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Purchase of leasehold

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  • 25-01-2011 2:48pm
    #1
    Some_randomer
    Registered Users Posts: 392 ✭✭


    Hi - I bought a semi-d house in Dublin 9 about 5 years ago. I found out after I moved in when I started getting letters for ground rent that it was leasehold rather than freehold. For some reason no-one thought to point this out to me, not even my own solicitor.

    The company that owns it have wrote to me and said they are doing a special offer for January where the cost of buying the freehold is reduced by about 100 euro to 450 approx. So I'm wondering are there any advantages to buying the freehold? Are there any disadvantages in not buying it? I don't know much about the whole thing so any advice or thoughts appreciated.


    TIA


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    #2
    lion_bar
    Registered Users Posts: 170 ✭✭lion_bar


    How long is left on the lease?

    My understanding of it is that leasehold means that you have use of the property until the lease runs out. At the end of the lease the property reverts to the owner

    Freehold means you own it.

    If you've got a spare 450 i'd buy it out.


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    #3
    antoinolachtnai
    Registered Users Posts: 9,787 ✭✭✭antoinolachtnai


    Pressure-cooker selling of freehold interests! I love it!

    If the lease is very long and the break is very low, it might not actually be worth your while financially buying it out. For example, if the rent is 9 euros a year, they are getting a return of 2 percent, which is very low. You could never borrow the money for 2 percent.

    You will also have legal fees of some sort to figure in. This might not be very much, but there is no point in buying a freehold interest unless you are fairly certain that you are buying the right freehold from the actual landlord.

    But if the lease is short (less than 50 years) then there is a good case for buying it out. Also, if you just like the idea of owning the freehold, it might be worth spending the few hundred euros.

    For what it's worth I have seen a solicitor advise (in writing) not to bother buying out a freehold on a residential property with a long lease.

    Also, they probably bought that freehold for considerably less than 450 euros. If you offered them 20 times the rent for it, or maybe less, they might go for it. (There is a quiet trade in these things.)


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