Leasehold/Freehold on a property.

[elfinblast]

We bought our house (with mortgage) about 10 years ago. It is a leasehold property and we pay a staggering 84p per year on the lease. Previously a local estate agent pushed a note through the door to remind us it was due and we payed it when we passed the shop but late last year we got a letter that it had been taken over by "Nationwide Ground Rents Ltd".

Today we got a letter saying that we could buy the freehold for £350

There is about 880 years left on the 999 year lease.

I've had a look through any paperwork we have, but can't see much. I found something that said the lease was £8 something shillings and pence PA and (I can't remember the words) the householder paid a proportion of a proportion of that which came to some shillings and pence which is now converted to 84p

DH thinks it is a waste of money as we will be long dead before we'd managed to pay £350 at 84p per year.

I seem to vaguely remember a solicitor explaining something about the difference, but can't actually remember what it was

So, am I wasting £350?
Can they put the annual payment up?
Any other benefits of buying or pitfalls to not?
Help!!

Found this forum which may help - some useful links and info on it In my last house I was the freeholder for a large number of leasholders. Caused a lot of problems and delays when selling the house because solictors could not seem to understand what was going on. The reverse of your situation.

I don't think they can up the lease, that's fixed. But they can try to say that you must use a particular insurance company etc.

That's rather useful. Thanks.

How many flats in the block? Who organises maintenance on the building at the moment? Presumably you have to pay a proportion of any maintenance which is carried out?

It can be useful to own the freehold as you are then in control of expenditure on the building. You could speak to all the other flat-owners about setting up your own management company which would own the freehold (all flat-owners would be directors of the management company). That way you all decide what maintenance to carry out, etc.

It's not a flat it is a terraced house.
Maintenance is organised by DH as I am far to girly to be messing around with sharp heavy things.

Oh right. Well, it might make selling the house a lot easier in the future. It is rare for houses to be held on a leasehold basis these days. When you sell, you will need to involve the freeholder which just bumps up your legal costs, so you may end up saving a lot more money than you think by shelling out now.

Once you buy it, unless you share the freehold with the other properties , there should be no future regular maintenance charges. You may however be liable for any maintencance costs of a private road or communal facilities, for exmaple, but even with your 84p you could have had additional costs levied. I think offering a leasehold house, even a long leased one, might put some buyers (and mortgage lenders) off.

Definitely buy it. As Zen says, when you come to sell it makes everything a lot more straightforward.

If you are not the freeholder there should be some form of maintenance agreement for works required and usually inc buildings insurance.Def easier to sell as freehold as people suspicious with leasehold houses.But as your dp says no real financial reason to do it although 350 is very cheap I think I would do it to make any future sales easier x

it sounds very very dodgy if you ask me - a 999 year lease on a block of flats is very standard so i really wouldnt worry about sales perspective. and financially it doesnt work out at all.

but can i just be clear: they are offering you to purchase the share of the freehold, i presume there are several flats in the block? so are they all buying a share of the freehold? and currently who pays for buildings insurance for the whole building?. Does husnband maintain whole building, but you dont ask for contribution from others??

what does the letter say about solicitors costs?

I would buy, only because we are in a leasehold property and had a ground floor extention, garage convertion and extention built over the garage a few years ago. The leaseholder then charged us £350 per extention (even though they were all done at the same time and on the same plans) to change the property details they held and according to trading standards there was nothing we could do about it!

sorry only just read that you are in a house not a flat.

if the freeholder hasnt been arranging buildings insurance or maintenance for you over the last ten yeas then you could have claimed they were absent/negligent and applied for freehold at no cost, it might be too late for this but i would still consult Leasehold advisory service on this in anycase.

it probably would be worth doing but I would look really carefully at the full costs. when you enfranchise (buy the freehold) you are liable to the freeholders costs so you may end up with a large legal bill on top of this. remember that no freeholder will be doing this out of the kindness of their heart.. £350 in the bank now means a lot more to them then collecting 84p for the next 400 years or so!

Hi we have two terraced houses both on 999 year leases (where are you - the 999 year leases seem to be the norm in Lancashire). 'My' lease is 58p a year, dps (where we all live) is £1.28 a year. A couple of years ago we had a letter like that asking if we want to buy the freehold for dps house for a few hundred pounds. I have a good friend who used to be a solicitor in the property dept at Blackpool borough council, she said some firms buy up the rights to collect the annual monies, and that they send out these letters asking people if they want to spend ££££ all at once rather than ppp per year. They just want the dosh now rather than spread out over the next 840 years in our case!
She said that if your house is on a 999 year lease, then unless its over about 850 years old already, the fact that its leasehold is just not going to affect any sale.
So we just pay the little bit each year.

The letter states that we can get our own solicitor, however the £350 includes them doing everything (Not including the £40 the Land Registry want).

I have phoned them today, and it seems like a "front room" operation. The bloke just answered Hello, rather than giving the company name.

He wouldn't budge on the price, but I tried!
I do like the absent/negligent angle. I'll look into it. We have some time to decide.

DH has had words with his boss who owns a fair bit of land and property and he thinks it is a good deal, so he's coming round to the idea.

My mum hunted out the documents from when they bought theirs. They were paying £1.17 on the lease per year but my dad offered them a £1 for the lease and they accepted. (Came to £80 including fees in 1987 )

My house was in the NW as well and they are pretty common up here. Plenty of "my" houses sold regularly so being leasehold can't have held up the sale too much. I used to get a cheque every now and then from a lessee settling their debt with me.

Not paying your ground rent can mean your house can be possessed. BUY YOUR FREEHOLD. Leasehold houses are going down in value and mortgage companies are refusing to lend on them. Its a huge national scandal with questions being asked in Parliament. Get your MP to join the All Party cross committee on Leasehold now.

I'd definitely buy it for my peace of mind.

The problem is professional fees

The true cost of the freehold is less than £5, however if you apply under the act to acquire it you have to pay a solicitor and a valuer to act for you and the freeholders solicitors and valuer on the other side. So before you can blink it will costs you nearly £2,000 in costs

The people offering you the freehold will know this so they offer you the freehold at a hugely inflated price but stating you won't have to pay anything like as much in professional fees.

it is a OUTRAGE as solicitors and surveyors are being deprived of fee income and the freeholder in effect pocketing some of their fees.

If you knew what was involved in such a transaction it would take your breath away, it is simplicity itself yet solicitors and valuers will make a meal of it

Do you have a copy of the lease? If you have any concerns read the lease, they are not all the same. Some may say you have to pay the freeholder for permission to build an extension or other things for example. Or it may give you peace of mind that there are no onerous conditions that may mean you want to buy the freehold interest.

If there are no onerous conditions I probably wouldn't bother buying it if I were you. Generally a 900 year lease at a negligible rent like that is an effective freehold. Only leaseholds less than about 100 years would cause any problems for resale.