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Buying a Freehold

(4 Posts)
Loonytoonie Sat 29-Dec-12 10:20:43

We don't own the Freehold on our home and we've been paying a ground rent every year to the company that owns it.

Years ago, before I met DH, he was offered to buy it for the sum of £3000. He didn't have the cash so declined. The price has now gone up to £8000 and it has about 90 years to run on it.

We have an endowment coming out this year (and apart from essential home repairs and perhaps replacing DH's old banger) we are considering buying the freehold.

We need advice though. Is this the best board to ask?

Thanks.

SquidgyMummy Sat 29-Dec-12 10:25:19

i would buy it. Problem you will have is once the lease gets shorter (80 years or less) of you wanted to sell it, the buyer's would struggle to get a mortgage and may ask you to deduct the cost of extending the freehold from the sale price.
If you have the money available then i would do it, as the longer you leave it, the more expensive it will get
I have just extended the leasehold on my flat (mansion block) as I am in the process of selling it.

Loonytoonie Sat 29-Dec-12 16:32:15

Is there any way of bartering the price, do you think?

SquidgyMummy Sat 29-Dec-12 18:14:46

I think it is always worth asking.

however i had to get an official valuation done of my flat (lease extension was based on a proportion of the surveyors estimate of it's value.)

In your case you could calculate the net present value of 90 years of ground rent payments and that would give you a figure (ie what the management company would "lose" if they sold you the freehold).

You will have to use an arbitrary interest rate (look at bank base rates over the last century to give you an idea, i would hazard a guess that 4 or 5 % averaged over the life of the remaining lease would be reasonable)Also google some NPV calculators. J

ust use that as the resulting figure as the basis of the most you are willing to pay when negotiating.

You could also see if an IFA could give you a free bit of advice on how to proceed.

Or you could just offer them £4k negotiate and see if they will meet you at £6k grin

good luck!

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