Active discussions

Meet the Other Phone. Protection built in.

Meet the Other Phone.
Protection built in.

Buy now

Please or to access all these features

Talk
Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

Original poster

Headlease inbetween Freehold and Leasehold

30 replies

sorrelly · 08/04/2021 13:38

In the process of buying a property (Victorian terrace) - it is freehold and leasehold - we are buying both, but there is a headlease in between them which someone else (not the seller) owns. Does the fact we are buying the freehold take precedence in terms of any right the person who owns the headlease might have?
Our conveyancer isn't being much (any) help.
Thanks!

OP posts:
MinnieMountain · 08/04/2021 14:57

It entirely depends on what the headlease says. Your conveyancer MUST explain it to you.

Original poster
sorrelly · 08/04/2021 15:04

thanks @MinnieMountain

She just keeps saying it's complex but is unable to explain in real terms what it actually means. Grr!

OP posts:
MinnieMountain · 08/04/2021 15:21

Well she should be able to, it’s her job. They are fiddly but that’s what clients pay us for.

Ask to speak to her partner in charge of your file if she can’t explain it.

AcornAutumn · 08/04/2021 15:23

@MinnieMountain

Well she should be able to, it’s her job. They are fiddly but that’s what clients pay us for.

Ask to speak to her partner in charge of your file if she can’t explain it.

I was just about to say this - she can't just say she can't explain it!
Original poster
sorrelly · 08/04/2021 15:27

Thanks both. We keep asking her to explain all the implications and options to move forward in writing, but all she does is explain what a freehold is, what a headlease is, what a leasehold is etc and keeps saying she's sorry that we don't understand.
And yes, we will be ringing her firm later to get another view.

OP posts:
SeasonFinale · 08/04/2021 15:41

Is the Headlease to a management company (that you may also own a share in when buy the freehold)? If so this would be to deal with the communal areas and joint expenses such as buildings insurance. Are you buying the whole freehold or a share of the freehold?

Original poster
sorrelly · 08/04/2021 16:13

No, it belongs to a couple who used to live next door decades ago.
We're buying the whole freehold.

OP posts:
AcornAutumn · 10/04/2021 17:51

Did you get any more info?

Original poster
sorrelly · 12/04/2021 19:03

Kind of - she has said that the freehold can't block anything that the headlease owner might impose. Whilst there currently aren't any payments from the underlease to the headlease she can't guarantee there wouldn't be in the future, and that the headlease owners could impose changes on the property which would be binding on us as the lessee. She wants us to try and buy the headlease, but the headlease owners moved away a long time ago and not sure they are even still alive...

OP posts:
Ahbahbahbah · 12/04/2021 19:06

Ok, you absolutely should not buy this flat if you cannot also buy the headlease. This should be the seller’s issue to sort out.

I’d tell her to go back to the seller’s solicitor and ask how they propose to deal with this and what their timescale is, then you can make a decision on how to proceed.

Are you cash buyers? A mortgage company is not going to give a mortgage on this flat as long as the headlease exists.

Original poster
sorrelly · 12/04/2021 19:11

Thanks - we are cash buyers.

Our solicitor has asked the seller's solicitor how they propose to deal with this, and the seller's solicitor has said:

"the fact that there is an intervening title not in our clients possession is not relevant. Your client will simply take the property subject to this and you need to advise your client of their obligations as leaseholder under the terms of the lease"

OP posts:
Ahbahbahbah · 12/04/2021 19:23

Ok, that’s completely unacceptable as a response.

I’d walk away. The seller needs to resolve this issue.

You could have all kinds of hassle in future with this, plus it would not be mortgageable so cuts down on future buyers.

Unless this flat is perfect and a bargain?

Original poster
sorrelly · 12/04/2021 19:30

It's a terraced house, just in case that makes any difference.
And it is kind of both of those things! We also need to move urgently from our current accommodation. But understand what you are saying. Argh.
If it came to selling in the future, could we avoid these issues by just selling it leasehold?

OP posts:
Ahbahbahbah · 13/04/2021 07:48

Selling it leasehold might help in future, but any new buyer would still be asking where the headlease owners are and how to contact them if they ever need a consent or anything from them. So it’s still an issue.

But how much of an issue depends on the actual wording of the headlease, and your lawyer will have to advise you on that.

Original poster
sorrelly · 13/04/2021 10:18

@Ahbahbahbah thanks for your advice :)

OP posts:
Original poster
sorrelly · 15/04/2021 17:46

Hello again - just in case anyone can help. Nobody knows where the headlease owners are now (possibly no longer alive), and we've been advised our seller should take out an absent landlord indemnity policy (aware this doesn't cover all risk). We've been told that the seller's solicitor needs to have made an attempt to contact/trace the headlease owner before they take the policy out, does anybody know if there's a minimum period of time they have to wait e.g. how long to wait for no reply to a letter to their last known address?

OP posts:
QueenStromba · 16/04/2021 08:36

Is this house significantly cheaper than a proper freehold? I'd be wanting a massive discount to take this on. How did this arrangement even come about?

GU24Mum · 16/04/2021 10:27

Your lawyer sounds too junior to be dealing with this!

What's the term of the head lease? If it expires in 2 years' time that's really different from one which has hundreds of years left on it.

Are the freehold and both leaseholds all for exactly the same land?

Not sure what your lawyer means when he/she says about future new charges. Landlords broadly can charge for 4 things:

If there is one, the amount and the timings/ amount of any increase is written in - the Ll can't unilaterally change it.

Insurance- if the freeholder insures then it will only be a technical pass-through of the cost via the F/H via the headlessee and back again.

Service charges. There probably aren't any services in practice but your solicitor should check how it works.

Fees for applications for consent eg for assignment (sale), request for any alterations which require consent. Again, your solicitor should be able to tell you what needs consent (possibly not much for a house) and how it works in practice.

It's absolutely the seller's issue to deal with and any indemnity insurance costs should be theirs.

Don't buy it and think that when you sell, you can just sell your leasehold if necessary as leasehold houses are not popular and especially not when's not something typical for the local area.

GU24Mum · 16/04/2021 10:28

The first point was supposed to say Ground Rent but got lost.

Original poster
sorrelly · 16/04/2021 14:59

Hi @GU24Mum
Thanks so much, really helpful.

The headlease is 700 years.
Freehold and leasehold are for exactly the same land.
There are no service charges.

It is a terrace of four houses. It seems like they are all in the same position - we've had a look at their titles online and they all reference this same headlease and its covenants. One is registered freehold and leasehold like ours, the other two just freehold but with ref to the headlease.

OP posts:
GU24Mum · 16/04/2021 15:32

So is there the same headlease (but different tenants) on each of the houses or literally the same headlease which covers all four?

If you want to send me the copy titles, I'm happy to have a look if you want another opinion on them?

Does the agent know that it's all a real mess?

Original poster
sorrelly · 16/04/2021 15:52

Thanks so much - that would be really helpful. How could I send them to you?
The estate agent does know about it all, yes. It was advertised as freehold only, so it's really annoying, to put it mildly!

OP posts:
Original poster
sorrelly · 16/04/2021 15:58

@GU24Mum
It's the same headlease which covers all four, but at least one other house is in the same position as ours (has freehold and leasehold but subject to this same headlease), and one is freehold only but their title document also references the same headlease.

OP posts:
GU24Mum · 16/04/2021 16:03

Hi OP, send me a message and we can work it out from there.

TakeYourFinalPosition · 16/04/2021 16:07

The only house I've ever viewed that had a head lease, we were advised to walk away from, even though we had a bargainous offer accepted beforehand. I'm really curious about whether this is resolvable...

I hope this is fixable for you!