Freehold* Sale or Purchase (by/to leaseholder) By agreement

Description

* Please note that this product refers to houses only - the purchase of the freeholds for flats raises much more complicated issues beyond the scope of this product (although please feel free to enquire as to a freehold flat purchase quote info@mounteney.com). Further this quote is for the conveyencing work only (i.e. after you have independently negotiated and agreed with your freehold owner).

The are many good reasons for a leaseholder to be interested in purchasing their freehold title: for example, to avoid lease obligations including having to pay rent. Freehold titles are generally more desirable than leasehold titles due to their simplicity, and may, therefore, render the property relatively more valuable.

However, there are legal complexities: a leasehold title is, ultimately, a contract concerning land occupancy between the freeholder/landlord and the leaseholder/tenant. English and Welsh law defines a contract as an enforceable legal agreement. By definition, such an agreement has to be between two different people, because there could be no logic in any person enforcing legal rights “against” themselves. For this reason, when a tenant buys their freehold the lease can “disappear” (the technical word is “extinguish”) – simply because the landlord and tenant are one in the same person. However, the ‘disappearance” of a lease that might be registered as leasehold title can have unintended consequences, especially if the leasehold title has been charged as security, e.g. for a mortgage (essentially, the security interest would cease to exist).

We can help you with the complicated law that arises if you decide to:

(1) purchase the freehold title for leasehold title you own, or

(2) sell your freehold title to your leaseholder.

Often the first question is “how much?” : ultimately, in some circumstances, an application can be made to a Land Tribunal to decide the terms of a sale.

The price to be paid for the freehold is typically relatively low compared to when an actual building changes hands; as a result of this leaseholders often fund the price (typically in cash) without borrowing using the property as security.

Normally, our client won’t require title certification – our basic product does not include reporting on or certifying the title being purchased on their behalf, e.g. any applicable covenants, easements, ground-rents etc. If clients want that kind of report, it would convert our work into “Standard” conveyancing transaction priced on the ‘normal’ basis [link (20)].

The basic service only includes the merger / extinguishment of the leasehold title in the registration of the freehold transfer when the prospect wants that to occur and that can simply occur by a request on registration (i.e. if the leasehold title is registered and un-charged). If the client wants to extinguish the leasehold title by merger into the freehold but the leasehold title is charged or unregistered, additional complications arise (pricing below).

How long will it take?

We don’t generally do anything for new clients until our process of client retention has concluded – this involves agreeing the scope of what we are doing for the price (our terms are below), setting-up our client record (that includes ID checks), and producing the bill (payment in advance is required for all new clients).

This work is complicated – it usually comprises several hours of work that needs to be co-ordinated with third parties, that can take weeks or months.

A completed application will then need to be submitted to HM Land Registry for registration. The time HM Land Registry take to process such a registration varies greatly, depending on how busy they are. Some applications are processed very quickly, up to “next day”; however, most applications appear to languish awaiting HM Land Registry attention; in 2021 many applications were taking about 6 months to be registered – and some types of application can take even longer than that, unfortunately. However, once submitted HM Land Registry process applications on any title in order of submission - so their delay ought not to affect the priority of your application relative to other matters on that title.

Money Matters

Your supplier is SRA-regulated Mounteney Solicitors, that charges VAT some customers may be able to reclaim

We charge £275 + VAT = £330 plus the Land Registry registration fee, normally currently £40

SUPPLEMENT FOR ANY OF THESE THAT ARISE:

1.     Negotiation of price [we do not advise] : £100 + VAT = £120

2.     Payment of arrears : £50 + VAT = £60

3.     Unrepresented seller : £50 + VAT = £60

a.     Mortgaged freehold supplement : £100 + VAT = £120

b.     Part title supplement : £100 + VAT = £120

4.     Merger of leasehold title : no further charge for un-charged leasehold, but if required for a charged leasehold:

a.     Discharge £100 + VAT = £120

b.     ‘Transferred to freehold’ £200 + VAT = £240

c.      Lending Security work (i.e. raising mortgage) : £350 + VAT = £420

There is more about our fees on our website here

If you have any questions or require any further information, please don’t hesitate to Contact Us.