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Leasehold - take action, or wait-and-see?

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Author Topic: Leasehold - take action, or wait-and-see?  (Read 353 times)
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« on: October 08, 2020, 11:48:04 AM »

I have owned a Leasehold house in south Sheffield since 2000. It has a 125 year Lease running from 1993 through to something like 2118. There's about 98 years remaining today. I've always wanted to purchase the freehold reversion... more for simplicity than anything that the Lease stops me doing (Ground Rent is a paltry £60 per year)... also I want to notionally increase the value of the property.

About a decade ago I approached the Freeholder informally and we entered into negotiations.. they started high and we ended up with a figure of around £3,000 to include their legal costs to - it wasn't bad and I wanted to proceed and then they through me a curve-ball and told me that they'd "just realised" that there was also a Superior Landlord, that being Sheffield City Council and they'd also need to be involved (obviously). At that time I didn't know if I was being played, but they seemed genuinely helpful and they were a company who acts on behalf of a Freehold purchasing investment company, who has lots of lots of interests... so maybe it was something that could be missed. Anyway... when we (jointly, hence why I say helpful) started to engage with Sheffield City Council things were like wading through treacle - emails were replied to in a month or so, etc.. And I lost interest and got on with my life.

I want to look at this again and I have selected a Solicitor who's done this before, and knows how it all works and says the only way to proceed with the Council is to do things formally... not informally... and follow the process as laid-out in the Leasehold Reform Act... all very good... I just hand him what he needs and, eventually, he comes out the other side with a bill.

However, the other night I had a free 15-minute telephone conversation with the Leasehold Advisory Service... the lady there reassured me I actually had a good handle on the situation and re-confirmed my choice of Solicitor too... saying that a Council will do everything by the book, so statutory notices need to be served and they need to be responded to in set timeframes etc..

Then she dropped the bombshell...

As we're all probably aware, there's been a lot of complaining about Leasehold to Government and there may even be some kind of consultation or report ongoing right now... looking at this industry... and she suggested it might be better for me to wait-and-see what comes out of that. My Lease still has 98 years on it, so it's not close to the 80 year "danger zone"... and nobody seems to know how this space might shook-up... whether it'd be retrospective... whether it'd only be for apartments... nobody knows... and nobody knows when it might become a reality either... with Brexit and Covid-19 acting as large distractions.

What would you do? Progress now knowing the world is as it is... and at least things can't get any worse, or keep your powder dry and see if anything changes for the better... sometime, whenever? WWJD?

Leasehold houses do seem somewhat of a peculiarity in Sheffield - there's more than you'd expect.
« Last Edit: October 08, 2020, 12:20:25 PM by Hippogriff »
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« Reply #1 on: October 08, 2020, 11:54:30 AM »

P.S. - I am quite familiar with my Lease... and I wouldn't say it has any unfair things in it... nor does it hide the fact the Ground Rent will increase from £60 to £100 per year in about 40 years. I didn't really know what I was getting into way back in the year 2000... that much is true... but I don't think the CMA would get involved in my personal situation, for example:

https://www.gov.uk/government/news/leasehold-homes-cma-launches-enforcement-action

I guess I just wonder whether the Government will come out with some kind of sweeping reform where they say a Leaseholder can buy the Freehold for a clearly-defined sum, maybe one that changes the longer you own it - so anything about 20 years (go me!) then it's free! Wishful thinking...
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« Reply #2 on: October 08, 2020, 12:15:34 PM »

Leasehold on houses are unusual, and from the little I know is exactly the space that would be reformed if any reform come out, as there's really no necessity or benefit to the leasehold house owner in most cases. On the other hand, the big problem area is those with escalating ground rent. If you have a fixed ground rent below £250 (assured theshold outside London), then I don't see any reform affecting you much, unless they go to abolishing leasehold on houses.

Brexit and COVID-19 are going to delay things, but seems like you're not in any hurry. If you're not restricted by the lease, and would get no real benefit from it, is there any reason to do it? By no benefit, I mean sure a notional increase in value, but is that an actual benefit unless you may wish to sell at some point in the near to medium future?
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« Reply #3 on: October 08, 2020, 12:50:07 PM »

You're not wrong... my assessment amounted to that increase in value and an ongoing life simplification of removing an additional party from any involvement. I do not want to make any changes to the property that might need the Freeholder's approval, nor do I any have plans to. I do not intend to sell at this moment in time... but I obviously wanted to act before the 80 year point and thought now was as good a time as any to revisit. I do have an escalating Ground Rent, but it never approaches anything like £250 per year. I believe it goes up twice over the entire Lease, reaching the heady heights of £150 per year.

Compared to the Leasehold apartment I have this is a peppercorn... tho' not a peppercorn.

Yes, it does seem like I'm not in any hurry.
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« Reply #4 on: October 08, 2020, 02:54:54 PM »

The only reason I bought the freeholds of the 3 studios was because only around 65 years remained on the leases.It was a very long-drawn out 3-4 years process,not completely sorted yet.The complications arose because the builders Taylor-Wimpy went into voluntary liquidation for the part that owned the flats.Instead of giving us all the chance to buy,they passed ownership to the Crown.Another far worse complication were the five others involved,two of whom are utterly vile.You would not have that to deal with.
Before purchasing the freehold they were valued around £100k each,and one has just been sold for £125k.There has been quite a campaign reported on Radio 4's You and Yours,about the injustice of freehold houses,and steps being taken to remedy that.
In your situation,I think I would wait and see.Then again,I have had my fill of buggeration and beaurocracy,I know you are made of sterner stuff.
Incidentally,when this first arose,I wrote to the Law Society to get the names of specialist freehold solicitors.The nearest to my area were one in Leicester and one in Sheffield,so that could well be your person.I was out-voted,and instead we got a local bog-standard property solicitor,who was someone's eejit pal from the golf-club. Don't get me started.
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« Reply #5 on: October 09, 2020, 10:53:15 AM »

I think I will wait-and-see... the Solicitor that I'd begun to engage will probably throw a wobbler and won't want to work with me when the time comes. I will ask him for his view, he may persuade me otherwise. And I am betting the one in Sheffield is the same one... JS?
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« Reply #6 on: October 09, 2020, 11:59:47 AM »

Locally to  me there is somewhat of a "Leasehold outrage", fuelled somewhat by the local MP who has taken it on as his personal cross to bear. Mostly for houses here, actually, my residential house included. My lease per year is very low (and has 990 years remaining) so i have no personal issues with it - i knew what i was getting into when we bought the house.

I have been tempted to buy it also, but i really do think there will be a government interjection in the medium-long term, so i'm waiting until there is some kind of conclusion with it.
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« Reply #7 on: October 09, 2020, 12:17:42 PM »

Sounds right-surname rhymes with "law"?
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« Reply #8 on: October 09, 2020, 02:29:23 PM »

Yup; we're gonna have a call on Monday... "Delighted to assist. Please telephone me** to discuss."
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« Reply #9 on: October 12, 2020, 12:21:47 PM »

I spoke to the Solicitor in question... and I've taken a look a the summary Law Commission report (https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2020/07/ENF-Summary-final-N10.pdf) this morning. I pointed-out that this report seems to imply lots of good stuff (Ground Rent buy-outs, reform of price payable to something market-based, elimination of non-litigation costs for other parties), potentially coming our way... and you could end up with a situation where not only are costs reduced, but the transaction simplified. His opinion was that whatever is in that summary could come to pass, or not, and it'll be "years and years and years" before the law is changed. Very much a "bird in the hand" approach coming from him.

I dunno. I may be unrealistically hanging onto a hope things will be better, soon. I may need to bite the bullet...
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« Reply #10 on: October 12, 2020, 03:00:19 PM »

Radio 4 You and Yours covered this topic on July 22nd and Sept.9th. One of the authors of the report is on the former.Your situation does not seem to be as unfair and restrictive as some. I could have sold the studios at any time,but no one would want something with around 60 years left to run.Also,importantly,the Crown had given an undertaking not to sell the freeholds  to another company for a few years,but said they had no plans to extend that window of opportunity.The connection to Sheffield council could be a blessing,or a curse? Are you concerned they could sell to another corporation?

You don't need me to tell you the problems with leasehold flats,or the aggravations of setting up the management company when you buy the freehold.You have none of that either way. I had no change out of £30k for 3,but there were no alternatives.I now do enjoy owning them.Even if I never sell them in my lifetime,they are left to a small charity,and it would be a real burden for them to have the hassle I went through.That might be something you can relate to regarding your beneficiaries.
At least you can be sure that if you go ahead,you will have a well-regarded man acting for you,not the eejit we all had on so-called "mate's rates". Good Luck, it's hard to see how you will end up regretting it if you do purchase.
   
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« Reply #11 on: October 12, 2020, 04:21:57 PM »

It seems, to me, that anything that - eventually - comes out of this will be beneficial to me. Noticing the aspect on Costs...

We recommend that whether leaseholders should continue to be required to contribute to their landlordís non-litigation costs should depend on the valuation methodology adopted by Government. If Government adopts a broadly market-value based approach, then we recommend that leaseholders should (in most cases) no longer be required to contribute to their landlordís non-litigation costs. However, if Government adopts a valuation methodology that is not broadly market-value based, we recommend that leaseholders should contribute to their landlordís non-litigation costs, but that the amount paid should be set by a fixed costs regime.

So I just need to balance-out the hope that things would be better for me (less costly, more certain / predictable, more simple) in the future vs. the idea that - if nothing changes as years go by - then the price within the current regime will go up... and, at some point, I will have to act. And who knows when my guy up here will retire... damn, I should've asked him that!
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« Reply #12 on: October 12, 2020, 04:31:40 PM »

The problem with LC reports are that they are very much just recommedations. The gov of the day is under no obligation to adopt any of it, never mind to do so under any specific timeframes. So your first consideration is what do you think are the political will to make any changes in that area? Then you can consider which of the recommendations are likely to be adopted in any such reform.
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« Reply #13 on: October 12, 2020, 04:55:12 PM »

I am calculating... which way the wind is blowing, I think... all the rest is up in the air. I have started wading through the full report... and almost universally the recommendations within here would benefit Leaseholders.

From abolishing the two year ownership minimum for enfranchisement, to being able to easily extend a Lease for 990 years at a peppercorn Ground Rent, to the introduction of market rate valuations, to the notion that the Freeholder's costs should be paid by the Leaseholder could be abolished... to the notion that if they're not then at least they'll be fixed or capped... right now everything is a dark murky mess and you haven't got a clue what bill you'll come out the other side with. The 'worst' case recommendation I've seen thus far is to keep things as they are.
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