Buying freehold

[mitch84]

We have a very small 2 up 2 down terrace that we bought 2 years ago super cheap because the lady had died and her family didn’t want to even clean the house never mind paint it.
We bought it as an investment really, it’s far too small, and we were supposed to be moving out (but keeping it to rent) when we bought a new property, but we pulled out due to forecast market drops.

We have had letters before, but got a third this morning offering to sell me the freehold for £700. This is quite a bit less than its been offered before.

We pay £3,50 a year ground rent, and there is decades and decades left on the lease (we’d be dead)

Has anyone ever bought one, would you recommend in our circumstances (we likely will never sell). It’s a lot of cash (200 years of ground rent) and as all these houses are leasehold, DH doesn’t believe it will add value to the house, and like I say, I doubt we’ll ever sell

The letter states we wouldn’t need a solicitor, they’d do that for us (Compton group) but anyone know if that poses risks? DH says he’d like our property solicitor to look it over, which will add on a chunk

[Omega1]

We bought ours about 5 years ago, residue of 999 years, ground rent £20 pa. The reason we bought was because the freehold had changed hands a couple of times in quick succession and the new landlord was a company consolidating freeholds and were quite pushy - plus, several years before we had an extension and ‘forgot’ to mention it to the landlord at the time and the new landlord was nosing around looking for such changes and charging extortionate fees for retrospective permission. We negotiated a price and had to pay the sellers legal fee. I did my own registration with the Land Registry, which was fine but did a lot of research and they are very helpful - downloading the correct forms is the trickiest part! Whether it adds value, I don’t know.

[disney332]

Buying the freehold turns a pawn into a king

Disney332

[disney1st timer]

Trying to sell a leasehold property is incredibly difficult. We had three sales fall through on ours because mortgage lenders wouldn’t lend on it. I know you say you’ll never sell but I think it’s worth investing in it just for the saleability in the future, it would have cost us £10,000 to buy the freehold - you’re getting a bargain!

[mitch84]

Originally Posted by disney1st timer

Trying to sell a leasehold property is incredibly difficult. We had three sales fall through on ours because mortgage lenders wouldn’t lend on it. I know you say you’ll never sell but I think it’s worth investing in it just for the saleability in the future, it would have cost us £10,000 to buy the freehold - you’re getting a bargain!

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I know what you are saying, and that’s why I am considering it, but we have streets and streets of little Victorian terraces, all leasehold and so if you buy a 2 bed in this area, they are all leasehold (as the new builds are all leasehold too). I think the purchaser would expect it to be leasehold. £10k is 10% of the value of the property, I think our first offer when we bought was £1500 but I could be wrong.
I’d have said no outright (and did) but I think with having to pull out of our house purchase, and no little trips away, finding £700 is more achievable so just pondering

[Blue nose]

Originally Posted by mitch84

I know what you are saying, and that’s why I am considering it, but we have streets and streets of little Victorian terraces, all leasehold and so if you buy a 2 bed in this area, they are all leasehold (as the new builds are all leasehold too). I think the purchaser would expect it to be leasehold. £10k is 10% of the value of the property, I think our first offer when we bought was £1500 but I could be wrong.
I’d have said no outright (and did) but I think with having to pull out of our house purchase, and no little trips away, finding £700 is more achievable so just pondering

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I'd be tempted to write back and say you'd be interested but at a lower rate. Offer £175 as 50 years equivalent.

My ground rent is £200 and to buy is £5000. We're not paying that even for our forever home.

I agree no issue with mortgages for houses as long as plenty of lease left.. It's quite common here too for new builds and old terraced.

[vhm672]

Originally Posted by disney1st timer

Trying to sell a leasehold property is incredibly difficult. We had three sales fall through on ours because mortgage lenders wouldn’t lend on it. I know you say you’ll never sell but I think it’s worth investing in it just for the saleability in the future, it would have cost us £10,000 to buy the freehold - you’re getting a bargain!

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I’m sorry you couldn’t sell your leasehold but this isn’t true. There is nothing wrong with leasehold as a concept only sometimes with certain defects in the lease. If your term gets under 100 years you will start to have problems with certain lenders and if the rent goes up exponentially this will also be a problem but leasehold interests have been around for 100s of years without issue.

To the OP you may have statutory enfranchisement rights, i.e. a right to buy the freehold. Have a look at the leasehold advisory service website which walks you through the process and cost.

[tspill]

Originally Posted by disney1st timer

Trying to sell a leasehold property is incredibly difficult. We had three sales fall through on ours because mortgage lenders wouldn’t lend on it. I know you say you’ll never sell but I think it’s worth investing in it just for the saleability in the future, it would have cost us £10,000 to buy the freehold - you’re getting a bargain!

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Selling a leasehold property is no more difficult than any free hold property as long as there is a reasonable time left on the lease.

[discoclare]

I would buy the freehold.

I understand the ground rent is low and it won't add value.
The problem, as others have pointed out, that when you come to sell it (or your children come to sell it if you pass it on), if the lease has dropped too low there may be issues in people who want to buy if they need a mortgage, and that will make it harder for you to sell. The key thing that jumped out to me in your OP was that it had "decades and decades" left on the lease. Once it drops below 70 years it can cause problems.

We are actually on the receiving end of some issues regarding a lease getting a bit low at the moment. We are a freeholder and have a dispute at the moment with a lady whose flat is leasehold to us and the lease it getting down towards 70 years. It a bit of a long story, but to make it short, basically when we bought our flat (share of freehold in the building) we didn't realise one of the other flats in the building was leasehold and we became their freeholder. She wants us to give her the freehold, we have stated she can either renew the lease or buy the freehold after statutory valuation. She refuses to do either, saying we have to give it to her (she was bought out of her share of freehold about 15 years prior to us moving), we need to "compromise" with her (how is giving it to her compromising with anything?) etc etc. Anyway, long story short it would be much simpler if she had kept her own freehold in the first place!

[Floridarules]

I would definitely buy it. Even if not thinking of selling, you never know.

Especially as you bought the house cheaply in the first place 👍