Buying a freehold and turns out to be leasehold.....

[Dupont666]

What to do next?

My mate is in the process of buying a flat and is 2 months into it and last night he looks through the latest docs form the solicitor to notice the words Leasehold on them. He thinks this is strange as it was a freehold when he agreed to buy and sort out the mortgage, etc.

So he keeps on reading and the same word pops up again and again... hes now a little bit worried and looks at the original advert as he swears the estate agents and everyone else said it was a share of the freehold property... success it is freehold on the website and other docs.

Now he has agreed a price and half way through the process of buying it and now finds out it has 66 years on the Lease to go, what are the repercussions? what can he do, or is he going to need to suck it up as a major fk up on behalf of the sellers?

Obviously his solicitor didnt know and was just reporting back what the property was in the document, but the sellers cant have managed to do that surely??? proof reading would have spotted it?

Now got a pissed off and anxious mate...

Any advice?

[Soovy]

Dupont666 said:

What to do next?

My mate is in the process of buying a flat and is 2 months into it and last night he looks through the latest docs form the solicitor to notice the words Leasehold on them. He thinks this is strange as it was a freehold when he agreed to buy and sort out the mortgage, etc.

So he keeps on reading and the same word pops up again and again... hes now a little bit worried and looks at the original advert as he swears the estate agents and everyone else said it was a share of the freehold property... success it is freehold on the website and other docs.

Now he has agreed a price and half way through the process of buying it and now finds out it has 66 years on the Lease to go, what are the repercussions? what can he do, or is he going to need to suck it up as a major fk up on behalf of the sellers?

Obviously his solicitor didnt know and was just reporting back what the property was in the document, but the sellers cant have managed to do that surely??? proof reading would have spotted it?

Now got a pissed off and anxious mate...

Any advice?

Has it always said "freehold" on the documents thus far?

He needs to ask his solciitor WTF is happening!!

Edited by Soovy on Tuesday 15th September 13:56

[pdV6]

Does the vendor also own a share of the freehold, which he is also buying alongside his leasehold flat?

[Dupont666]

pdV6 said:

Does the vendor also own a share of the freehold, which he is also buying alongside his leasehold flat?

Is that how it works?

You buy the leasehold and then the freehold?

The bit in the contract that states 66years suggests not.

He is trying to contact his solicitor now for answers, but I said I would ask anyway.

[mk1fan]

Flats are always sold as Leasehold (England and Wales). The Freehold of the propoerty can be dealt with in a number of ways.

A Lease is being bought on the Flat. But this lease comes with an entitlement to a share of the freehold. It is normal.

What proberly happened was that the Estate Agent doesn't understand the arrangement and thus explained it wrongly - or your friend didn't listen properly.

[TedMaul]

Dupont666 said:

pdV6 said:

Does the vendor also own a share of the freehold, which he is also buying alongside his leasehold flat?

Is that how it works?

You buy the leasehold and then the freehold?

The bit in the contract that states 66years suggests not.

He is trying to contact his solicitor now for answers, but I said I would ask anyway.

In laymans terms, I thought Freehold was just that, you owned the property and the land it was on.

Leasehold, you own the property but not the land and you effectively lease the land from the landowner at a given rate for a given period of time. If it is shared, are you not effectively joint owners who pay and agreed amount in, for an agreed period of time to pay for general maintenance and stuff?? Does it mention a managing agent in the docs?

Apologies if vague and wrong but long time since been in a flat!

[pdV6]

Dupont666 said:

pdV6 said:

Does the vendor also own a share of the freehold, which he is also buying alongside his leasehold flat?

Is that how it works?

You buy the leasehold and then the freehold?

The bit in the contract that states 66years suggests not.

He is trying to contact his solicitor now for answers, but I said I would ask anyway.

The freehold will apply to the building as a whole, so it won't be possible to buy a "freehold flat".

The owner of the freehold might be an individual, a company or a group of individuals each owning a share of the freehold (usually but not necessarily the owners of the flats in the building).

[mk1fan]

Ted,

Not quite. A lease is a lease, you never own the property you just have entitlement to use it.

Edited by mk1fan on Tuesday 15th September 14:22

[Dupont666]

I understand the difference between leasehold and freehold.

But is it possible to be advertised as a share of the freehold, then once you are part the way throught the process of buying it and reading the documents it says 66 year leasehold?

But here is the crux of the matter, you buy the leashold first and then buy the freeholder it comes free, etc, but its in the same deal?

Or if the contract states leasehold, it is just leasehold and has to state freehold to be a share of the freehold?

I have looked at the advert and it clearly states share of the freehold and nothing about leasehold.

[Soovy]

Dupont666 said:

I understand the difference between leasehold and freehold.

But is it possible to be advertised as a share of the freehold, then once you are part the way throught the process of buying it and reading the documents it says 66 year leasehold?

But here is the crux of the matter, you buy the leashold first and then buy the freeholder it comes free, etc, but its in the same deal?

Or if the contract states leasehold, it is just leasehold and has to state freehold to be a share of the freehold?

I have looked at the advert and it clearly states share of the freehold and nothing about leasehold.

Nothing means jack st unless it's on the LEGAL DOCUMENTATION.

The adverts don't mean ANYTHING.

[Dupont666]

Soovy said:

Dupont666 said:

I understand the difference between leasehold and freehold.

But is it possible to be advertised as a share of the freehold, then once you are part the way throught the process of buying it and reading the documents it says 66 year leasehold?

But here is the crux of the matter, you buy the leashold first and then buy the freeholder it comes free, etc, but its in the same deal?

Or if the contract states leasehold, it is just leasehold and has to state freehold to be a share of the freehold?

I have looked at the advert and it clearly states share of the freehold and nothing about leasehold.

Nothing means jack st unless it's on the LEGAL DOCUMENTATION.

The adverts don't mean ANYTHING.

True, just wanting to know what his options are now.

What is the kind of costs that could be incurred if the lease was to be raised from 66 back to 99 years?

[pdV6]

Dupont666 said:

I understand the difference between leasehold and freehold.

In which case you'd realise that what he thought he was getting simply isn't possible as described.
More likely, it was advertised as "flat with share of freehold".
Either that or the saturday boy at the estate agent wrote the advert and cocked it up.

[mk1fan]

Yes, it is possible to advertise the property as coming with a share of the Freehold, as long as it it does. You're still buying a Leasehold on the Flat though regardless of whether it comes with a share or all of the Freehold.

It is quite common for a flat to be advertised as 'Comes with share of Freehold' as this is a feature as much as gas central heating. It is assumed that any purchaser will know that Flats are only sold under Lease only.

It sounds like the Leasehold comes with a share of the Freehold. Your friend is buying the Leasehold and in doing so accepts the terms within the lease. One of those terms is a share of the Freehold. I don't see what the issue is?

[Engineer1]

The costs can be anything, but as far as I understand it having been looking into increasing the lease on our flat you "buy" an extra 99years lease, 66years is potentially a worrying figure as it may possibly restrict the number of lenders willing to provide a mortgage when your mate comes to sell unless he increases the lease. Having said all this I am no expert this is from personal experience.

[mk1fan]

The costs to extend or renew the Lease will depend on the protocols of the Lease.

[Dupont666]

mk1fan said:

The costs to extend or renew the Lease will depend on the protocols of the Lease.

What like and how much usually (examples if possible)?

[mk1fan]

It depends what it says in the Lease.

Although, as a share of the Freehold is included it would be reasonable to assume that an extension would be forthcoming from the other 'owners' of the Freehold.

I would be concerned at the relatively short lease term. These concerns would be that a, the mortgage company (if there is one) is still happy to lend and b, what is the process to extend it. Your friends solicitor should be advising them regarding this.

Is it too late to get the extension included as part of the sale? That is get the vendor to arrange it.

Edited by mk1fan on Tuesday 15th September 15:03

[VxDuncan]

Engineer1 said:

The costs can be anything, but as far as I understand it having been looking into increasing the lease on our flat you "buy" an extra 99years lease, 66years is potentially a worrying figure as it may possibly restrict the number of lenders willing to provide a mortgage when your mate comes to sell unless he increases the lease. Having said all this I am no expert this is from personal experience.

Will second this, when I was looking at a flat that had 59 yrs left I had problems with lenders. Leaseholders wanted £30k to extent the leasehold!

[pdV6]

VxDuncan said:

Will second this, when I was looking at a flat that had 59 yrs left I had problems with lenders. Leaseholders wanted £30k to extent the leasehold!

Which is one very good reason why a share of the freehold would be a very attractive feature of the property.

[bga]

Dupont666 said:

mk1fan said:

The costs to extend or renew the Lease will depend on the protocols of the Lease.

What like and how much usually (examples if possible)?

In 2001 I extended the lease of my flat (Victorian conversion in South London) from 69 years to 125 years for £5k + freeholders legal costs (another £1k). Before we purchased the flat we got a quote for the lease extension from the freeholder which went through both sets of solicitors and was valid for 1 year. We factored this into the offer price.

Where we are, share of freehold is always nice, but does not have a material impact on the price if there is a long lease (100 years or over).


A mate of mine did similar last year, same area & property type & it cost him £15k.