Can one get a buy to let mortgage on 64 years lease and share of freehold?

AdmiralX · 11 February 2012 at 7:45PM

I received an offer for my 2 bed flat from a buy-to-let buyer who has as he says 30% deposit and expects to get a mortgage.

I have 64 years remaining lease and 1/3 share of freehold in the management company and there are 2 more flats each with 1/3 share of freehold. All the flats have the same 64 years leases. I said to the EA t I shall sell at 64 y without application to extend due to risks and may be we look for cash buyer.

The other 2 lessees: t they will not sign an extension of my lease before I sell, and my buyer has to make them an offer 2 years after they move in. I have spoken and written to one, the other has vanished but lets her flat.

Is it possible that the buyer can get a mortgage with this lease?

Thrugelmir · 11 February 2012 at 8:24PM

AdmiralX wrote: »

Is it possible that the buyer can get a mortgage with this lease?

Highly unlikely if a mortgage is required.

HappyMJ · 11 February 2012 at 8:40PM

Thrugelmir wrote: »

Highly unlikely if a mortgage is required.

Any reason why? It's a leasehold flat with 64 years remaining on the lease. Even if the buyer gets a 30 year mortgage there will still be 34 years left on the lease when the mortgage is due to be repaid. Buying the share in the company that owns the freehold of the flats is a seperate transaction. That share of the company can be sold to anyone or kept by the current owner.

Annisele · 11 February 2012 at 8:54PM

AdmiralX wrote: »

I have spoken and written to one, the other has vanished but lets her flat.

If I was your buyer, I'd run a mile on that statement alone. Every so often you're going to come across something that requires all three of the shareholders to agree. If one of them can't be found, that's going to be a pain.

I'd also choose another flat if the existing owner couldn't get the lease extended. I wouldn't much care about why he couldn't extend it - just that if the seller can't extend, then he either can't really be bothered and doesn't want to sell (in which case I'm not interested), or there's a problem that prevents extension (ditto).

And then, as you say, there's the mortgage problem. Lenders are in general not a fan of short leases.

AdmiralX · 11 February 2012 at 11:13PM

HappyMJ wrote: »

Any reason why? It's a leasehold flat with 64 years remaining on the lease. Even if the buyer gets a 30 year mortgage there will still be 34 years left on the lease when the mortgage is due to be repaid. Buying the share in the company that owns the freehold of the flats is a seperate transaction. That share of the company can be sold to anyone or kept by the current owner.

I need to explain more: only owners of flats can have a share in the management Company that holds the freehold. Each flat owns one share and there are 3 flats.

AdmiralX · 11 February 2012 at 11:44PM

Annisele wrote: »

Every so often you're going to come across something that requires all three of the shareholders to agree.

I need the signatures of the other 2 lessees to extend my lease. The other 2 lessees also have the same low lease and they would need mine to extend their leases as well. If they agreed that we all extend our leases at the same time we would only pay our legal costs.I cannot get their agreement, but they cannot stop me getting my extension because the Law provides that I could, compel them to do so. This requires to go into a procedure: pay the others an expensive premium, which is the offer, specified by professional advisers, valuers, then instruct solicitors; and and pay all the legal costs of both the other side and myself. The other side will instruct their experts and solicitors as well which I have to pay.

Thrugelmir · 12 February 2012 at 12:59AM

HappyMJ wrote: »

Any reason why? It's a leasehold flat with 64 years remaining on the lease. Even if the buyer gets a 30 year mortgage there will still be 34 years left on the lease when the mortgage is due to be repaid.

Lenders set the terms.

tulipz · 12 February 2012 at 10:20AM

AdmiralX wrote: »

This requires to go into a procedure: pay the others an expensive premium, which is the offer, specified by professional advisers, valuers, then instruct solicitors; and and pay all the legal costs of both the other side and myself. The other side will instruct their experts and solicitors as well which I have to pay.

Have you estimated the costs involved? ANY sensible buyer would not buy unless your price takes into account these costs

Ps: I am negotiating to buy a flat with a similar problem....I will not TOUCH it if the owner doesn't want to extend it before selling...

GDB2222 · 12 February 2012 at 11:28AM

AdmiralX wrote: »

I need the signatures of the other 2 lessees to extend my lease. The other 2 lessees also have the same low lease and they would need mine to extend their leases as well. If they agreed that we all extend our leases at the same time we would only pay our legal costs.I cannot get their agreement, but they cannot stop me getting my extension because the Law provides that I could, compel them to do so. This requires to go into a procedure: pay the others an expensive premium, which is the offer, specified by professional advisers, valuers, then instruct solicitors; and and pay all the legal costs of both the other side and myself. The other side will instruct their experts and solicitors as well which I have to pay.

The difficulty is that you have to pay a premium to extend your lease unless all 3 of you do it together. I suspect that the other two (if you could find one of them!) would agree provided you pay all the legal costs for all 3 flats to be extended at the same time. What a mess!

madeupname1 · 12 February 2012 at 12:42PM

I had a BTL with a short lease (about 72 years) with a share of freehold with 1 other person. It was very difficult to secure a re-mortgage, but I did manage to secure it eventually after negotiations with the mortgage company. I then set about extending the mortgage and even with only 1 other freeholder whose lease was also being extended, it took about 2 years. The problem is that if all other freeholders aren't as focussed on this issue as you are, its very difficult to move the process forward. This is especially the case given that they will need to come up with a few hundred pounds in professional fees alone. Its for this reason that buyers / mortgage companies just wont want to run the risk.

AdmiralX · 12 February 2012 at 2:35PM

Thank you all.

Thrugelmir wrote: »

Lenders set the terms.

Yes indeed and I understand they vary in setting conditions but would the size of deposit make a different to the lender? . There are many under 70 year lease flats on the market.

GDB2222 wrote: »

I suspect that the other two (if you could find one of them!) would agree provided you pay all the legal costs for all 3 flats to be extended at the same time. What a mess!

None of the two lessees would agree to that even though their own leases are the same length. The probable reason is: my offer would generate capital of the management company to be used for repairs.

madeupname1 wrote: »

...I did manage to secure it eventually after negotiations with the mortgage company. I then set about extending the mortgage and even with only 1 other freeholder whose lease was also being extended, it took about 2 years.

Encouraging. I wonder if the delay was affected by the size of loan to value or just the length. I would be grateful if you could say more on this.

Can one get a buy to let mortgage on 64 years lease and share of freehold?

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