Residents face huge hike to buy freehold

RESIDENTS of a Sheffield estate claim they are facing a huge hike in the cost of buying the freehold to their properties after the leases were sold to a private development agency.

Wednesday, 3rd October 2007, 5:23 pm
Updated Friday, 5th October 2007, 7:49 am

People living on the Hollybank estate, near Richmond, have been quoted a purchase price of 3,500 per lease by new owners Fennbend Limited.

But residents say a solicitor told them each lease would cost a maximum of 900.

The current leases, which have around 68 years remaining on them, were originally owned by Sheffield Council. But they were sold at auction to London development agency Fennbend Limited

Sign up to our daily newsletter

The i newsletter cut through the noise

The leases were listed at a guide price of 80,000 for all 85 plots but they fetched 210,000.

Residents of the estate, made up of Hollybank Close, Drive and Way, claim they were only told about the sale eight weeks before it happened – by which time it was too late to purchase their individual plots.

But those who did manage to take legal advice were told that the price should be between 600 and 900, as it is based upon a multiplier of their 30-a-year ground rent.

Catherine Hogg, of Hollybank Close, said: "I have a letter of valuation from a chartered surveyor at Eadon, Lockwood and Riddle in Sheffield that says the multiplier usually varies between 20 and 25.

"In some case it goes as high as 30 which would mean the most our lease should cost is 900 but instead we have received a very nasty letter from the new landowners asking for 3,500.

"You can imagine how upsetting this is for elderly people on the estate – they feel quite threatened."

Around 80 of the 85 homeowners on the estate have signed a petition against the hikes, which was presented to Sheffield Council.

Christine said: "We were led to believe by the council that it did not matter who owned the lease because the price would remain the same. Now we learn that, by law, the new land owners can charge what they like."

The land which leasehold properties stand on is owned by the leaseholder while the buyer owns the actual property.

This is not an issue when there are hundreds of years left on a lease – but as the number reduces, mortgage companies become more reluctant to lend against the property.

If the freehold is not bought or a new lease arranged, the building itself becomes the property of the leaseholder once the lease expires.

"The letter from Fennbend Limited pointed this out in a bit of an aggressive way which is upsetting," said Christine, who addressed a full meeting of Sheffield Council.

Coun Steve Jones, Sheffield Council cabinet member for finance, said: "The circumstances you have described sound totally unacceptable and quite serious."

He promised to look into the situation and take "pro-active advice".

But Timothy Gibson, of Fennbend, said: "I am sorry if people were getting distressed - that was not the intention, we simply wanted to explain what people's legal rights are.

"The figures given regarding the amount residents believe they should pay are generally incorrect. Our value comes from advice we were given by estate agents Knight Frank."

Click here to return to main news index.

What do you think? Add your comment below.