Freehold reversioner- house- extortionate price for f/r

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    Freehold reversioner- house- extortionate price for f/r

    Our house is under a 999-year leasehold dating back to 1852. We hold the head-lease from the freeholder for the sum of £5.00 per annum, with three other properties holding sub-leases to us (value £6.00 per annum total). We embarked on buying the freehold, being advised by our solicitor's conveyancing exective that we would have to buy the freehold for the whole site as is registered title. The freeholders' surveyor valued the freehold at £5000, an "armchair" valuation arrived at solely by looking at papers sent by our solicitor (copies of lease, registered title etc). Three weeks later, they suddenly came back with a revised figure of £25,000 - because they had misinterpreted the information they had been given. This valuation was based on the fact that "a very useful parcel of land will have been assembled ... Even though there will still be the leasehold interests to deal with so that a site with possession is available, there is great potential for a development scheme and this needs to be reflected in the consideration for the sale free from any restriction".

    We cannot see how a valuation can be given on speculation. There is no reason to assume that this is a viable development site. Our conveyancing executive tells us that that is the price and we cannot negotiate. Is this right?

    #2
    Originally posted by Skipper View Post
    Our house is under a 999-year leasehold dating back to 1852. We hold the head-lease from the freeholder for the sum of £5.00 per annum, with three other properties holding sub-leases to us (value £6.00 per annum total). We embarked on buying the freehold, being advised by our solicitor's conveyancing exective that we would have to buy the freehold for the whole site as is registered title. The freeholders' surveyor valued the freehold at £5000, an "armchair" valuation arrived at solely by looking at papers sent by our solicitor (copies of lease, registered title etc). Three weeks later, they suddenly came back with a revised figure of £25,000 - because they had misinterpreted the information they had been given. This valuation was based on the fact that "a very useful parcel of land will have been assembled ... Even though there will still be the leasehold interests to deal with so that a site with possession is available, there is great potential for a development scheme and this needs to be reflected in the consideration for the sale free from any restriction".

    We cannot see how a valuation can be given on speculation. There is no reason to assume that this is a viable development site. Our conveyancing executive tells us that that is the price and we cannot negotiate. Is this right?
    1. The advice was wrong. If you have owned your house's leasehold for >2yrs, you have a stautory right to purchase ONLY its freehold reversion (i.e. not the other three's).
    2. For such a long leasehold term, the price should be no more than about 25 to 30 times your ground rent (= [£125 to £150] x 0.25, as the £5 rent relates to four houses).
    3. Ignore development value.
    4. The £5000 is ludicrous. Reject it and use 1967 Act procedure to force sale of your own f/r. Tribunal costs will be far less than what you'll save in price.
    5. Get a surveyor to negotiate for you.
    6. Consider finding another solicitor who knows rather more about enfranchisement!
    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
      Head Lease

      Many thanks for your advice, Jeffrey. Just for information, our freeholders are Willis Fleming Enterprises. They own a lot of land on the Isle of Wight (where we live) and elsewher. They are notorious for asking for money for the slightest addition or improvement by their tenants to leasehold properties, and also for asking for ridiculous sums for freeholds. Incidentally, what do you think of their surveyor's costs - all done from a chair, by looking at pieces of paper sent by our "solicitor" - £450 + VAT for the initial valuation, now at £650 + VAT for valuing the entire plot at £25,000.

      If we go ahead and purchase the freehold for our own property, what happens about the head-lease and our sub-leaseholders?

      I'll certainly be taking issue with our firm of solicitors, and looking elsewhere.

      Skipper

      Comment


        #4
        If you enfranchise as lessees, the transaction and the Transfer deed relate to your house only. You become freeholders.
        So far as concerns the other three houses, however, you remain leasehold reversioners and retain the dribble of underlease rents- unless the underlessees decide individually to enfranchise too.
        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
          LVT valuation?

          Hi Jeffrey

          Sorry to trouble you again. My solicitors are now saying that if we go to Leasehold Valuation Tribunal they will allow restrictive covenants to be kept on the freehold as the current freeholder will still own the freehold to the neighbouring properties. We would willingly change solicitors, but the trouble is that they are holding nearly £1200 as an undertaking to pay the costs of the freeholders' solicitors - whether or not completion takes place. Quite frankly, we do not know what to do.

          Skipper

          Comment


            #6
            Do not panic. Send pm to me and I will explain how to get your own way!
            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

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