Builder ‘will have to pay £23k to buy dream house he thought he already owned’
A builder who thought he had bought his "dream home" says he will have to pay more than £20,000 to buy the the freehold.
Ian Rice, from Liverpool, thought he owned the home on the Aigburth Grange estate after moving in two years ago.
But he was shocked when he later found out that he owned the leasehold, not the freehold, when he looked into building an extension.
Mr Rice told the Liverpool Echo that he has had to hire a solicitor and has been struggling to sleep at night knowing he'll need to pay about £23,000 to get out of the "mess" he is in.
He said developers Elan Homes told him he could buy the freehold for about £7,500, but a letter later arrived from a property company, Landmark, telling him that it owned the freehold to his house.
Mr Rice said he paid £50 to Landmark to find out the cost of the freehold, which was £15,900 plus legal fees of £540.
He said: "I have not slept since I received the letter from Landmark telling me they owned the freehold. I had to find a specialist conveyancing solicitor to represent me on this matter.
"I have been told that even when you buy the freehold there can be hidden covenants and other things that ordinary solicitors won't spot.
"I will probably have to pay out around £23,000 to pull myself out of this mess.
"I blame Elan for selling on the freehold to my house and I have begun legal proceedings against the solicitors who I dealt with during the sale."
Most people who bought a house in the past also bought the freehold, but in recent years in the North West builders have sold many properties on a leasehold basis instead.
In that scenario, residents buy a long lease and then pay an annual “ground rent” to the landowner.
After two years or more they can then buy the freehold.
The developer keeps hold of the land and the buildings – the freehold. But in many cases the original developer sells the freehold on for a profit.
Mr Rice said: "I am just a builder and my wife is a nurse. We are both hard workers. When we bought the house there was a tickbox which related to the leasehold, but that is all I remember. It was not brought to my attention in any way.
"If we knew two years ago what we know now, I would not have touched this house. It has been an absolute nightmare from start to finish."
A spokesman for Elan Homes said: “Mr Rice has a 999-year lease on his home and, along with other buyers on the development, was given a price to buy the freehold.
"A number of other residents bought the freehold but we understand Mr Rice did not. In December 2018, the freehold was sold to Landmark Investments. We cannot comment on the current price of the freehold.”
A spokesman for Landmark said: "Ian was given the option by Elan Homes to acquire the freehold and did not. Ian thinks the price quoted in the letter of £15,900 for the freehold is very high.
"There is no hard evidence around Mr Rice being offered the freehold for £7,500 and we have emails from him that clearly state he hadn’t received a response from Elan.
"A housebuilder can afford to offer an asset that they have created as a by-product of development at a much lower price than somebody who has acquired it and paid a market price.
We also have an email from Mr Rice – which unfortunately went to our spam box due to the format – dated January 7 stating that he would like to proceed, presumably at the £15,900 quoted, and was indeed re-mortgaging his house which would take 6-8 weeks according to him.
"There is absolutely no ambiguity in this statement as to his intent and he is clearly accepting of the price. It was not until around April, when he may have come into contact with campaigners and perhaps been misinformed around their ability to negotiate a lower price, that his entire perspective has changed."
The Landmark spokesman added: "His own quote around his re-mortgage taking 6-8 weeks, in line with my response would mean that he had funds by February yet we have still to hear direct from him.
"It is standard practice when re-mortgaging, especially to a new lender, that the freeholder would have certain important responses to provide – we have not had any contact whatsoever therefore can only assume the re-mortgage has not began, which further undermines the narrative.
"Mr Rice was not forced, it was entirely at his discretion whether he wanted to pay the valuation fee or not. The fee is not a profit centre, is a fraction of what others would charge and serves to cover costs handling these enquiries. In addition we factor the fee into the price so it is refunded.
"It appears Mr Rice has been misinformed and scaremongered into using an apparent 'specialist' lawyer. There are no hidden covenants.
"He is unhappy with the legal fees of £540. This includes VAT so is actually £450 net of tax and is charged by the lawyers with no benefit to Landmark. We have negotiated this reduced figure to ensure costs to homeowners are kept as low as possible. I would be surprised if his own legal fees for acquiring the freehold are as low which would be an interesting comparison.
"After reviewing the evidence, which is from Mr Rice himself, it appears there is nothing to support his claim he was offered the freehold at this price. The price for the freehold is reasonable and not 'very high.'"
A spokesman for Landmark said Mr Rice appeared to have hired a lawyer whose fees were higher than Landmark's solicitors.
Mr Rice took issue with some of the claims made by Landmark, saying: "If we were informed that Elan homes would even consider selling this freehold we would have bought it immediately.
"And yes I did send them an email telling them I would like to buy it from them at the price stated because I was worried it was only going to escalate and it was only after advice on this way of buying that I was warned that there would almost certainly be hidden covenants left in the freehold and charges for certain things like extensions.
"Upon looking into this deeper with the help of others we immediately lost all trust. We then began a formal enfranchisement of the freehold thus guaranteeing that when the sale does go through there would be no hidden covenants."
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