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

[Deleted User] · 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

Leasehold house - should we still buy?

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