Leasehold property (sale agreed after bid accepted )

[dubdub123]

Hi, I had a bid accepted on a property accepted and paid deposit some time ago. Contracts have come to my solicitor and she has flagged that its leasehold. I will of course be meeting with her, but would like some guidance/feedback from this group.

- has anyone bought out the leasehold? Should we push seller to do this?
- what are potential pitfalls of leasehold?
- any other comments appreciated

 

[RedOnion]

Leasehold house? How long is left on the lease?

 

[dubdub123]

Leasehold house? How long is left on the lease?

Hi, yes its a house, long term leasehold, over 900 years to run. This is actually the first time ive heard of this in Ireland, being honest.

 

[RedOnion]

It's very common. There are 10s of thousands of leasehold houses in Ireland. If you look at large estates in Dublin on the land registry (landdirect.ie) you'll see estates where lots of houses appear on the same folio - that's because the freehold is all owned by the same company.

We bought one a few years ago, and when we purchased the house I asked our solicitor to arrange to buy out the ground rent at the time. So we completed the purchase, and our solicitor then engaged with the freehold owners (Fitzwilliam Land Securities in our case) who had a standard procedure to follow. There's a formula to calculate the maximum cost, but they also charged a “title search and administration fee” of €302.50 including VAT. We proceeded with that, and got it sorted quickly - so quick that my solicitor was able to register the freehold with Land Registry before they had registered the leasehold (it was a first time registration), so we ended up getting a small refund from land registry.
If you don't agree to pay the admin fee, you can proceed by arbitration, but it can take about a year.

If you don't buy it out, you'll pay a small rent to the holder of the freehold. Mine would have been just under 10 euro every 6 months. Technically you need the permission of the freeholder before you carry out any building works / extensions on the house.

Ground rent on property

Ground rent is paid on properties that are owned by leasehold. You can buy out the ground rent, so you then own the property outright.

www.citizensinformation.ie

 

[dubdub123]

It's very common. There are 10s of thousands of leasehold houses in Ireland. If you look at large estates in Dublin on the land registry (landdirect.ie) you'll see estates where lots of houses appear on the same folio - that's because the freehold is all owned by the same company.

We bought one a few years ago, and when we purchased the house I asked our solicitor to arrange to buy out the ground rent at the time. So we completed the purchase, and our solicitor then engaged with the freehold owners (Fitzwilliam Land Securities in our case) who had a standard procedure to follow. There's a formula to calculate the maximum cost, but they also charged a “title search and administration fee” of €302.50 including VAT. We proceeded with that, and got it sorted quickly - so quick that my solicitor was able to register the freehold with Land Registry before they had registered the leasehold (it was a first time registration), so we ended up getting a small refund from land registry.
If you don't agree to pay the admin fee, you can proceed by arbitration, but it can take about a year.

If you don't buy it out, you'll pay a small rent to the holder of the freehold. Mine would have been just under 10 euro every 6 months. Technically you need the permission of the freeholder before you carry out any building works / extensions on the house.

Ground rent on property

Ground rent is paid on properties that are owned by leasehold. You can buy out the ground rent, so you then own the property outright.

www.citizensinformation.ie

Ok that is great information and sounds reasonably straightforward. I will definitely speak to my solicitor about that option. Being honest, I was very taken aback by the fact it is leasehold, but feeling more reassured now and good to hear from someone who has been through the process. Thanks so much

 

[Johnno75]

Long leases are not uncommon in apartments and multi-development estates where the builder or management company wishes to retain some element of contractual control over the owners of the dwellings eg maintenance of common areas, contribution to a sinking fund, use of parking spaces, payment for lighting and elevators, upkeep of green areas etc.

By creating a long lease (as distinct from transferring an absolute freehold title), the developers/ ground owners can contractually oblige the dwelling owners to covenant that they will do certain things during the currency of their ownership, and if they don’t, they can be pursued through legal means compelling them to do so.

 

[RedOnion]

I was very taken aback by the fact it is leasehold

Just to add to what @Johnno75 has said, I had assumed yours was an older house with ground rent. I believe these were all built pre 1978.
If its a newer development with management charges that would be a different scenario.

 

[dubdub123]

Just to add to what @Johnno75 has said, I had assumed yours was an older house with ground rent. I believe these were all built pre 1978.
If its a newer development with management charges that would be a different scenario.

Yes its pre 78 alright with annual rent. Id never heard of this in Ireland before this. Im setting up call with my solicitor and will ask about buying this out, as you mentioned above. Ideally would like sellers to do this, or if we take the action, for reduction in sale price. She has noted that a couple of the houses nearby in the estate are now freehold, but ive no info on the process for that

 

[RedOnion]

Ideally would like sellers to do this, or if we take the action, for reduction in sale price.

It could end up delaying your purchase if you go down this route. Talk through with the solicitor and work out the costs of buying out the ground rent - it should not be material in the context of your overall purchase. Or just stick with leasehold and pay to c. 20 per year ground rent!

I just had a look at my communication with solicitor at the time. We completed purchase as leasehold, and then bought out the ground rent after.

The costs involved our case - you'll need to get the purchase price & admin fee from the 'landlord', if your solicitor requests a statement from the sellers to show the ground rent has been paid, these purchase prices are usually stated on it:
Purchase price 295.00
Title search & admin fee 302.50

Solicitor charged professional fees for dealing with it 450 (plus VAT). I think it's possible to do it yourself, but I had enough going on at the time.

There are also land registry fees:
Application fee to Property Registration Authority 30.00 (this increases to 105 if done by arbitration)
Land Registry fee for registration of Vesting Certificate 25.00
Land Registry fee for certified copy freehold Folio and map 25.00

As I mentioned we ended up getting a refund from the land registry because we'd completed the purchase of the ground rent before our initial leasehold purchase had been completed.

 

[mf1]

"Ideally would like sellers to do this, or if we take the action, for reduction in sale price."

No chance. It's a perfectly good title.

mf

 

[dubdub123]

It could end up delaying your purchase if you go down this route. Talk through with the solicitor and work out the costs of buying out the ground rent - it should not be material in the context of your overall purchase. Or just stick with leasehold and pay to c. 20 per year ground rent!

I just had a look at my communication with solicitor at the time. We completed purchase as leasehold, and then bought out the ground rent after.

The costs involved our case - you'll need to get the purchase price & admin fee from the 'landlord', if your solicitor requests a statement from the sellers to show the ground rent has been paid, these purchase prices are usually stated on it:
Purchase price 295.00
Title search & admin fee 302.50

Solicitor charged professional fees for dealing with it 450 (plus VAT). I think it's possible to do it yourself, but I had enough going on at the time.

There are also land registry fees:
Application fee to Property Registration Authority 30.00 (this increases to 105 if done by arbitration)
Land Registry fee for registration of Vesting Certificate 25.00
Land Registry fee for certified copy freehold Folio and map 25.00

As I mentioned we ended up getting a refund from the land registry because we'd completed the purchase of the ground rent before our initial leasehold purchase had been completed.

Thank you so much for this detailed reply, I really really appreciate it. Understand what you're saying about potentially stalling the sale and how it may be fine to do following purchase. Appreciate you looking this up as its definitely giving me some peace of mind, before I go into the solicitor. Also gives me a ballpark for budgeting. Thanks!