Purchasing Freehold

[BYTEr]

Hi all,

From October this year we would have been in our new build for 2 years, which according to the contract, we are eligible to purchase the freehold for 25 * annual leasehold fee which is currently £150, so in total £3750, I understand we’ll need to pay legal fees for both sides which from what I can gather is around £700-£1000, so we’re looking at between £4450 - £4750 to purchase the freehold.

What I want people’s opinions on is, is it worth buying now? or at all? £5k at present is a lot of money for us, although it is doable, I don’t see us moving for at least another 3 years. The reason we’re thinking of buying is because we think it will put a lot of potential buyers off, but is this true? I mean it’s only £150 a year for the first 10 years, then increases by RPI. The reason we’re thinking of buying now, rather than in a couple of years is because of the horror stories of them being sold to a random company, who, as far as the contract states, can’t change the price, but they could make it difficult, I dunno?

What are peoples opinions?

Thanks.

 

[dan958]

Leaseholds may always potentially scare people off - but you bought it knowing their was a leaehold, so there will be someone that will buy it from you as well.

 

[BYTEr]

Leaseholds may always potentially scare people off - but you bought it knowing their was a leaehold, so there will be someone that will buy it from you as well.

Yeah true, I think people are slightly more willing with a new build because of the help to buy loan. It's a little bit frustrating as the house builder in the area seemed to stop leaseholds only a few months after we purchased ours.

 

[Destination]

Is the 25* a contract thing, as I know when they changed the rules in Norn Iron they set it to 10 times the annual, not 25. Maybe it is different.

-edit
Rules are different in NI.
When ours were updated your posh landowners somehow managed to sideswipe the plebs and forgo the automatic right to buy.
Shame on your Ressemoggs

 

[BYTEr]

Is the 25* a contract thing, as I know when they changed the rules in Norn Iron they set it to 10 times the annual, not 25. Maybe it is different.

Absolutely contractual, it's specifically stated on the leasehold that we are eligible to purchase the freehold after 2 years for 25*current annual leasehold fee, but I'm not sure how this is enforced if they decided to sell the leasehold to some random company who then refuse to communicate, respond to solicitors etc which is why I'm thinking of purchasing now, even when we are not planning on selling for at least another 3 years.

They'll probably scrap leaseholds for houses in a year or something, we got stung for £1500 stamp duty, when 3 weeks later they changed the rules for first time buyers...

 

[singularity]

Definitely buy it

 

[Semple]

Absolutely contractual, it's specifically stated on the leasehold that we are eligible to purchase the freehold after 2 years for 25*current annual leasehold fee, but I'm not sure how this is enforced if they decided to sell the leasehold to some random company who then refuse to communicate, respond to solicitors etc which is why I'm thinking of purchasing now, even when we are not planning on selling for at least another 3 years.

They'll probably scrap leaseholds for houses in a year or something, we got stung for £1500 stamp duty, when 3 weeks later they changed the rules for first time buyers...

The law states that the current freehold must give you first refusal. Obviously if you're not interested in purchasing the freehold then another company is free to snatch it up.

You're quite lucky in some sense that your leasehold contract puts a value on the freehold, i've not long looked at our leasehold documents for the property we're purchasing and it doesn't mention how much it would cost to buy it out.

From my research though, the values are typically around what you mentioned.

I understand we’ll need to pay legal fees for both sides which from what I can gather is around £700-£1000

I would probably double those legal fees - just to be on the safe side. It's possible that you'll also need to pay for a valuation (on both sides).

How many years are left on the lease as well?

There's obvious pro's of buying up the freehold, but unless you're living there for 10+ years, it's likely to cost you more than sticking with the leasehold.

 

[Semple]

They'll probably scrap leaseholds for houses in a year or something, we got stung for £1500 stamp duty, when 3 weeks later they changed the rules for first time buyers...

This is also a possibility, especially after some notorious house builders put unfair leases in place - those where ground rent doubles every 10 years starting at like £500.

Frankly for housing, it makes absolutely no sense for the landowner to split off the freehold. If you lived in a "gated community" then maintenance charges for "public" gardens and access gates could surely just be stuck in the deeds.

 

[Shoza]

Who’s the developer? Taylor Wimpey & Countryside are doing voluntary freehold sale deals atm.

 

[BYTEr]

How many years are left on the lease as well?

997 in October.

There's obvious pro's of buying up the freehold, but unless you're living there for 10+ years, it's likely to cost you more than sticking with the leasehold.

Yeah, I'm not worried about saving the £150 a year, my only reasons for thinking of buying is to help sell and to avoid any potential issues down the road if it was sold off.

Who’s the developer? Taylor Wimpey & Countryside are doing voluntary freehold sale deals atm.

Persimmon.

 

[Mercenary Keyboard Warrior]

Could be worth a quick chat with your mortgage lender, they may be willing to lend the cash and then its going to be paid off like the rest of your mortgage
Otherwise I would deffo buy, if your going to buy at some point there is no point delaying

 

[Semple]

997 in October.

Yeah, I'm not worried about saving the £150 a year, my only reasons for thinking of buying is to help sell and to avoid any potential issues down the road if it was sold off.

Your ground rent review sounds similar to ours, that didn't put me off as a new buyer. I was more weary of some ground rent reviews where the costs would astronomically shoot up.

From what i'd read valuers seem to put an average of around 1% on the value of the property if it owns its own freehold.

I would guess you're on an estate of Persimmon homes and they'll all be leasehold. It's obviously your call at the end of the day, but seeing as you've said you're likely to only be there for a few more years, i'd imagine it'll cost you more money to buy out the freehold than what you'll make back from increased value + not paying yearly ground rent.

Whether it would potentially attract more buyers is anyone's guess.

 

[LeeUK]

I'd buy it now while you have the chance and the funds to do so. It could well end up in someone else's hands further down the line who may charge you 3 or 4 times the current amount to buy it.

My grandparents bought their Cussins Homes leasehold in the 90's and I'm sure all they paid was their own solicitor fees, I don't think they had to have a valuation done. The freeholder's fees were included in the freehold asking price. Obviously there is a lot more money making scam involved now with these leaseholds.

 

[Firestar_3x]

100% buy it.

 

[b0rn2sk8]

I'd buy it, you'll likely get that back when you sell it and it will be far easier to sell. Leasehold just cuts out a huge part of the market, it doesn't matter what the terms are.

Put it this way, me and so many other people I know wouldn't touch a leasehold. Ever.

 

[adidan]

I'd buy it, for the security more than anything.

You could have a quick chat with an estate agent to see if it would improve the value (it should), it'll certainly improve the numbers you'd get considering it when you come to sell.

I wouldn't look at a leasehold house unless it was long term and/or cheap. I certainly wouldn't pay anywhere near the same as an equivalent freehold and would usually just omit them from searches.

 

[HoneyBadger]

Buy it for sure. I remember a few years back when I read in the news there was essentially a scam in that a private equity bought a load of free holds and jacked the price up 10 times. Buy it now for your own security.

I’d never buy a house on lease hold land.

Edit: Have a read: https://www.theguardian.com/money/2016/oct/29/new-builds-house-buyers-leasehold-property-trap

 

[TNA]

I'd buy it, you'll likely get that back when you sell it and it will be far easier to sell. Leasehold just cuts out a huge part of the market, it doesn't matter what the terms are.

Put it this way, me and so many other people I know wouldn't touch a leasehold. Ever.

+1

 

[Skillmister]

Put it this way, me and so many other people I know wouldn't touch a leasehold. Ever.

That's because you're mistakenly tarring all leasehold properties with the same brush due to the scary headlines involving exponential rent increases. While it is right to be wary of those (although they have pretty much been removed now and no new ones will be created) there is, as far as it actually being leasehold goes, nothing to worry about with normal rent review provisions on a long lease as long as there is a contractual price for the purchase of the freehold. If there isn't, then it may become a future issue when some Guernsey registered company buys the land and you should consider whether buying it now makes sense but chances are you won't get the money back. The same restrictions when it comes to alterations etc will still exist whether you own the freehold or not.

I would however tarnish all "new builds" with the same brush as I think it is ridiculous that additional service charges get paid that could potentially increase significantly. But that is the same whether leasehold or freehold.

 

[BUDFORCE]

Buy it 100%.

There have been many scams which I believe are now illegal, but this is in recent years, where they sell these houses on leases then sell they freeholds off the very shady entities, who end up charging absorbanant amounts to then buy it, and can shoot up the GR/SC costs.

From what it sounds you situation isn't quite the same scenario but never the less once you own the freehold that's it, no one can mess with your security.

New build developers are bloody criminals I tell you.