Purchasing Freehold

[topflat29]

You can find the cost of buying the freehold title for a leasehold house with 900 years lease and £6 ground rent from a recent decision in 2016 by the FTT decision ( First Tier Tribunal ) by Northern Residential Property Chamber under Ref: MAN/ooCA/oAF/2015/0033 .

 

The cost came to £107 ( approx 17 x annual ground rent ) and the legal costs were sset at £250 + VAT.

 

http://decisions.lease-advice.org//app/uploads/decisions/act67/1-1000/959.pdf

[Jeffrey Shaw]

They are not allowed to just name any price to prevent you from being able to buy it, it has to be a sensible figure. The rough rule of thumb is between 15-30 times the annual ground rent.

Er, what you say is true; but there's no law precluding a demand for a price that's unfeasibly high.

The leaseholder's only control is use of the First Tier Tribunal (ne the Leasehold Valuation Tribunal) but the cost of being represented there is also a lot.

 

---------- Post added 04-09-2017 at 17:55 ----------

 

You can apply to court but that's hardly inexpensive. Same with getting a good solicitor.

 

I could refuse to pay the big admin fees, but while they never say so I think it's entirely obvious that if I refused I would get a negative to whatever requests I had made. Which they're entirely entitled to do because there's no 'may not be unreasonably refused' anywhere in this contract**. They can just say no for any reason or none at all.

** No but s.19 of the Landlord and Tenant Act 1927 contains just that wording. See my post #13 on https://www.sheffieldforum.co.uk/showthread.php?p=11707023&highlight=landlord+and+tenant+act+1927#post11707023

Edited September 4, 2017 by Jeffrey Shaw

[Dave h-j]

Bought mine from Compton Group in Jan 2014. Ground rent was £8/yr (split into two payments of £4 per 6 months) and had ~850 years to run.

 

Compton wanted £700 to sell the freehold reversion. I engaged a solicitor at £250+VAT (ex disbursements). Overall it cost me £1049 plus a few hours of my time to travel and sign paperwork.

 

I decided to buy because they wanted to enforce their insurance company to cover the house and I wanted to build an extention. Yes I could have filed the paperwork for this to avoid it, but there was nothing to stop them claiming it was incorrectly filed or otherwise invalid - I would then have to engage a solicitor and would start to accumulate costs.

 

Therefore I saw the value in spending ~£1000 to remove this potential future issue and at the same time receive the benefit of holding the freehold.

 

Hope this helps someone.

[Jeffrey Shaw]

Bought mine from Compton Group in Jan 2014. Ground rent was £8/yr (split into two payments of £4 per 6 months) and had ~850 years to run.

 

Compton wanted £700 to sell the freehold reversion. I engaged a solicitor at £250+VAT (ex disbursements). Overall it cost me £1049 plus a few hours of my time to travel and sign paperwork...

 

Therefore I saw the value in spending ~£1000 to remove this potential future issue and at the same time receive the benefit of holding the freehold.

Still sounds expensive!

[Dave h-j]

Still sounds expensive!

 

Probably, I was offered it at £500 from the previous holder - but missed the deadline (misplaced paperwork). What would your target price have been?

[Robin-H]

Bought mine from Compton Group in Jan 2014. Ground rent was £8/yr (split into two payments of £4 per 6 months) and had ~850 years to run.

 

Compton wanted £700 to sell the freehold reversion. I engaged a solicitor at £250+VAT (ex disbursements). Overall it cost me £1049 plus a few hours of my time to travel and sign paperwork.

 

I decided to buy because they wanted to enforce their insurance company to cover the house and I wanted to build an extention. Yes I could have filed the paperwork for this to avoid it, but there was nothing to stop them claiming it was incorrectly filed or otherwise invalid - I would then have to engage a solicitor and would start to accumulate costs.

 

Therefore I saw the value in spending ~£1000 to remove this potential future issue and at the same time receive the benefit of holding the freehold.

 

Hope this helps someone.

 

£8 a year using the basic rule of thumb would come to between £120-£240, plus legal fees.

[Dave h-j]

£8 a year using the basic rule of thumb would come to between £120-£240, plus legal fees.

 

Thanks - I guess in this case you would also need to figure in the legal fees for the seller (as well as your own).

 

What if they rejected your offer?

[Jeffrey Shaw]

Once Notice of Claim has been served, the reversioner is compelled to sell.

The only dispute is about at what price; and the First Tier Tribunal can be used but would waste a lot of money on each side.

[AnnaGrant]

Hello, another question about purchasing freehold that I hope Jeffrey Shaw might be able to advise on. We have requested from the surveyors who bill us for our leasehold a quote for purchasing our freehold. There is about 800 years left on the lease. The surveyors have asked us for £350 to prepare the quote, which they say will involve a valuation on the house and going through the deeds. Is this level of fee normal for a quote? Thank you.

[geared]

Thats taking the mickey, tell them to FRO.

You shouldn't be paying anything just for a quote, in all honesty it sounds like you shouldn't even be asking to buy it.

 

You employ someone like Jeffrey and he tells them you will be buying it, (after a couple of years when you have the right obviously).

Edited September 22, 2017 by geared