Is Ground Rent the same as Freehold

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    Is Ground Rent the same as Freehold

    Hi
    This may seem a silly question, but is ground rent the same as freehold. My confusion is that i have lived in my house since 1977 with a ground rent of £15 pa for 99 years. I own my house outright. Could some one please answer the following questions;

    My assumsion is that i pay ground rent for the ground within my boundary which the house sits on, is this correct

    As i own my house, why should the person who owns the ground have any say on what i do to my house as they have no ownership of it. I can understand if i am extending as i am exceeding the boundary of the house.

    How much would it cost to by the ground rent (how do i work it out).

    As i do not own the ground why can i change the appearance of it without telling the owner e.g. add patio, flowers rockery.

    I pay my ground rent through Simarc which i can see through the posts they can be a pain

    Many thanks in advance

    #2
    Well your post is a typical attempt to understand with rationales that do not apply, so its best to forget them for now.

    There are two estates in law, freehold and leasehold, the latter which must always be subject to a rent. The longer the lease, the lower the rent, as rule of thumb. Houses and flats can be sold and owned as leasehold.

    Having purchased a leasehold house you should be aware of exactly what control the landlord has power you, as the lease is contract between you and the landlrod. Your solicitor would have explained this before you purchased.

    If you qualify, you are entitled to acquire the freehold.
    http://www.lease-advice.org/wizard/?step=7
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

    Comment


      #3
      Hi,
      Thanks for the reply.
      I can understand how people can get confused so am i right saying that as i pay ground rent this is known as freehold, leasehold is if i rent the house. Am i correct that as i had a mortgage with a building society, as my house was never rented, but have paid it off, the only section i need to understand is the freehold (to me this is ground rent).

      Comment


        #4
        No, if you pay ground rent it's probably a leasehold.

        A 99 year lease is like a very long rental, what you buy is the right to live in it for 99 years. Leasehold interests are mortgagable because unlike a normal rental agreement they have a value. If you buy a new house on a 99 year lease and after five years decide to move you can sell the remaining 94 to someone else.

        Leases are contracts and so have covenants (a bit like terms and conditions). Very often those covenants restrict what you can do with the house, such as no alterations or extensions without consent.

        You need to work out what it is you own.

        Comment


          #5
          1. Your property has 2 property titles and you can buy a copy of each for your post code from Land Registry Online website and download at 4 pds each - to check the name of the title holders. Check date when the freehold was sold to Simarc ?

          (a) freehold title means title holder owns the land ( and perhaps the house).
          (b) leasehold title means the title holder ( YOU) has a 99 year rental agreement from 1977 which means there is only 65 years remaining left on your lease.

          2. When you bought your lease in 1977, the price paid was for a PREMIUM on the 99 year rental agreement and not for ownership of the Land . Think of your house like a caravan without wheels parked on land owned by another party.

          3. Study the The LEASE website given in post #2 by LA as there is a sample valuation cost of buying the freehold for leasehold house with 65 yrs left remaing on the lease. The sample is for a leasehold house with market value of 120K and the cost of buying the freehold came to about 7.5K for which a large component is the inclusion of marriage value factor .

          4. You may have bought your house direct from the builder on 25 year mortgage , but after you have spent the best part of your working life to fully pay off your 25 year mortgage , you end up owning a 99 year rental contract fallen below 80 years and will be caught in any lease extension with higher payment due to the calculation of marriage value factor which kicks in below 80 years.

          5. The "99 year lease" is basically defective and doesn't give the leaseholder/consumer a fair deal and you should ask your MP to get the law changed to move the marriage value factor from 80 years to 21 years threshhold.

          Comment


            #6
            Originally posted by xtomx View Post
            Hi,
            Thanks for the reply.
            I can understand how people can get confused so am i right saying that as i pay ground rent this is known as freehold, leasehold is if i rent the house. Am i correct that as i had a mortgage with a building society, as my house was never rented, but have paid it off, the only section i need to understand is the freehold (to me this is ground rent).
            In a sense yes you do rent your house. What you have is a long lease which are commonly as long as 99 years 125 years or 999 years. You pay an annual rent, the ground rent, but rather than a high monthly rent paid by renters with only short"leases" of 6 months or a year, the original buyer pays the landlord a premium " up front", the purchase price.

            Part of that lease is the ability to sell the lease to another person, which is the purchase price that you paid and on which you based your mortgage.

            So what you own is a long lease for a house and land which you use, are responsible for and may sell, at a low annual rent. That is not a freehold.
            Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

            Comment


              #7
              Thank you all for your quick and knowledgeable answers.
              It does seem a lot clearer after reading you comments i will look into this in more depth. The only thing that has come as a shock is the part:
              "99 year rental contract fallen below 80 years and will be caught in any lease extension with higher payment due to the calculation of marriage value factor which kicks in below 80 years".
              I will recheck to make sure i did not read it wrong and it is 999 years other wise I am sunk!

              Comment

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