LJ1 Posted June 23, 2014 Share Posted June 23, 2014 You can always negotiate a lease extension. In some case, you may have a right to renew, in which case the freeholder cannot refuse an application for renewal on "reasonable" terms. If the lease does expire, it reverts to a monthly rolling tenancy, just like a conventional tenancy agreement;the freeholder needs to provide notice of rent payable, etc. In advance. Just remember that the freeholder can charge a renewal fee equal to the resultant uplift in market value of the lease. Effectively, you'll be paying market price for a similar property unencumbered by a short lease. This can be a big windfall for the freeholder, as effectively they get the HPI. Is this part effectively invalid if you do it before the 80 year marriage value? Quote Link to comment Share on other sites More sharing options...
durhamborn Posted June 23, 2014 Share Posted June 23, 2014 Reading this thread made me take action to buy my freehold.I have/had a leasehold house that had 81 years left on the lease (original 125 years).Lots of northern houses are leasehold mainly it seems stretching back to the land being owned by the church/other religious persons. My lease stated i couldnt sell alcohol or allow the house to be used for the oldest profession.The ground rent was £25 a year.It seems once you hit 80 years buying the lease becomes much more expensive as at that point you start to share the value of the house itself with the freeholder (marriage value) until the house reverts back to them. All in it cost me £4k to buy the freehold including legal costs and land registry etc. Interesting but looking at the status of the other houses in my close around 1/3 have bought the freehold,2/3s havent.For those 2/3s marriage value starts kicking in next year.Its probable that none of them know or understand what that means.In rough terms it looks like every year after 80 adds about £1500 onto buying the freehold. Anyone else with a leasehold house worth looking into buying the freehold before 80 years left.That really is a ticking timebomb. Quote Link to comment Share on other sites More sharing options...
the_dork Posted June 23, 2014 Share Posted June 23, 2014 I saw many flats in London when purchasing 3 years ago, nice areas but fairly grotty blocks (Islington, Maida Vale, Notting Hill) where the properties were for sale as the elderly lessees had never bothered extending if had no one to pass on to or presumably just didn't have any cash. By the time you have a year left you are basically paying 99% of the market value (plus costs) so unless you're desperate for the particular flat is probably not worth it. When they actually expire, they stay on as protected tenants but at market rates, the leasehold returns to the freeholder (invariably an old estate or semi criminal developer who bought loads up a few decades ago) Unlike many here I don't have a problem with flats or service charges but the feudal leaseholder system is a mug's game. Quote Link to comment Share on other sites More sharing options...
sleepwello'nights Posted June 23, 2014 Share Posted June 23, 2014 As savings account yields are so low now I'm looking at alternative ways of saving. Purchasing ground rents is an investment area I'm considering, at the moment the yield looks to be about 5%, but if you purchase some where the landlord is able to collect other costs, insurance for example, then the yield can be higher, some I've looked at are around 20% Quote Link to comment Share on other sites More sharing options...
ChumpusRex Posted June 23, 2014 Share Posted June 23, 2014 Is this part effectively invalid if you do it before the 80 year marriage value? The valuation of leases is complex, and depends on many factors including prevailing rates of inflation and interest rates. There is more to it than just the marriage value. For example, if a lease is extended, but the original lease does not provide for adjustment of ground rent, the ground rent cannot be adjusted, and therefore the LL is getting his ground rent inflated away - so, part of the cost of renewing the lease is compensating the LL for inflating away his ground rent, when he could otherwise have sold a new lease to a 3rd party. This area is best dealt with by a specialist surveyor/conveyancer. However, there is quite good guidance from LEASE: http://www.lease-advice.org/publications/documents/document.asp?item=10 Quote Link to comment Share on other sites More sharing options...
Venger Posted June 23, 2014 Share Posted June 23, 2014 As savings account yields are so low now I'm looking at alternative ways of saving. Purchasing ground rents is an investment area I'm considering, at the moment the yield looks to be about 5%, but if you purchase some where the landlord is able to collect other costs, insurance for example, then the yield can be higher, some I've looked at are around 20% Nice landlord head you've still got on. I hope many ground rent buyers get wiped the hell out, and that recent buyers have been massively overpaying for their right to collect ("it's not earning anything in the bank"), and overwhelmed courts give very low resources to claimants with inflated claims - who still have to pay all the bills for the property - including your insurances. US: In 1930 and 1931, the collapse of the local appeals system under weight of these challenges had the effect of spurring delinquencies. Home-owners who thought their bills were outrageously high stopped paying. Many could not pay. The allure of not paying grew as the depression deepened. Tax-title buyers were "wiped out" by the collapse of real estate. Home-owners realised they no longer faced an immediate prospect of having their properties auctioned for failure to pay. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.