Buying Freehold - 999 Year Lease / Low GR

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    Buying Freehold - 999 Year Lease / Low GR

    Hi,

    Our house, which we purchased in 1996, has a 999 lease (from 1936) and a Ground Rent of just £4.50 /year.

    Our bill for this year included a new demand by the Freeholder for a copy of our Building Insurance Policy and a stipulation that we note them as an interested party on the policy.

    Not sure why, after all this time, they have decided to do this (and I believe it won't cost anything to do and we have no choice but to comply), but it has prompted me to think again about buying the Freehold. We tried about 8 years ago but the figure asked then (around £1000 + legal costs) put us off.

    Having done a bit of research I understand a recent change in the law means that the "official" calculation - should the matter have to be decided by a tribunal - would now ignore something called the Marriage value and use only a multiple of the Annual Ground Rent - say 20 to 25 times.

    On that basis we have today offered what we thought was a generous £225 (multiple of 50) to buy the Freehold, but have again been told that the Freeholder will accept nothing less than £750 + £500 (+VAT) legal costs.

    Should we up our offer rather than go down the legal route? If so, what should a fair maximum be? Also, is £500 (+VAT) a fair sum for the legal costs? Any other advice would be appreciated.

    Thanks
    Stephen

    #2
    1. What does yourr lease say re your obligation to insure?
    2. Even if L wants to direct your insurance (and gain commission for itself!), it can't now. See s.164 of Commonhold and Leasehold Reform Act 2002. If you comply with that, you are no longer required to comply with lease re property insurance.
    3. A fair price for f/r would be 20YP (= £90) + L's legal fees (no more than £250 for these) = total c. £340. L's figures are exorbitant.
    4. So serve Notice under Leasehold Reform Act 1967 and threaten L with Leasehold Valuation Tribunal. You would be crazy to go there (as it costs up to £1000 in fees) BUT each party would have to pay its own fees- win or lose- so L would be in danger much more than you would.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      Will check the lease re: insurance, but I'm almost certain that the terms state that alternative insurers have to be approved by the L (rather than nominated by them). I'm also certain that our current comprehensive Buildings & Contents policy covers far more than is stated in the lease.

      On that basis, I assume we have no choice but to comply with their demand to include them as an interested party on the policy and to send them a copy - but to ignore any demands they may subsequently make to force us to change to an insurer of their choice?

      With regards to serving notice, is that something we could do ourselves initially - is there a pro-forma lawpack we could use? - or would we need to engage the services of a solicitor?

      Thanks again.
      Stephen

      Comment


        #4
        Originally posted by MOLYVOS View Post
        Will check the lease re: insurance, but I'm almost certain that the terms state that alternative insurers have to be approved by the L (rather than nominated by them). I'm also certain that our current comprehensive Buildings & Contents policy covers far more than is stated in the lease.

        On that basis, I assume we have no choice but to comply with their demand to include them as an interested party on the policy and to send them a copy - but to ignore any demands they may subsequently make to force us to change to an insurer of their choice?
        No. Just use s.164 procedure for alternative insurance. L cannot insist on compliance with covenant, if you do that.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).

        Comment


          #5
          Originally posted by MOLYVOS View Post
          With regards to serving notice, is that something we could do ourselves initially - is there a pro-forma lawpack we could use? - or would we need to engage the services of a solicitor?
          You can do this yourselves, if you are able. Use Notice of Claim, under Part I of 1967 Act.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

          Comment


            #6
            Sorry for this, but it's not clear to me how we should be responding to the insurance request by the L (for a copy of our policy and having them included as an interested party).

            Reading what I can about the s164 "notice of cover" procedure, there seems to be a 14 day time limit starting from the renewal date. Our policy runs from 30 Sept and was renewed in Sept 2007, so are we too late to make use of that section? If so, what do you advise?

            Thanks again.
            Stephen

            Comment


              #7
              Originally posted by MOLYVOS View Post
              Sorry for this, but it's not clear to me how we should be responding to the insurance request by the L (for a copy of our policy and having them included as an interested party).

              Reading what I can about the s164 "notice of cover" procedure, there seems to be a 14 day time limit starting from the renewal date. Our policy runs from 30 Sept and was renewed in Sept 2007, so are we too late to make use of that section? If so, what do you advise?

              Thanks again.
              Stephen
              You (T) can serve a Notice only within 14 days from renewal [s.164(3)(a)], as you say. For the current insurance year, you therefore need:
              a. to cancel existing policy (claiming refund for period to September), create new one, and serve Notice on L within 14 days; or
              b. to comply with L's demands until September, if you retain existing policy.
              JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
              1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
              2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
              3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
              4. *- Contact info: click on my name (blue-highlight link).

              Comment


                #8
                1. Which part of UK is your leasehold house located ?

                2. How much can you save buying your own insurance ?

                Comment


                  #9
                  Leasehold property is located in Warrington, Cheshire.

                  Following advice picked up elsewhere I checked Northern Area Tribunal decisions before submitting a written offer and found one from April 2008 in Warrington, with a similar lease (999 years from 1930's) and a GR of £15/year (ours is £4.50/year). The ruling in that case was a lease cost of £150 (GR x 10) with legal costs of £100.

                  Armed with that information and the advice received on here, we put what we thought was a very generous offer in writing to the Freeholder of £180 for the lease + £300 (+ VAT) towards legal fees. Very surprised to received a reply yesterday rejecting the offer, saying that their costs alone amount to £500 - £600 (+VAT). They added words to the effect that an increased offer would be considered.

                  Bearing in mind the possible costs involved in taking formal legal action and ending up at a Tribunal, would it make sense to increase our offer?

                  Would we be committed to including those final offer figures in a formal action if the offer was again rejected, or can lower figures be put in the formal offer?

                  How much is formal action likely to cost (in total)?

                  Does anyone know a good step by step DIY guide to commence such action?

                  Thanks.

                  Comment


                    #10
                    Generally, LVT procedure costs at least £800-£1000 on each side. Win or lose, each must pay own LVT fees.

                    LVT does have jurisdiction to set purchase price and L's conveyancing transaction fees (solicitors/surveyors). Why would L refuse to agree deal now, as it will have to spend upwards of £800 (irrecoverable) at LVT- entirely consuming net sale proceeds?
                    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                    4. *- Contact info: click on my name (blue-highlight link).

                    Comment


                      #11
                      Thanks for the info.

                      It doesn't make sense in light of what you're saying - unless, I suppose, their costs really are in the region of £500 (+ VAT)? Could they be that high? (they are based in London).

                      If the stumbling block is their costs, and we agreed to pay what they're asking + £180 for the lease, would we have any other costs?

                      The alternative appears to be to engage a solicitor to make a formal claim on our behalf? How would that compare, costwise, with paying the above?

                      Comment


                        #12
                        T cannot use LVT procedure unless he's served a Notice of Claim under Leashold Reform Act 1967- so get it served. Conveyancing costs are irrelevant if L wants such a high price that it's worth T daring him and going to LVT- which will laugh at a L spending (on LVT) fees dwarfing the eventual price!

                        Anyway, there is minimal chance that LVT will consider L's conv. fees fair and reasonable if they exceed £500!
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                          #13
                          I have a 999 lease and want to buy the freehold. How do value the freehold? The free holder may be reluctant to sell it. How do I go about buying the freehold?

                          Comment


                            #14
                            You can download the free guide from LEASE.

                            https://www.lease-advice.org/faq/i-o...-the-freehold/

                            Comment

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