Property lease from seller

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    Property lease from seller

    Hello!
    I have been looking everywhere for information on this and cannot find any at all.
    I was recently looking to purchase a BTL house through an online auction after viewing the property twice. After noting all the defects the first viewing I made up a budget as to what would need doing. The second time I went to view the property was to make sure that I hadn't missed anything.
    The legal pack was on the auction website and available for download. The usual documents were there along with an extra lease. I read through the lease which was a straight forward £2 per year lease with 888 years remaining - nothing wrong there.
    Then I read another document from the legal pack that was named as the "auction lot number and address of the property". This turned out to be an EXTRA lease from the legal pack put together for the seller. The second lease was making the seller the landlord of the property with a whole host of clauses of what could and couldn't be done in the property including what risks needed to be covered by the insurance (rebuild costs, fire, airplane incidents etc). All this for the sum of £500 per year payable "1st January in each year of the term".
    I passed it all over to my solicitor to double check I had the right idea of what was going on. The solicitor had never heard of a seller issuing a lease on the property and neither had the two directors of the company.
    If the sale completed the buyer had to pay the auction fees £1000 +VAT, a deposit of £8000 for this particular lot, to re-pay the seller for the cost of the searches £185 and the sellers legal fees of £940. In the contract there was a further clause of "Upon completion the Buyer is to reimburse the Seller for the Seller's costs associated with the sale of the Property in the sum of six thousand pounds and the Buyer will accept the Seller's Completion Statement in this respect as evidence of the same without question, requisition or query with regard to the same."

    Has anybody ever seen or heard about anything like this before? It is more or less buying the house but not owning the house or the land it sits on. On the edge of a rip off/scam if you ask me.

    Pete

    #2
    Sounds as though you are buying a leasehold house, as opposed to a freehold house. ( but I could be wrong )

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      #3


      I have seen this on terraced house up in the north east. - a number in Peterlee County Durham I recall there is a vendor who specialises in this. Many purchasers think its a long leasehold house up north dating from 100 years ago so the rent must be a couple of quid and bid without realising the trap that is being set up

      The vendor owns the 888 year lease and is granting an overriding lease over the property which you will buy and pay the vendor going forward as he will be the landlord £500 pa ground rent

      I strongly advise you not to proceed. The high deposit is there because they expect someone to exchange and then realise the error of their ways and try to get out of the contract .







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        #4
        It is a leasehold house with the £2/year ground rent but the seller has added a lease on the house itself of £500/year. If I were to purchase it I would technically not own the house as that is on a lease too. Its a new one on me for sure.
        Compton Group collect the £2/year ground lease and the current owner wants to collect £500/year for the house lease. That would make it none mortgageable and highly unlikely to be able to sell to even a cash buyer.

        Comment


          #5
          Originally posted by wilsopn View Post
          I was recently looking to purchase a BTL house.... It is more or less buying the house but not owning the house or the land it sits on.
          Hi. So you spotted that? You fell at the first hurdle wanting to "buy" a house. You never own a leasehold house or the land it sits on unless you buy the freehold. Then it isn't a leasehold house. Are there no real freehold houses to buy? 'Virtual freehold' doesn't exist.

          Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

          Comment


            #6
            Correct, it is not freehold property but has 2 completely separate leases both of which have 888 years remaining.

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