Cost of buying out leasehold

AidanMike

Hi there,

I'm having difficulties to find what it would generally cost to buy the leasehold to get a freehold. We have a ground rent of 20€ over 950 years or so.

Would the arbitrary calculation be 950*20? Would the landlord ask for more or be happy with less than this?

Most likely very stupid questions but what I find on internet seems more confusing than helpful so far.

DubCount

I think there is a formula setting the max price. I'd expect it to be less than the full amount of all future payments. Can you contact the LL for a quote. I reckon you might need to budget for some legal fees for filing with the land registry if you do buy out the ground rent.

AidanMike

DubCount wrote: »

I think there is a formula setting the max price. I'd expect it to be less than the full amount of all future payments. Can you contact the LL for a quote. I reckon you might need to budget for some legal fees for filing with the land registry if you do buy out the ground rent.

I find many UK / NI articles when searching online making it harder to know what it would be here. some speak about 25 time the yearly rent some less.

I have a company name and the name of the original LL. searching that gives me an address(ish) but I sadly can't find a phone number so I'll have to wait for the restrictions to lift before driving there and boldly asking:
"anyone called XXX here I need a quote?!"

I hope to get a better understanding of what is usually done so I know what would be a joke and what would be a serious offer.

athlone573

There is a formula based on government bond yields which is pretty complicated. There are also legal costs involved.

In most cases (long leasehold and low ground rent) there is very little point in buying out the freehold so most people ignore it. I've never heard of anyone being chased for ground rent but in the unlikely event you were, the most you would owe is seven years worth.

A lot of these ground rents were bought up by companies who now do nothing more than send out letters requesting payment but they're unlikely to follow up, particularly if they don't have a name so the letters are just going to "the owner"

AidanMike

athlone573 wrote: »

There is a formula based on government bond yields which is pretty complicated. There are also legal costs involved.

In most cases (long leasehold and low ground rent) there is very little point in buying out the freehold so most people ignore it. I've never heard of anyone being chased for ground rent but in the unlikely event you were, the most you would owe is seven years worth.

A lot of these ground rents were bought up by companies who now do nothing more than send out letters requesting payment but they're unlikely to follow up, particularly if they don't have a name so the letters are just going to "the owner"

Any idea where to get this formula or is there any online calculator? I assume complex formula can be made easy with excel or a good calculator!

I never open letters addressed to "the owner" as it is generally advertisement.

athlone573

AidanMike wrote: »

Any idea where to get this formula or is there any online calculator? I assume complex formula can be made easy with excel or a good calculator!

I never open letters addressed to "the owner" as it is generally advertisement.

It'll be on the PRAI dot ie website, knock yourself out.

AidanMike

athlone573 wrote: »

It'll be on the PRAI dot ie website, knock yourself out.

Indeed I could find it there, sadly the issue is rarely math but rather understanding what they speak about in those paragraphs ...

https://www.prai.ie/ground-rents/#29

the Purchase Price can’t exceed an amount which, if invested in the most recent long-term Government Stock matching the criterion specified in the subsection, “would produce annually in gross interest an amount equal to the amount of the rent” under the lease or tenancy. This amount is calculated by dividing the price of the Government stock, as quoted on the stock-exchange at closing on the previous evening, by the interest rate on the stock and multiplying the rent by the resulting figure, colloquially referred to as the “multiplier”.

With the Government Bond :
https://www.ise.ie/Market-Data-Announcements/Irish-Government-Bonds/Government-Bonds/?ACTIVEGROUP=1&&type=5

Now I need to understand how Gov bond work ... slow progress but still moving forward!