buying a 3 year old leasehold house......anyone bought the freehold

[lokijet]

Im looking at a couple of houses on a development that is c 3 years old but despite the estate agent details saying they are freehold they are actually both leasehold ( built by Miller homes)

Im ok with leasehold as a concept both my previous properties were old but leasehold but I'm aware some more recent developments had issues with step ups in ground rent and service charge and difficulty in buying freeholds.

I feel that if it is this kind of lease then acquiring the freehold is substantial additional cost this should be reflected in any offer I make

Anyone got any experience?

I wouldn't do it. These houses are almost impossible to sell on because of the threat of increasing ground rents. Tell them you want it freehold.

I wouldn't. Or at least get a solicitor that is familiar with leasehold. If you have, for example, the doubling ground rent clause, it will probably render the property unsellable.

That's even if you get approved for a mortgage on it. Mortgage companies are clamping down on lending on properties with these types of clauses within the lease

You may also find the freeholder sells your freehold without your knowledge.

Thanks for responding - Share your concerns

i have already asked the question re Ground rent accelerator and whether the vendors have sought to purchase freehold ( or know who still has it!)
Just curious if anyone has been in the position of having bought one then got it sorted (for all the reasons you mention!)

Have you had a look at the terms of the lease? If it's got one of the ground rents which escalate quickly then unless the seller can somehow persuade the freeholder to vary the provisions or (less likely) transfer the freehold, then it's probably one to avoid.

If the ground rent isn't dreadful then it's worth looking into the lease ie what controls does the freeholder have on alterations/sales etc?

I'm assuming the house is in the North West of the UK (that's where most of them are). PPs are right that leasehold houses are probably on their way out but if the terms of the lease are OK, then it being leasehold isn't a complete non-starter, especially if you're in an area when there are a few of them. If the provisions of the lease are too onerous then that tips the balance and I'd steer away.

Absolutely not (sorry). Read so
Many horror stories about new leaseholds that start out at £100 yearly ground rent, then it doubles to £200. Then to £400 followed by £800 etc.

Also beware that not all leases are enfranchisable and one for a house on a new estate is quite likely not to be so please don't assume you will be able to buy the freehold and don't just rely on an ordinary residential conveyancer to advise you on this - leasehold enfranchisement is a specialist area and you should seek specialist advice.

Don't do it. I sell new build houses as my job and we changed last year to all freehold. Leasehold is a huge scam.

Properties our company sold ten years ago at £150 ground rent + £100 management charge are now looking at £600 ground rent and £250 management charge. It's utterly disgusting but most leases are sold on to private companies where they escalate hugely and there's nothing you can do.

Either steer clear or find out how you can buy the freehold (usually around £3000-£8000 on a new build home). Even if the lease terms don't escalate to that degree, you're basically living on rented land and it never really feels like yours. Also you will really struggle to sell it in the future - no matter what the terms, at least 80% of the people that walk through our doors say they would never even look at buying leasehold.

Don’t do it

The whole scam is storing up so many problems for the future
While you may be able to buy the freehold, others on the estate won’t be able to, and a bunch of unmortgagable houses aren’t going to make for the best neighbours

thanks all - i have done lease hold before (currently in a victorian 999 lease with 869 years left and £10 pa ground rent)

Think I will a) see if ground rent is fixed
or b) see if current owner can buy freehold and negotiate on that basis ( if less than £10k it won't be an issue on £750k property)
otherwise will need to find somewhere else

Our old town house was on an estate. It was originally a 200yr leasehold with pepercorn ground rent. We purchased the freehold primarily to be able to make internal changes without asking for permission. The premium was £0. It cost about £2500 solicitors fees in total for both parties.

I wouldn’t want to. A freehold property is more desirable.

The price of the freehold reflects 'ground-rent foregone' so if the lease has an escalator then the freehold will be expensive.
Also, I think that you have to own the leasehold for two years before you get the right to buy the freehold. It would be much better if the current leaseholder went through the process and then sold you a freehold house.

Why is the current owner selling after only three years? That rings alarm bells.

No. Wouldn't touch it with a bargepole.

OP you sound as you know what to look out for and how to do your research. There is much difference between old leasehold, as you're used to, and new leasehold. A pp is right that you can only acquire the freehold if you've owned for 2 years so the seller would need to go through that process but they can kick start it (make the request) and then you can step into their shoes - speak to a solicitor about it.

Be aware that some estate agents lie to make a sale. Double check everything they say. Our flat's specs had blatant inaccuracies on the estate agent's blurb. They could not have believed for ex that it was in borough A ( cheap council tax) when it is in borough B ( double the tax).

I also had a lease extension nightmare. Of course they didn't tell me it would attract marriage value.

update: looks like freeholds have been sold on to investment vehicle - not sure vendor was even aware.

still awaiting lease details re escalation clauses etc but looking at other properties as plan B :(

I feel sorry for the vendors as im nt sure they were really aware of the issue but surely agents should be (and not advertising as freehold when leasehold)

I think a leasehold on a older property is completely different than a leasehold or rentcharge on a new build. New build contracts seem to be written in such a cruel way to make the property virtually worthless under the threat that you have no idea how badly your going to be out of pocket 10 years down the line, and others won't want that risk once the news stories flood. I would avoid.

Old leasehold house = fine.
New leasehold house = bad.

I check titles for my job. The rent escalation is often too high/frequent and the freeholders refuse to change it.

Apparantly the lease escalation is purely ONS RPI

should also say escalation is very 10 years and only RPI

@minnie is this still a problem

Thinking of making a double offer 1 including freehold and lower offer for just leasehold?

If a big company has already bought the freehold the vendors won't be able to accept an offer for the freehold will they?

That ground rent and escalation is fine.

As PP have said though, be aware that the seller has no control over whether or not the freehold is sold. If buying the freehold is important to you you'll need to find out from the freehold whether or not they will sell and how much for before you progress.

thanks all for the advice - speaking to my official legal advisor tomorrow