Leasehold house - should we still buy?

bri007 · 12-03-2019 2:55pm #1

Hi all,

So we are sale agreed, contracts have been issued etc.

Solicitor sent me an email today outlining that the house we are buying is a leasehold property and there are 139 years left on it.

Forgive my ignorance, I know I won’t outlive that but just wondering about handing it down to family etc.

We are paying over €450k for it and wasn’t expecting it to be leasehold. I know nothing about this. Is this anything to get alarmed about?

Thanks in advance

Doop · 12-03-2019 3:32pm

I would say yes it is something to be 'alarmed' about! you should really have been making an offer on the house already in the knowledge that it was leasehold. The fact that its leasehold will have a bearing on the value. Have you discussed with your solicitor about the possibility of acquiring the freehold? Is your solicitor local to the house?

antoinolachtnai · 12-03-2019 3:50pm

You need the advice of your solicitor about the implications and the options.

It is very likely indeed that this is not anything to be alarmed about at all.

If the Bank are prepared to lend against the title it is probably not too bad (but you should ask still get your own advice).

Tigerandahalf · 12-03-2019 3:51pm

You should get a new solicitor if they are only now telling you it is a leasehold.
There could be a management company in place if your unit is part of a larger building. Is there a shop under you or other units involved?

bri007 · 12-03-2019 3:56pm

It’s a semi D 3 bed house. Literally first we heard of it today by email.

Tigerandahalf wrote: »

You should get a new solicitor if they are only now telling you it is a leasehold.
There could be a management company in place if your unit is part of a larger building. Is there a shop under you or other units involved?

JimmyMW · 12-03-2019 4:03pm

bri007 wrote: »

It’s a semi D 3 bed house. Literally first we heard of it today by email.

To the best of my knowledge once there is less than 70 years left on the lease then the property becomes un-mortgageable, so it very well may be a concern for the next generation if handed down. As others posters have said it being a leasehold property will have a bearing on its price, it will be worth less than similar freehold properties in the area.

I would have your solicitor request that the current owner purchase the freehold (if possible) and provide the property freehold for the agreed price, or check out purchasing the freehold yourself and the costs involved or alternatively revise your offer to reflect the fact the property is leasehold.

Tigerandahalf · 12-03-2019 4:12pm

It sounds like the house is part of a very old building. I would be looking into the deeds and see what the story is with the common areas. Maybe it is an ex council house and the council held the lease on a number of the houses.

Your solicitor is not helping you here. I would be digging for more info.

Markcheese · 12-03-2019 4:16pm

You need to know who owns the leasehold..and how easy or expensive it'll be to buy out the lease...
(I had same issue when I bought my house, was a bit surprised to find it was lease hold, owned by the local authority, just as I completed the sale they got rid of all their leaseholds, only cost the solicitors fee..)

bri007 · 12-03-2019 4:40pm

Just after trying to contact solicitor there, not in office now. I’ve emailed him and asked about buying out the leasehold and how to go about it.

Should I try and get something off the agreed sale price or is that being cheeky?

From the email my solicitor sent me, he didn’t appear to make a big deal out of it

12-03-2019 4:47pm

Leasehold isn't a big issue in Ireland. It is very common in parts of Dublin. Ground rents have typically been reduced to a pittance by inflation and legislation has made them easy and relatively affordable to buy out as long as there is time left to run on the lease.

Don't let it put you off if your solicitor is happy with it.

cormac_byrne · 12-03-2019 4:52pm

There is a scheme that gives you the right to purchase the leasehold at a fair price, your solicitor should know about it.

https://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/ground_rent.html

https://www.prai.ie/guidelines-for-ground-rents-purchase-scheme/

This is the best only link I could find on the price,
it means that the leaseholder can't hold you to ransom for a ridiculous figure

https://www.irishtimes.com/business/commercial-property/more-people-opt-for-arbitration-to-establish-the-ground-rules-1.1294537

If more than 15 years remain on the lease, or the tenancy is yearly, the cost of buying out the ground rent cannot exceed an amount which, if invested in the most recent long-term Government Stock, would produce an annual gross interest equal to the amount of the rent under the lease or tenancy.

...

However, if the lease has run its full term, the cost is based on the value of the property - typically one-eighth of the value of the house.

Sleeper12 · 12-03-2019 5:00pm

Ronoc is 100 percent correct. It's absolutely nothing to worry about. My first house was leasehold. It was something ridiculous like 5 pounds per year.

Ask your solicitor to explain it to you. For the life of me I can't remember or be certain of the exact details but I believe that the ground rent is only owed if they actually look for it. Any back ground rent will be paid before the sale. You have a legal right to buy out the lease & I think the cost is 7 years rent or something like that. The danger of a lease is letting the lease run out before buying it out.

Definitely nothing to put you off the house and nothing that would effect the value of the property

Rew · 12-03-2019 5:02pm

Its normally bought out and converted to freehold as part of a sale, thats what we did

gmisk · 12-03-2019 5:07pm

My house was leasehold I think 80 years left, I bought freehold after buying house no big deal via prai, you can do via a solicitor or by yourself.

Nobodysrobots · 12-03-2019 5:22pm

gmisk wrote: »

My house was leasehold I think 80 years left, I bought freehold after buying house no big deal via prai, you can do via a solicitor or by yourself.

How much does it cost though?

L1011 · 12-03-2019 5:35pm

Nobodysrobots wrote: »

How much does it cost though?

Is it a council leasehold (the first council houses sold off were retained as leasehold) or a private owner?

Council leaseholds generally have fixed ground rents of effectively shiny buttons - my brother's house was 25c/year. DCC had not collected it in decades for obvious reasons! To buy it out was something like 10 years ground rent + DCCs solicitors fees + land registry fees, less than a grand I think all sold. Council leaseholds have to be dealt with this way; they are not covered by the other scheme

Private owners - there is strict regulation on this, you can force a sale via arbitration if required. I believe 20x annual rent is the usual arbitration settlement amount but its hard enough to find recent info on this and its been a long time since I knew anyone that did it. It does not accelerate the shorter the time left on the lease like it does in the UK.

As goes the poster saying it has to be very old - they were banned in 1978; and weren't uncommon until then on new builds. My own house is 1972 built and was bought out in 1998; looking at landdirect I'm one of the very few freeholders in the estate!

antoinolachtnai · 12-03-2019 6:18pm

You should read this.

https://www.irishtimes.com/life-and-style/people/the-low-down-on-ground-rents-in-ireland-1.669994

And take the advice of your solicitor.

Most likely there is nothing wrong with this title.

bri007 · 12-03-2019 8:01pm

My solicitor emailed me back and said the leasehold is with the builder of the initial development when it was build in the early 1970’s.

Never explained anymore........ not sure if this is good or bad. I will chase him up about it more tomorrow by phone. He started again in the email nothing to worry about. That might be fair enough but I’d like to know if the option is there to buy the freehold of the house and how we go about it, which he still hasn’t answered!

gmisk · 12-03-2019 8:02pm

Nobodysrobots wrote: »

How much does it cost though?

I will be honest can't remember exactly but it was under 200 euro

Franz Von Peppercorn · 12-03-2019 8:08pm

cormac_byrne wrote: »

There is a scheme that gives you the right to purchase the leasehold at a fair price, your solicitor should know about it.

https://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/ground_rent.html

https://www.prai.ie/guidelines-for-ground-rents-purchase-scheme/

This is the best only link I could find on the price,
it means that the leaseholder can't hold you to ransom for a ridiculous figure

https://www.irishtimes.com/business/commercial-property/more-people-opt-for-arbitration-to-establish-the-ground-rules-1.1294537

If more than 15 years remain on the lease, or the tenancy is yearly, the cost of buying out the ground rent cannot exceed an amount which, if invested in the most recent long-term Government Stock, would produce an annual gross interest equal to the amount of the rent under the lease or tenancy.

...

However, if the lease has run its full term, the cost is based on the value of the property - typically one-eighth of the value of the house.

I read that Irish times article before you wrote that. I’m confused by government stock? Dies she mean a bond?

Couldn’t be that much anyway.

bri007 · 12-03-2019 8:08pm

Judging by the experiences of people here, I’m guessing it won’t be too costly to sort out hopefully.

Markcheese · 12-03-2019 8:37pm

bri007 wrote: »

Judging by the experiences of people here, I’m guessing it won’t be too costly to sort out hopefully.

Yeah but there'll be a cost for the solicitors fees for the sign over...

gmisk · 12-03-2019 8:40pm

Markcheese wrote: »

Yeah but there'll be a cost for the solicitors fees for the sign over...

I purchased my freehold directly so don't always have to go through a solicitor.

bri007 · 12-03-2019 8:42pm

Does it make a difference if the leasehold is through county council or private such as builder? Was it straightforward enough to do it yourself?

gmisk wrote: »

I purchased my freehold directly so don't always have to go through a solicitor.

L1011 · 12-03-2019 9:19pm

bri007 wrote: »

Does it make a difference if the leasehold is through county council or private such as builder? Was it straightforward enough to do it yourself?

Completely different systems, two different legal concepts for it. Council is likely to be cheaper. You approach the holding council or its successor (Dublin County Council is the only one with multiple legal successors, dissolved town/borough/city councils revert to the city; as does the Tipperary merger)

bri007 · 12-03-2019 9:26pm

It’s leased to 3 different companies as per solicitor email and then to a persons address in Dublin.

It states from what I can make out on it thag no washing allowed out unless it’s on a patio, no fencing in the back garden. This was dated in 1971 so not sure if this still applies. House next door had a huge wooden fence?

Solicitor seems to be very causal about it. Am I just being over picky about it all?

L1011 wrote: »

Completely different systems, two different legal concepts for it. Council is likely to be cheaper. You approach the holding council or its successor (Dublin County Council is the only one with multiple legal successors, dissolved town/borough/city councils revert to the city; as does the Tipperary merger)

gmisk · 12-03-2019 9:29pm

L1011 wrote: »

Completely different systems, two different legal concepts for it. Council is likely to be cheaper. You approach the holding council or its successor (Dublin County Council is the only one with multiple legal successors, dissolved town/borough/city councils revert to the city; as does the Tipperary merger)

Mine was very straightforward it was with council.
Sounds like yours might be more complex, make your solicitor work for their money!
How many years are left on your leasehold?

bri007 · 12-03-2019 9:33pm

Yeah it appears to be very complex.

Solicitor doesn’t want to know from dealing woth him today, he said “of my mothers house was the same” nothing to worry about!

gmisk wrote: »

Mine was very straightforward it was with council.
Sounds like yours might be more complex, make your solicitor work for their money!
How many years are left on your leasehold?

4ensic15 · 12-03-2019 9:51pm

If you go onto landdirect.ie and look at a map of the housing estate you will likely find very few freehold houses in the estate. The sky is not falling in. You have a statutory right to buy it which will cost 20 times the ground rent plus fees. You can do it in years to come if you want. If you are otherwise happy with the house it should not be a deal breaker.

L1011 · 12-03-2019 9:54pm

bri007 wrote: »

It’s leased to 3 different companies as per solicitor email and then to a persons address in Dublin.

It states from what I can make out on it thag no washing allowed out unless it’s on a patio, no fencing in the back garden. This was dated in 1971 so not sure if this still applies. House next door had a huge wooden fence?

Solicitor seems to be very causal about it. Am I just being over picky about it all?

Realistically those covenants aren't going to be enforced at this stage, even if the ground rent is being collected. Sounds like a copy/paste (or re-type, being 1971) of an American "homeowners association" type rulebook - I'd take a stab in the dark at this being a development of larger/nicer for the time houses in South Dublin or North Cork City?

Even if the ground rent is being collected, this is only likely to be an issue when you sell in the future - and then only if its in quite some time. Banks are unlikely to have any issues with >99 years remaining and even frequently >70 is fine.

bri007 · 14-03-2019 5:47pm

Spoke to solicitor, genuinely haven’t a clue what he was talking to me about and I’m more confused as I was before!

I asked about buying the freehold back and he said oh hold your horses..... you have to buy the leasehold first and then obtain the freehold.

I said ok but how do I go about it. He said it’s not part of buying the house and I shouldn’t be bothered by it. I said I want to get the freehold. Again he said in a few years it’s something to consider. Then I pushed more and he said it had 5-6 different interested parties and he said it would be very complicated!

Again couldn’t say if it was possible to obtain or not.

So am I right in saying now all houses are able to be purchased the freehold back?

I’m totally confused

L1011 · 14-03-2019 5:55pm

The leasehold is the actual thing you're buying with the house.

The solicitor likely doesn't want to do it, but is not giving you inaccurate advice - it can be bought later and could be complicated but there is the arbitration system to sort this stuff out.

Check landdirect to see if any neighbours have bought theirs out - leaseholds are green hatching, freeholds are not hatched. If others have it is clearly not impossible to sort out.

antiskeptic · 14-03-2019 6:02pm

bri007 wrote: »

Spoke to solicitor, genuinely haven’t a clue what he was talking to me about and I’m more confused as I was before!

I asked about buying the freehold back and he said oh hold your horses..... you have to buy the leasehold first and then obtain the freehold.

I said ok but how do I go about it. He said it’s not part of buying the house and I shouldn’t be bothered by it. I said I want to get the freehold. Again he said in a few years it’s something to consider. Then I pushed more and he said it had 5-6 different interested parties and he said it would be very complicated!

Again couldn’t say if it was possible to obtain or not.

So am I right in saying now all houses are able to be purchased the freehold back?

I’m totally confused

There's a tale on here about a guy buying a house in Sligo only to find out that a chunk of the small front garden had been CPO'd for road alterations by the Council.

The solicitor told him he'd checked out the folio map on it and that it was nothing to worry about.

"Did the solicitor tell you this in writing?"

"No"

Have your solicitor give you a written thumbnail of the current status and how you go about obtaining freehold in the future. With an approximation for the legal and leasehold purchase costs likely to be involved.

You can't be expected to go in eyes close on potential future issues and need him to give you a written steer - so that if it goes pear shaped you have him on the hook.

"Nothing to worry about" on the phone won't count if you encounter trouble later.

machalla · 14-03-2019 6:08pm

I haven't followed the whole thread here but I had a situation where I had purchased a house with a freehold and still had an individual come along a year or so later who claimed to be entitled to ground rent.

They were known for this tactic despite not being the least bit entitled to a penny. Obviously I binned the letter and never heard another word.

Tigerandahalf · 14-03-2019 6:09pm

You need to be careful. It may not be a huge issue but if you want to do extensions down the line you need to be sure that the land is yours and that nobody else has a right.

Your solicitor doesn't seem to have his homework done or wants to keep you blind to the situation.

Muahahaha · 14-03-2019 8:46pm

bri007 wrote: »

Solicitor seems to be very causal about it. Am I just being over picky about it all?

Your solicitor is being very casual about it OP. He is fobbing you off and delibritely confusing you in the hope that you'll give up. As others said generally you can buy the leasehold out but right now you do not know that for a fact, for all you know it could be in the hands of someone who later intends to profit from you or else make things very awkward for you. I'm not saying this will happen but it is a worst case scenario and if your solicitor is not checking this out now then you could find yourself stuck between a rock and a hard place further down the line.

I would be emailing him instructions to clarify the sitaution including costs for how much it will need to put right, it could add up to thousands in legal fees. Remember he works for you so don't let him fob you off again. Finally he needs to be requesting a statutory declaration from the vendor that there has been no demand of rent on the lease, if he is not insisting on this very important document then he definitely isn't doing his job right.

Kev1001 · 14-03-2019 8:54pm

Unless you think the house is worth way more than you are paying for it, I would walk away.

For €450k you shouldn't have to deal with that.

What are similar properties in the area priced at?

starbaby2003 · 14-03-2019 8:58pm

We are in the process of buying out our leasehold. 3 bed semi D. Built late 1950’s 150 year lease. It has been zero hassle. I would not in anyway let it put you off buying.

Samuel T. Cogley · 14-03-2019 9:03pm

It all depends how easy it is to sort out. Our solicitor provided advice on purchasing the freehold at the pre-purchase stage. I'm a bit confused why yours seems to be obfuscating the issue. Possibly too busy to properly deal with the situation? This is quite common if you've engaged one at the cheaper end of the scale, they tend to work on volume and aren't great if you need tailored advice.

bri007 · 14-03-2019 9:13pm

The solicitor is by no means cheap! In fact it’s a little more than some prices we got quoted on before we went with this one.

Problem is the solicitor we went with from the start decided when we went sale agreed to delegate the task to another solicitor in the firm and he will oversee him.

I’m not sure if the current one now is a trainee or what but I’ve no confidence in him at all now and don’t know what to do!

He’s adamant about the freehold and won’t budge with it. He also asked have we accepted the loan offer from our bank?? I asked to clarify that, as I said yes we have accepted it and then he replied by saying dodnwe sign it and I said no! He then goes well I need to get working on it and let him work on the legal side of it.

Eight me being totally confused I contacted my broker for some advice and she was horrified and said that is meant to be signed in person with the solicitor.

I feel totally lost about it all now and I don’t know what to do. The solicitor was pushy from the get go!

antoinolachtnai · 14-03-2019 9:35pm

You clearly don't know much about title in Ireland. There is nothing wrong with that. A lot of the advice on this thread is written by people who don't know much about it either. There is some awful rubbish written in this thread.

But what you are entitled to and what you need is advice. Ask the solicitor what advice he can give you in relation to the leasehold to set your mind at ease. It's really his job to set your mind at ease.

That advice should be provided in writing if this is a concern for you.

If the solicitor assigned is not able to explain it satisfactorily I would suggest you call on the original overseeing solicitor.

Just because a solicitor (or a legal clerk) isn't good at explaining these things doesn't mean they are not a skilled conveyancer.

For your issue with the broker and the signing of loan offer, ask the broker and the solicitor to sort it out between them.

I don't know your exact situation, but this is probably going to all be ok. Be patient, hold your nerve.

Posy · 15-03-2019 1:01am

starbaby2003 wrote: »

We are in the process of buying out our leasehold. 3 bed semi D. Built late 1950’s 150 year lease. It has been zero hassle. I would not in anyway let it put you off buying.

Are you doing this through a solicitor?

gmisk · 15-03-2019 9:43am

starbaby2003 wrote: »

We are in the process of buying out our leasehold. 3 bed semi D. Built late 1950’s 150 year lease. It has been zero hassle. I would not in anyway let it put you off buying.

The poster had stated that the leasehold might be split between 5 or 6 different parties I would think this would complicate things considerably.
Your paying a solicitor get them to check it out. As other people have said get it in writing.

When buying my house the solicitor said it was leasehold and had about 80 years left, he said I could go via him (after puchase) at a later date and buy freehold (ex council house) or buy it directly which I did via PRAI in the end, it cost about 200 Euro and took about 2/3 months.

starbaby2003 · 15-03-2019 9:53am

gmisk wrote: »

The poster had stated that the leasehold might be split between 5 or 6 different parties I would think this would complicate things considerably.
Your paying a solicitor get them to check it out. As other people have said get it in writing.

When buying my house the solicitor said it was leasehold and had about 80 years left, he said I could go via him (after puchase) at a later date and buy freehold (ex council house) or buy it directly which I did via PRAI in the end, it cost about 200 Euro and took about 2/3 months.

We just went via the arbitration route on the prai. Ours had changed hands numerous times. It is up to the lessor to get in contact then. It will be held in an account for a number of years. https://www.prai.ie

Franz Von Peppercorn · 15-03-2019 9:59am

The solicitor is saying I think that buying the property and buying out the leasehold are too different actions, and you need to do the former before you do the latter.

The only question that needs to be answered is whether buying out this leasehold is more complicated than usual or not.

bri007 · 15-03-2019 12:01pm

Totally lost trust in our solicitor now..... he emailed me someone else’s information about their house purchase, personal info!

I wonder is it to late to change solicitor now, just worried about cost involved!

Samuel T. Cogley · 15-03-2019 1:08pm

bri007 wrote: »

Totally lost trust in our solicitor now..... he emailed me someone else’s information about their house purchase, personal info!

I wonder is it to late to change solicitor now, just worried about cost involved!

I'd be negotiating that asap.

Rew · 15-03-2019 1:11pm

bri007 wrote: »

Totally lost trust in our solicitor now..... he emailed me someone else’s information about their house purchase, personal info!

I wonder is it to late to change solicitor now, just worried about cost involved!

Thats a GDPR breach... which he is obliged notify the other person about.

You can change but it will likely cost you a fir bit and delay you. I had a solicitor tell me a house that we subsequently bought was "un-buyable". Cost me €400 for him to give me is bad advice and be rude over the phone.

Tigerandahalf · 15-03-2019 3:05pm

Really the system should be better.
Any house put on the market should clearly state whether any management company, rights of way, freehold/leasehold exists. The obligation should be on the seller to make things clear.

There is also a mess with new build housing estates and confusion over who owns common areas and has responsibility to maintain them.

antiskeptic · 15-03-2019 4:55pm

bri007 wrote: »

Totally lost trust in our solicitor now..... he emailed me someone else’s information about their house purchase, personal info!

I wonder is it to late to change solicitor now, just worried about cost involved!

I wouldn't be getting my knickers in a twist. Your in the middle of a house buy. It's a stressful time.

The advice seems clear in thread:

- buying a freehold is something that is usually not an issue and takes place outside the conveyancing

- get your solicitor to outline in writing what's involved, are there significant risks, what are the expected costs. If things turn out much different, you can take your solicitor to task via the Law Society. He's says its straightforward and nothing to worry about. Get him to say that in writing.

- accept a mistake was made sending you some wrong docs. It happens.

Don't panic. Moving solicitor now will simply cost you money. And you have the possibility of getting a weak solicitor.

annoyedgal · 15-03-2019 10:45pm

First house was leasehold. Solicitor mentioned it when going over the contract. Don't remember verbatim what he said but the jist was it was no issue and not expensive to resolve. Never did a thing and sold on years later and was no issue when selling.....that said had absolute faith in mysolocitor and if you don't I would think about changing.

Leasehold house - should we still buy?

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