doublegunshop.com - home Forums General Discussion DoubleGun BBS @ doublegunshop.com OT- long term leases in London...

OK - this isn't about guns. It's about London, which IS about guns if you're like me.

I was just in London and I noticed a lot of real estate was being offered on long-term leases - like 100+ year leases. There were also "freeholds," which I guess are outright purchases.

I found these long-term leases to be very interesting. What's the story with them? Are they common throughout Europe? And why would anyone want to buy into one (cheaper, no other options, etc)? Are there tax benefits to leases - like when you pass them down through families (if it can be done)? And how do families hold onto them, especially with the British tax codes, etc?

And no, I'm not looking to buy in London. That city is a lot of things, including insanely expensive. I don't think I could affored a place and the Ferrari/Lamborghini/Aston Martin/Bentley? Rolls that you must have to have to live there.

I swear, I've never seen so many expensive cars!

Anway, thanks.

OWD

It is a common practice here in the states to build a commercial building on a 99 year lease.

OWD,
Some generalities to avoid getting too detailed. Leases are an historical throw-back to the Norman era. All land was vested in the King, William the Conqueror who then granted land to a supporter in return for a specific service. That service could be anything from entertaining the King and his retinue for X number of days, to raising a military force (e.g. x number of horsemen and y number of foot soldiers, or building a castle and maintaining the peace in a district. Usually the bigger the land grant, the more onerous the duties. Sometimes leases were granted for “grace or favour” i.e. essentially a gift, or granted on a “peppercorn rent” – when pepper/spices were a precious commodity. There had to be a “consideration” i.e. even a peppercorn, to make the lease contract valid.

These land leases led to the “aristocracy” and the distinction of class in the UK, and land ownership was very closely tied to the right to vote, a seat in the House of Commons (made up of commoners i.e. landowners,) or the House of Lords (basically senior knights / big landowners, Lords.) A Lord of a Manor is not the same thing. Farmland leases were usually granted for three lives, so it was in the interest of the lessee to spend money on drainage, etc., and the lessor took account of this. Many of the streets in London bear the names of their titled land-owners.

The situation on leases exploded during the reign of Henry VIII, after he got his hands on the monastic /church lands. Regularly the owner of the land granted a long lease to someone to build a house but retained ownership of the “plot” and in return charged the lessee “Ground Rent.” Where the plot was sold, the land was held Freehold, i.e. no rent was payable. In Ireland, the Church of Ireland (Anglican) obtained huge tracts of land after the dissolution of the monasteries and although I owned the freehold to my home, an extension built in 1906 on the adjoining land-plot was leasehold, 999 yrs from 1906, with £20 payable annually to Trinity College Dublin. Under a relatively recent Irish law I was able to buy-out that - on an agreed formula – cost me about a 10 times multiple, I think.

Where the property was important to the development of an area, longer leases were granted to “make it worthwhile” for a greater investment/bigger/better property. Many of the London residential leases are for periods of 999 years and although some are shorter, the lessees do have many basic rights that roughly approximate to property ownership. As far as I know, there are no personal tax advantages to leases, they have a value and can be transferred, so will be taxed on that value. Sometimes the leases can be “full repairing” i.e. the lessee must carry out repairs at his own cost; the odd wealthy dotcom millionaire has leased an old country house on that basis, and occupies it basically rent free in return for carrying out structural repairs, etc.

In Ireland land ownership was very different up to the Cromwellian era (1650), and also differed subsequently, even though it was supposed to be based on the UK model. It was largely the cause of conflict between the two countries for hundreds of years.

Expensive cars – car prices vary from country to country here in the European Union. Taking the average EU car price as 100, the price in France is 99, it is 101 in the UK and 132 in Ireland.

Hope this helps
Km

My son lives just to the SW of London and commutes into the city. He has lived there a little less than a year so is still renting a house but will most likely buy one in 08. The average low end price is about one $million and he expects to pay a good bit more than that. That's sounds like the high life but a similar house in the Philadelphia suburbs could go for $250,000 to $500,000. Also, I wasn't impressed by the quality of UK construction. Nothing like as good as German or French houses. I worked in construction in London in the late fifties and there has been a drastic decline in quality. I like London but I just don't get it's attraction as a place to live. Traffic is awful, the tube isn't airconditioned, everything is way overpriced, police spy cameras are watching your every move, it feels worse than Portugal under Salazar did and the food is beyond disgusting. What's not to like?
npm

Nial, you forgot about the congestion charge! Quite right about the price differential, but Ireland is now as bad. When in 2001 I sold my 2 bed high-rise condo in NYC (Upper East Side) the funds would not have bought me a semidetached home in most of Dublin. Here, when we read about a "star's" USD2 million luxury home, we smile, as that price would buy a small family-home in an ordinary Dublin suburb. Larry B posted elsewhere about US land costs of $5k an acre - ORDINARY farmland is selling for euro 20k an acre here (+/-$30k)
Shuddered when you mentioned the General, I was caught (was delivering a yacht) in Portimao during that revolution and got locked up!
Blowing hard from the SW, indoors, nothing flying!
Km.

The bottom line is that the 100 year lease is just another way for people who can't afford a house to get way over their heads in debt so they can live in a house.

Then again, no one ever really owns real estate anyway. Even if you pay it off the day you buy it it's only yours as long as you keep paying the government their 'protection' money.

Hi Kerryman, I didn't know you like sailing. I have a little cruising sailboat. There's nothing better than being on the ocean just dealing with sailing and not having to think about anything else. For many years I've had a fantasy about living on the boat and duck hunting somewhere in the Carolinas. Of course then there would be the problem of plucking and cooking 'em in the confined cabin space. Still, that's what Wentworth Day recomended in his many books about fowling on the Essex and Norfolk coasts.
npm

npm,
No problem plucking them, just sling the hook, lash 'em to the taffrail and the feathers float "down" wind! (sorry). Once was a keen foredeck guy, peeling spinnakers, up the mast without anything, then co-owned a hot plastic off-shore racer, trophy hunter, now a much quieter guy, plodding around daysailing when I can on my little sloop, singlehanded, tho' I've now got a couple of young grandsons who are keen and learning. I don't do mornings very well, associate them with too many red-eye flights (on planes) hence the lack of fowling experience. As for living on board, I believe you need minimum 35ft. to do it in comfort, but getting from A to B is that bit harder. Sailing talk is reminding me of an anti-fouling job that awaits..... ugh.
Km

Much of the Birmingham Gun Quarter was built on land leased for 100 years.As these leases expired,some remaining Gun makers were forced out of the city.For example,Wiseman,s who were in Price street, moved to to Cannock, which is 20 miles N.W. of the city. Last time I was in Price Stret their old location was a parking lot! It is my undersranding that the gun makers remaining in the Price Street area operate from buldings owned by the City of Birmingham. For the record there were other issues other than spiraling land values that impacted this area. A prime factor was the Birmingham,s redevelopement plan and the associated new road system. Thank goodness the city fathers saw fit to save a small portion of the old gun quarter.

The Duke of Westminster of the Grosvenor family that dates to at least the 14th century is a major landowner in London, especially Belgravia and Mayfair. An ancestor married a woman in 1677 who had 500 acres on what was then the outskirts of London. Among his properties is the land on which the U.S. Embassy sits at Grosvenor square. The rent is one peppercorn. A recent U.S. Ambassador gave the Duke a gold peppercorn, apparently satisfying the rent for some years...

Regards