87 Years left on Lease - Cant buy freehold until 2 years?

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    87 Years left on Lease - Cant buy freehold until 2 years?

    A property recently came back onto the market for the reason being that the previous buyer was unable to lend money from his bank due to the lease only having 87 years remaining, the estate agent therefore said that going forward only cash-buyers would be considered. Out of those cash buyers i was selected.

    I understood the complications of the issue, but for me as i was getting the property at a relatively good price due to this complication, i knew (or hope unless proven wrong, which is why i am asking here) that it did not adversely affect the actual property itself, only the financing to 'buy it'. Which probably worked in my favour at the end of the day.

    My question is regarding finding out an estimated cost of either:

    1. Extending the leasehold
    2. Buying the freehold

    What i initially did was go to ask the adjoining neighbour if they bought the freehold to theirs, which they said that they did but couldnt remember the cost. So i'm fairly confident that the ability to buy the freehold shouldnt be an issue at all, but i would like to try and estimate the costing into my future projections.

    The Freeholder is actually 'The Council of the City of Manchester', which i guess is maybe a good thing? as it is not a random private landlord that they have to go scouring for and to negotiate a price to sell the freehold. I'm assuming that if it is owned by a council that they should have a set structure or pricing for this, i couldnt find it for Manchester council but Warrington council states that to buy a freehold from them would be approximately 15x the ground rent. So i am guessing it will be some kind of multiple of the ground rent

    Which brings us to the actual groundrent itself, at the moment the estate agent doesnt know and the person who was in the property has passed, I have sent an email to manchester city council to ask but not sure if im going to get a reply back to state that if i am not the proprieter of the property then they wont disclose that information, or they might just tell me upfront what it is. Either way, i know that the actual price of the groundrent will have to be found out at some point as it is part of the conveyancing process but that could be weeks down the line.

    Lastly, i'm not sure if there is any way to speed up the process in regard to applying to extend lease / buy the freehold? at the moment I believe you have to own the property in your name for 2 years before you can do either, which means that I would obviously find it difficult to remortgage before the 2 year period due to the same lease issue. Obviously i have already planned for the cash to be tied up in the property for at least 2 years until the lease can be sorted but if there is a quicker way to do it then I thought i'd be stupid for me not to ask for some opinions/advice beforehand.

    Any advice is apprecaited in advance

    Many Thanks

    #2
    The city will probably insist you served notice and that they obtain a valuation for which you will almost certainly have to pay. Even so with 87 years unexpired its still not going to cost very much, a few thousand pounds. The solution to your question is to ask the seller to serve the notice on the city between exchange and completion and assign it to you so that you have a claim in train, I think the legal name for this is a chose in action. Yes you will pay the seller his fees to do so. Typically the buyers solicitor will prepare the claim and ask the sellers solicitor to serve it on the l/l

    Comment


      #3
      If you have a solicitor ask him to download a copy of the lease from HM Land Registry, it will inform you of the rent payable etc. Costs about three quid, plus your solicitors time (ten minutes!)

      Comment


        #4
        Or just get it yourself from land registry.

        Comment


          #5
          L4NDLORD,

          Thank you very much for that advice, i will mention it to my conveyancer and see if we can get them to start this process, although i am not sure if it will make any difference if both persons on the lease have passed. I believe it is the family selling on their behalf so hopefully they have been given some sort of rights/authority to enact these sorts of things.

          So from my undrstanding is that it will still pretty much stay the same 2 year period but that we are just enforcing it slightly earlier on and then transferring it over to myself once completition has completed. Similarly to handing a torch over to someone else once it has already been lit so that the time is now shorter.

          Comment


            #6
            it makes no difference if the registered lessee is deceased, the same rights are now granted to the Executors. What you could therefore achieve is for the vendor to commence the purchase by serving notice under section 42 of the Leasehold Reform and Urban Development Act 1993 and then assigning the claim to you simultaneous with the assignment of the lease. It is important to get the paperwork spot on

            Comment


              #7
              Originally posted by L4NDLORD View Post
              The city will probably insist you served notice and that they obtain a valuation for which you will almost certainly have to pay. Even so with 87 years unexpired its still not going to cost very much, a few thousand pounds. The solution to your question is to ask the seller to serve the notice on the city between exchange and completion and assign it to you so that you have a claim in train, I think the legal name for this is a chose in action. Yes you will pay the seller his fees to do so. Typically the buyers solicitor will prepare the claim and ask the sellers solicitor to serve it on the l/l

              hopefully the sellers ‘solicitor’ knows what they are doing! Heard of a few bad experiences with this. Especially the high street conveyancers.

              Comment


                #8
                Originally posted by SouthernDave View Post


                hopefully the sellers ‘solicitor’ knows what they are doing! Heard of a few bad experiences with this. Especially the high street conveyancers.
                the council may be quite happy to extend as part of a general policy of realising assets and won’t be pouring over the notice trying to find grounds for arguing it is not valid

                as a general observation serving the notice on exchange and then assigning it - it is vey important that the notice is deemed valid if not the new lessee has to wait two years before qualifying

                Comment


                  #9
                  Agree 100%

                  Comment


                    #10
                    Is this property a "leasehold house" with 87 years remaining on the lease ? I would not expect 87 year lease is a complication

                    What is the annual ground rent ? how often does it the increase ?

                    Comment


                      #11
                      Evening Gentlemen/Ladies.

                      So I have tried to figure out this myself but for some reason it does seem pretty strange regarding this property. So essentially I have gone onto the Land registry as instructed, but when putting in the property details it comes up with 2 results, one for Freehold and one for Leasehold. When i have looked at other properties (friends houses, previous homes i have owned etc) it has only come up with just 1 result. Not sure if that seems strange or not:

                      1.jpg

                      So i basically paid for the title register for both of them and neither of them have any mention of any monetary value in there, i have keyword seached for '£', 'pound', 'GBP', ' Sterling', and actually read both documents in full and none of them have any mention of anything to do with anything money-related in either.

                      The leasehold has a mention of a covenant in regards to the land adjacent which has said that no commercial building can be erected, and then also a charge againt the property in regards to a Equity-release company which is what i assume the person living in there prior did in order to release some equity from the house. But everything else is pretty much just mentioning the address, the freeholder (manchester council) and rights to access in relation to drainage, gas, water, electricity etc.

                      I know that this is something that my conveyancer will eventually have to find out before we exchange etc, but i based my offer price based on the fact that we would have to buy the freehold eventually etc and it was even a sort of negotiation to get the price to our level, but now i cant even figure out how much roughly it might even be lol

                      Comment


                        #12
                        The free guide to enfranchisement of leasehold house may help you :

                        https://www.lease-advice.org/advice-...ses-valuation/

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