Freehold: To buy or not to buy

[Manchesteralex]

We own our detached house in Manchester where we have lived for 2 years, we pay ground rent of £40 a year to the Compton Group. Last year we had to pay a £30 fee because our buildings insurance was not with their recommended insurer Zurich. We tried to use section 164 of the Commonhold and Leasehold Reform Act 2002, but they rejected this due to us not sending it to them in the required time, plus a few errors on my behalf when trying to use this act.

There is approx 970 years left on the lease.

They have sent me a letter last week with a special offer price to buy the freehold of £1600, plus £50.00 payable to the land registry for registering the freehold in my name. I am interested in buying, as my dealings with the compton group last year over the £30 were not pleasant, and in 5 years or so we are looking to extend the property.

I thought £1600 was on the expensive side, can anyone advise me of an accurate value to buy the freehold.

Help much appeciated.

Thanks.

[kikuyu]

We own our detached house in Manchester where we have lived for 2 years, we pay ground rent of £40 a year to the Compton Group. Last year we had to pay a £30 fee because our buildings insurance was not with their recommended insurer Zurich. We tried to use section 164 of the Commonhold and Leasehold Reform Act 2002, but they rejected this due to us not sending it to them in the required time, plus a few errors on my behalf when trying to use this act.

There is approx 970 years left on the lease.

They have sent me a letter last week with a special offer price to buy the freehold of £1600, plus £50.00 payable to the land registry for registering the freehold in my name. I am interested in buying, as my dealings with the compton group last year over the £30 were not pleasant, and in 5 years or so we are looking to extend the property.

I thought £1600 was on the expensive side, can anyone advise me of an accurate value to buy the freehold.

Help much appeciated.

Thanks.

With that term of lease left unexpired, the freehold is worth no more than £400 plus costs - and that is being generous.

Is there any development potential-i.e. space on the side of the house to extend etc?

[James 2009]

With that term of lease left unexpired, the freehold is worth no more than £400 plus costs - and that is being generous.

Is there any development potential-i.e. space on the side of the house to extend etc?

OP says he intends to extend!

[jeffrey]

With that term of lease left unexpired, the freehold is worth no more than £400 plus costs - and that is being generous.
No. A £40 ground rent income is worth 15-20 YP [= years' purchase] in normal times, i.e. £600-£800. In current times of unparalleled low interest rates, it would temporarily be even greater. However, I agree that £1600 is a bit too high, so try a counter-offer of £1000 but be prepared to go up to £1200 to get them off your back.

[Gordon999]

We own our detached house in Manchester where we have lived for 2 years, we pay ground rent of £40 a year to the Compton Group. Last year we had to pay a £30 fee because our buildings insurance was not with their recommended insurer Zurich. We tried to use section 164 of the Commonhold and Leasehold Reform Act 2002, but they rejected this due to us not sending it to them in the required time, plus a few errors on my behalf when trying to use this act.

There is approx 970 years left on the lease.

They have sent me a letter last week with a special offer price to buy the freehold of £1600, plus £50.00 payable to the land registry for registering the freehold in my name. I am interested in buying, as my dealings with the compton group last year over the £30 were not pleasant, and in 5 years or so we are looking to extend the property.

I thought £1600 was on the expensive side, can anyone advise me of an accurate value to buy the freehold.

Help much appeciated.

Thanks.

Is the "freehold title and map " for your house only or does it include several houses in the same street under the same title ? Does it show any name for charge holder like Nationwide ? This will help to judge if higher charges apply if you offer to buy the freehold. You can buy this info from Land registry online.

The most "accurate value" must be based on recent LVT judgements for leasehold houses which can be found under "decisions" at www.rpts.gov.uk and go to Northern office + house enfranchisement . Are you living near to Macclesfield ?

LVT Case No. MAN/13UG/OAF/2008/0039 ( decision 16 Jan 2009)
Address : No. 24 , Byron St, Macclesfield SK11 7PL
GR = 30 pds on 900 yr lease
Freehold price = 300 pds + reasonable legal costs ( 200 for this case )

So write and tell Crompton,the market rate is much less and make a counter offer of 400 pds for freehold plus say 300 pds costs = 700 pds and send it with a copy of the Macclesfield LVT decision and threaten to apply to LVT and see what is their response.

[kikuyu]

No. A £40 ground rent income is worth 15-20 YP [= years' purchase] in normal times, i.e. £600-£800. In current times of unparalleled low interest rates, it would temporarily be even greater. However, I agree that £1600 is a bit too high, so try a counter-offer of £1000 but be prepared to go up to £1200 to get them off your back.

Jerrrey. where do you get your Y.P of 15-20?

The income is fixed for no less than 970 years and the lessee should not be rushing out for the next 900 years to enfranchise.


As I point out, Y.P of 10 is very generous. If I was in the OP's shoes, I wouldn't be rushing to buy the freehold now bearing in mind the associated costs.

[Manchesteralex]

Thank you for all your help, as I thought, £1600 does sound expensive.

I will offer them £400 plus costs, and see how they react.

[Gordon999]

They will claim their costs are 1200 and may hold you to your offer based on the wording in your letter.

You should state what exactly costs you are prepared to pay and let the other side come back with a lower figure.

[jeffrey]

Jerrrey..
Who?

where do you get your Y.P of 15-20?.
Derived from interest rates, as I explained. 15-20 YP equates to 5-7% gross interest.

The income is fixed for no less than 970 years and the lessee should not be rushing out for the next 900 years to enfranchise...I wouldn't be rushing to buy the freehold now bearing in mind the associated costs.
But, as OP seeks to extend house, it's a very good idea to enfranchise beforehand.

[kikuyu]

[QUOTE=jeffrey;171344]Who?



Jeffrey

My apologies.

Slip of the fingers. You will note that on the keyboard "f" lies below "r" and I intended no disrespect. This is the second time I have misspelt your name and I shall endeavour to be more careful in the future, JEFFREY.