeholds are being sold. It may be more applicable to flats, but I understand it can be applied to houses as well - my other half is far more clued up on all of this than I am though.
recently pulled out of buying a 2 bed leasehold flat with ground rent linked to rpi, therefore roi.
my solicitor wanted me to sign a disclaimer with them that i understood the issues with this type of purchase. in a nut shell, selling on could get difficult because a highly geared FTB may get their mortgage refused.
not quite the same as a house on 999 years but have to ask why do 999 years??
i walked away.
my solicitor wanted me to sign a disclaimer with them that i understood the issues with this type of purchase. in a nut shell, selling on could get difficult because a highly geared FTB may get their mortgage refused.
not quite the same as a house on 999 years but have to ask why do 999 years??
i walked away.
Chicken Chaser said:
I've just bought my peppercorn freehold on my house with 940 years to run.
Paid £9 a year for it, they wanted over £1000 but I got it down to £580. I wanted to extend and they wanted £150+VAT for the adjustments alone so figured for £320 extra it was worth owning my own land too.
Similarly with my house - the permission costs were ridiculous for things like replacing windows and radiators. It was cheaper for us long term to buy the freehold than pay out or challenge the legitimacy of the admin charges.Paid £9 a year for it, they wanted over £1000 but I got it down to £580. I wanted to extend and they wanted £150+VAT for the adjustments alone so figured for £320 extra it was worth owning my own land too.
We did point on a number of occasions that that admin charges were not detailed in the lease, and therefore we were not obliged to them, but the attitude was "so take us to court"...
Glad I stumbled across this thread!
Myself and my girlfriend are in the process of purchasing a leasehold house at the moment.
The property was built in 2006 and is a 999 year lease.
I've checked through the details in the lease, and it states that the ground rent is fixed at £150 per year for the first 25 yrs (to 2031), and then increases every 25 yrs according to the following formula -
New rent = rent from prev period * (current RPI / RPI at the 'base date')
From what I can tell, the 'base rate' is the RPI value in 2006.
I'm just trying to get my head around whether the rent rises will be reasonable, or if they are likely to be ridiculous as per the stories which are currently doing the rounds in the media?
Should also add that there is no service charge.
We've asked our solicitor to find out how much it would be for us to purchase the freehold, but we obviously want to be able to weigh this up against the projected costs of ground rent etc in the future.
Finally, am I correct in thinking that if the freehold is sold on to another 3rd party they cannot change the terms of our lease without our agreement?
Any advice welcome!
Si
Myself and my girlfriend are in the process of purchasing a leasehold house at the moment.
The property was built in 2006 and is a 999 year lease.
I've checked through the details in the lease, and it states that the ground rent is fixed at £150 per year for the first 25 yrs (to 2031), and then increases every 25 yrs according to the following formula -
New rent = rent from prev period * (current RPI / RPI at the 'base date')
From what I can tell, the 'base rate' is the RPI value in 2006.
I'm just trying to get my head around whether the rent rises will be reasonable, or if they are likely to be ridiculous as per the stories which are currently doing the rounds in the media?
Should also add that there is no service charge.
We've asked our solicitor to find out how much it would be for us to purchase the freehold, but we obviously want to be able to weigh this up against the projected costs of ground rent etc in the future.
Finally, am I correct in thinking that if the freehold is sold on to another 3rd party they cannot change the terms of our lease without our agreement?
Any advice welcome!
Si
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