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Help With Property Laws


SupraD06

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Hi all, not sure if anyone can shed any light on things for me? But any info would be greatly appreciated. Im in the process of buying a property, and currently its a lease hold property. Now at some point i might be interested in purchasing the freehold ( Need to live in the property for at least 2 years) BUT what im struggling to find any info on is this. Obviously im paying for the mortgage, and until its fully paid off the bank still own my house. But once its fully paid off, i own the house outright? Right? This may sound like a stupid question, but someone said that the leaseholder still owns the house :blink: Because they own the land the house is on.

 

I find it hard to belive that once i've spent 25 years paying for a mortgage, i still dont own the house. What would be the point in having a mortgage if you still don't own the property, you may aswell rent.

 

Any info would be great

 

Cheers

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You would own the property when the mortgage is paid off, but you wouldn't own the land that the property is built on.

 

Leashold is most common when buying a flat: it's extremely unusual for one of the flat owners to own the land that the block of flats is built on.

 

Unusual for a house (not a flat) to be sold as leasehold.

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Guest wantthatone

you will find the lease will be 99 years & up matey. nothing to worry about its common practise, you may want to find out if theres a management company, you will be required to pay them per anum, as well as ground rent, i had a designer flat in bath, in a lot, my lease was something like 999 years, but i was being screwed for £1800 management fees, for this they cut the grass & cleaned the windows! ground rent, & there building insurance, on a positive note i doubled my money within 4 years!

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It very much depends upon the type of leasehold that we're talking about here.

 

Most flats for instance, are leasehold, whereby you pay a service charge for the up keep (supposedly) of the communal areas. You, in essence, own the part of the building (the flat) for the duration on the lease - which can either a) expire or b) be extended by you.

 

Extending a lease is normally quite expensive depending up whereabouts you are. But for a standard 99 year lease extension, there are normally deals to be done with the freeholders.

 

Owning a leasehold property, with a decent length lease on it, makes little or no difference to your ownership rights and potential resale (although a leasehold house is a tad peculiar - unsual).

 

I'm more than willing to write you out my advice, but I'd need some more details off you.

 

Cheers,

 

Josh

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As it stands there is 67 years left on the lease, and at the minute they are only asking £75 a year for the rent. So were only talking £6.25 a month. Im more than happy to live in the house for the next two years, then see what kind of price they want to make it a freehold. But my worry was that after 25 years of paying the mortgage i still dont own the house.

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How long it the lease?

Is it a flat in a block?

Is it a semi or terraced house?

Are any similar properties in the area leased to the same landlord?

Have any near by owners bought the lease hold?

You can/may be able to buy out the lease holder?

 

Your conveyancer / solicitor should be advising on this, if they are not get another who can?

If it is a long lease 100 + years it probably wont make any difference when you sell but short lease holds will devalue the property. At the end of the lease ownership reverts to the land lord!!!

 

Edit Sorry posted late many questions answered.

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Sounds like you need a new legal advisor. On a positive note the first investment property I purchased had 70 years lease to go and I was able to by the freehold for much lest than 70 years rent. If I could not have bought the lease I would have walked away. It really depends on the reasons behind the original lease.

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No conveyancer in their right mind will advise you to proceed on a property with a 67 year lease unless you're getting a very good price for it and have made enquiries about it's extension etc.

 

The house was up for sale last year for 160K, this year it was up for 150k and ive had it for 140K, The bank were happy to aggree the mortgage as long as it had 40+ years on the lease.

 

By the way, who told you that you couldn't purchase the freehold unless you've been there two years?

 

I'm not certain that's correct, I will check for you.

 

Ive been told by a few companys and read on websites that normaly you have to live in the property as the new owner for 2 years before you can purchase the freehold.

 

£75 is ground rent, is there a management fee? have you a solicitor?

 

As far as i know there is just the £75 annual fee, ive had all the paperwork from both mine, and the previous owners solicitors, and there is no mention of any other fees.

 

Sounds like you need a new legal advisor. On a positive note the first investment property I purchased had 70 years lease to go and I was able to by the freehold for much lest than 70 years rent. If I could not have bought the lease I would have walked away. It really depends on the reasons behind the original lease.

 

As ive said, the plan was to live there for the two years and then purchase the freehold, once i own it, that will be it

 

There may also be restrictions within the lease for devopment or extensions etc

 

There are no plans to build or extend at this point, and if i did id purchase the freehold first.

 

 

 

Just to be clear, this is a house were talking about, and not a flat.

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Why did it not sell at 160k and 150k ? and why would it not drop further ?

 

Im guessing it didn't sell before for the simple reason, people didnt think it was worth that amount if it was a lease property, but if i live in it for two years and only pay £75 land rent, i could then purchase the freehold, and it would increase its value again. The property is a 3 bedroom, fully detached house, thats only 27 years old, im sure if it were freehold it would be more than ive paid for it.

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It's actually quite common to have leasehold houses. The councils used to buy up land which houses were built on to have a steady income of ground rents. The two year thing might be correct if it does belong to a council.

 

If that is the case, the fees to purchase the freehold will be a lot less than through a private landlord - usually a couple of £1k with extra legal fees.

 

Not really much else I can say without the full info but I'd be happy to take a look at the OCEs if you can get a copy, or such like.

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"You should not buy a property with a lease of less than 60 years, and anyway mortgage lenders are very unlikely to lend for a lease as a short as this. Lenders normally want at least 20 years left on the lease after the end of the mortgage term. As a leaseholder you have the right to extend the lease for 90 years or even to buy the freehold if certain criteria are met, though the application process is expensive and takes a long time. Contact the Leasehold Enfranchisement Advisory Service"

 

 

You need to do some research, and remember we live in a country obsessed with house buying ,yet everyone missed this bargain house ???

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Thanks for the info Charlotte, what info would you require from me exactly? As i've got a mountain of paperwork sent from my solicitors. The land is owned by a company called Simarc.

 

The usual criteria is the mortgage term plus 25 - 30 years but it sounds like you've already sorted that bit out.

 

You really need to check with your solicitor what steps can be taken to extend the lease (until such time as you can apply to purchase it). They should be able to write to Simarc and request their standard 'extension fees'. Actually I've just found the company's website http://www.simarc.co.uk. It looks like you can obtain a quote from them directly so it seems like a fairly standard thing they do.

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If its still got 67 years left do i need to extend the lease right away? Im only asking because if we decide to purchase the freehold in two years i wont need to extend. ive had a look on the Simarc website and it does say i can get a quote for freehold or extension, so will give that a go in the morning. Looking through some of my paperwork i cant see any mention of any maintenance/service charges? so would i be right in thinking that i only have to pay the ground rent?

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So in 7 years time if you do not secure the freehold ,you live in an unmortgageable house , ie you can only sell to a cash buyer !!

Is the house a repo,or under bank ownership ? or the previous owner passed away ? corporate owned?

The banks are super cautious now ,and that they offered a mortgage means the underwriters have factored in a price drop so should be reasonable value , unless they are recouping losses from a previous default

What does your solicitor say ?

I would offer 100k and take a punt

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