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samsmoot

New To Selling Property And Totally At A Loss

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Hi.

Please excuse my total ignorance but there are some things I know absolutely nothing about, selling a house being one of them. My girlfriend has the responsibility of selling the property recently vacated by her estranged husband, and she also knows very little. I'd appreciate it if any replies take this into account. Ta. Also we have no money.

For starters the house has a very short leasehold - about 43 years: the freeholders have given a price (around £8500 + their costs) and we have been advised that the process of acquiring the freehold can be started by the GF and completed by whoever buys the property. They need £100 deposit, which I am sure we can find. The GF thinks they may be asking too much (after looking at some case law), as the ground rent is only about £12 per year, so we are wondering if a counter-offer to the freeholders would be a good idea? But to make a realistic offer we would need to pay a valuation surveyor, would we not? Or should we try and reach a figure ourselves? Or just make an offer and see what happens? As said, we have no money so paying for a VS may be out of the question. What if the property was sold without the freehold - would the new owners have to pay a lot more for the freehold if it's not gotten before the sale of the property?

Also, we do not want to use a solicitor if it can be helped - we would like to handle the sale ourselves but I have suggested the use of a conveyencer might be a good idea at some point.

We have spent a lot of time and effort trying to get the property up to scratch as far as cleaning and decorating, but it's only recently that it was realised that the house was still under leasehold - now it's getting a bit frustrating and we are loathe to do more at the moment - the GF fears that auction sale may be the only way to dispose of the property but that would really be a last resort.

So, the main question is about how to deal with the offer of the freehold, with some input needed re using a solicitor/conveyencer and thoughts on having the property go to auction. Any other suggestions or advice is welcome. We haven't gone to an estate agent - should we? As buyers won't get a mortgage because of the short lease the only thing an ES would do for us is to value the property, which we have an idea of anyway.

I'm thinking the house should just be advertised as it is and see what offers come in - see if we can attract a cash buyer for around the £90,0000 mark (properties in the area go from £110,000 - £130,000 - this one needs central heating installed plus upstairs double glazing and a few more things doing to it). If we can attract a non-cash/mortgage buyer that would be better - just don't know how it will work out on only a promise of the freehold - though I guess the offer will be binding. And on that subject - can we safely assume that the freeholders will deal with the sale of the freehold correctly, or will we need to actually get a solicitor to look at the paperwork before it is signed?

Anyway, we'd appreciate any help or advice or suggestions. Many thanks.

Edited by samsmoot

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i know its not what you want to hear but you have to appoint a solicitor.

all house purchases have monies going to a solicitor, not to a homeowner direct.

its done that way to avoid situations where there is a still legally married husband on the scene.

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Hi.

Please excuse my total ignorance but there are some things I know absolutely nothing about, selling a house being one of them. My girlfriend has the responsibility of selling the property recently vacated by her estranged husband, and she also knows very little. I'd appreciate it if any replies take this into account. Ta. Also we have no money.

For starters the house has a very short leasehold - about 43 years: the freeholders have given a price (around £8500 + their costs) and we have been advised that the process of acquiring the freehold can be started by the GF and completed by whoever buys the property. They need £100 deposit, which I am sure we can find. The GF thinks they may be asking too much (after looking at some case law), as the ground rent is only about £12 per year,

With only 43 years to go the ground rent is irrelevant noise when determining the costs of an extension. The largest factor is the reversion value, which with only 43 years to go is going to be circa 30% of the value of the property.

8,500 is bloody cheap IMHO and you should snap their hands off.

However, what is that for. Is it a 90 years extension at a peppercorn rent (as per the statutory requirements) or a new 99 year lease at market rent, which is what most FH offer as an alternative as it gives them a second bite at the cherry in 20 years time when the then current owner needs another new lease and thus means that the freehold has a reasonable resale value.

(Though most prospective purchasors won't notice the difference and there is no reason not to accept the latter in 99% of cases)

tim

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With only 43 years to go the ground rent is irrelevant noise when determining the costs of an extension. The largest factor is the reversion value, which with only 43 years to go is going to be circa 30% of the value of the property.

8,500 is bloody cheap IMHO and you should snap their hands off.

However, what is that for. Is it a 90 years extension at a peppercorn rent (as per the statutory requirements) or a new 99 year lease at market rent, which is what most FH offer as an alternative as it gives them a second bite at the cherry in 20 years time when the then current owner needs another new lease and thus means that the freehold has a reasonable resale value.

(Though most prospective purchasors won't notice the difference and there is no reason not to accept the latter in 99% of cases)

tim

Got to agree, there are few on line calculators and houses with short leases are expensive to renew. Anything less than 80 years has uplift applied to it. Putting your figures in on line it comes out at £46K.

http://www.freeholdcalculator.com/calc.php

But saying that been watching a repossession in my area that went SSTC within 24 hours November of last year at £115K after 3 months the notice of offer dropped to £100k and was told while viewing another property on with the agents that it had a lease of 23 years left. So it seems in this case the bank had been in contact with the freeholder and they agreed a fee of £15k hence the drop in price, because no way would a bank lend on a property with 23 years left.

Another repossession that is going to auction i was on line last night reading the legal pack. Various letters in the pack where the bank asked the freeholder if he wanted to sell which he refused unless the leaseholder meet the criteria laid down by law, which they didn't because of the 2 year owning rule. So it seems it depends on the freeholder. Now this property i am very interested in but i know when i want to buy the freehold after 2 years it will be difficult and most likely end up at a lease tribunal which is going to be drawn out and expensive with RICS surveyors involved on both sides etc. Although it will still have a lease of 90 years. I wass reading the lease inside the legal pack, MY GOD, the powers the freeholder has is amazing.

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Most lenders require a minimum of 75 years remaining on the lease (so 50 years by time the mortgage is over) otherwise they will not lend on the property. If you want to proceed with this, you will either need to be a cash buyer or you will need the seller to extend the lease themselves before they sell it to you.

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Certainly need a solicitor.

You mentioned that they have offered a price of £8,500 to purchase the freehold and not extend the leasehold.

It would be in your interest to purchase the freehold.

I used to pay £15 per year when I first owned a house and luckily the freeholder contacted me and everybody in the Street suggesting that we all pay 10 years ground rent at once to purchase the freehold. Result :D

I would counter offer regardless, but probably best to get advice from a solicitor. Yes they are expensive especially when you have no money, but they may well save you a lot of money and problems.

You could always borrow money on the strength of the sale or even contact the mortgage lender to release some capital, but this could take a big piece of the sale price with early repayment charges etc.

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Certainly need a solicitor.

You mentioned that they have offered a price of £8,500 to purchase the freehold and not extend the leasehold.

It would be in your interest to purchase the freehold.

I used to pay £15 per year when I first owned a house and luckily the freeholder contacted me and everybody in the Street suggesting that we all pay 10 years ground rent at once to purchase the freehold. Result :D

I would counter offer regardless, but probably best to get advice from a solicitor. Yes they are expensive especially when you have no money, but they may well save you a lot of money and problems.

You could always borrow money on the strength of the sale or even contact the mortgage lender to release some capital, but this could take a big piece of the sale price with early repayment charges etc.

Thanks for that advice. There is no mortgage on the property, and probably quite difficult to get a loan. Yes, I think a counter offer can't hurt - should it be a properly calculated offer according to all the figures, or can we make an offer that is realistic to us? If the price was low enough we could probably find the money.

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You owe a little over £500 in ground rent before the lease is up. (43 years)

Perhaps offer to settle this lease and a further 100 year lease which is £1,200.

They are basically asking you to pay over 700 years ground rent. Perhaps negotiate this figure, so instead of talking money talk years to them.

I would see a solicitor first though.

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You owe a little over £500 in ground rent before the lease is up. (43 years)

Perhaps offer to settle this lease and a further 100 year lease which is £1,200.

They are basically asking you to pay over 700 years ground rent. Perhaps negotiate this figure, so instead of talking money talk years to them.

I would see a solicitor first though.

But if you don't buy the leasehold the total value of the property becomes theirs (the leaseholder) in 43 years time. No new 100 year lease will be issued, at any price (FWIW some form of statutory tenancy at a market rent will be).

With less than 80 years to go, the future ground rent is completely irrelevent to the cost of a lease buyout. It is the freehold value of the property that matters.

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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