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  • FIRST POST
    • seven-day-weekend
    • By seven-day-weekend 13th Oct 16, 4:12 PM
    • 27,833Posts
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    seven-day-weekend
    Flat over shop with 80 year lease
    • #1
    • 13th Oct 16, 4:12 PM
    Flat over shop with 80 year lease 13th Oct 16 at 4:12 PM
    Hi there.


    We are looking for an apartment as an investment. We have come across one, already tenanted, in a very popular and picturesque little tourist town on the River Severn, 12 miles from where we live. The lease is 80 years.

    It is above two shops, one is a furniture shop and the other I think is a
    clothes shop. The shopkeeper is the freeholder and the EA thinks they might be persuaded to extend the lease.

    It is in a beautiful position overlooking the river and would rent out all day long. The asking price is £85k and it is bringing in £450 pcm.

    It has been for sale since last year, the EA says it is because mortgage lenders will not lend on it as it is above shops, and also being tenanted. We will not require a mortgage on the property, if necessary we could raise one on our other BTL.

    I see two potential problems here, one is the shops and the other is the lease (although even if the lease shortens it will always make a nice holiday home until it runs out, either for us or our son - at just over £1000k a year this could be a viable option - or stay as a rental property).

    I forgot to ask if it was listed or in a Conservation area, will ask when I ring back. (If it is listed then that will kill it stone dead).

    Is it a terrible proposition to even think of buying it? We love the town and frequently visit, as do many other people.
    Last edited by seven-day-weekend; 13-10-2016 at 4:14 PM.
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
Page 1
    • Jackieboy
    • By Jackieboy 13th Oct 16, 4:16 PM
    • 251 Posts
    • 397 Thanks
    Jackieboy
    • #2
    • 13th Oct 16, 4:16 PM
    • #2
    • 13th Oct 16, 4:16 PM
    Ironbridge?
    • seven-day-weekend
    • By seven-day-weekend 13th Oct 16, 4:18 PM
    • 27,833 Posts
    • 51,080 Thanks
    seven-day-weekend
    • #3
    • 13th Oct 16, 4:18 PM
    • #3
    • 13th Oct 16, 4:18 PM
    Ironbridge?
    Originally posted by Jackieboy
    No......Bridgnorth
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • seven-day-weekend
    • By seven-day-weekend 13th Oct 16, 4:19 PM
    • 27,833 Posts
    • 51,080 Thanks
    seven-day-weekend
    • #4
    • 13th Oct 16, 4:19 PM
    • #4
    • 13th Oct 16, 4:19 PM
    http://www.rightmove.co.uk/property-for-sale/property-51994223.html
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • Jackieboy
    • By Jackieboy 13th Oct 16, 4:21 PM
    • 251 Posts
    • 397 Thanks
    Jackieboy
    • #5
    • 13th Oct 16, 4:21 PM
    • #5
    • 13th Oct 16, 4:21 PM
    No......Bridgnorth
    Originally posted by seven-day-weekend
    Equally lovely.
    • anselld
    • By anselld 13th Oct 16, 4:21 PM
    • 4,869 Posts
    • 4,322 Thanks
    anselld
    • #6
    • 13th Oct 16, 4:21 PM
    • #6
    • 13th Oct 16, 4:21 PM
    Once you have owned for 2 years you will have a statutory right to a lease extension so it is not necessarily a case of "persuasion". Alternatively you could ask the vendors to issue a Section 42 notice and assign you the rights which will avoid the two year wait.

    There is obviously a cost which you can estimate here ..
    http://www.lease-advice.org/calculator/
    ... plus you have to pay for both your own and the freeholders survey and legal fees if you go down the formal route.

    Of course if the freeholder can be "persuaded" informally then even better.

    There are mortgage companies who will do BTL above shops, not a problem especially as they are not hot food.

    Obviously it can't be both a BTL and a holiday home at the same time. When you do your sums allow for the lease extension and don't forget the stamp duty surcharge on second homes.
    • seven-day-weekend
    • By seven-day-weekend 13th Oct 16, 4:29 PM
    • 27,833 Posts
    • 51,080 Thanks
    seven-day-weekend
    • #7
    • 13th Oct 16, 4:29 PM
    • #7
    • 13th Oct 16, 4:29 PM
    Once you have owned for 2 years you will have a statutory right to a lease extension so it is not necessarily a case of "persuasion". Alternatively you could ask the vendors to issue a Section 42 notice and assign you the rights which will avoid the two year wait.

    There is obviously a cost which you can estimate here ..
    http://www.lease-advice.org/calculator/
    ... plus you have to pay for both your own and the freeholders survey and legal fees if you go down the formal route.

    Of course if the freeholder can be "persuaded" informally then even better.

    There are mortgage companies who will do BTL above shops, not a problem especially as they are not hot food.

    Obviously it can't be both a BTL and a holiday home at the same time. When you do your sums allow for the lease extension and don't forget the stamp duty surcharge on second homes.
    Originally posted by anselld
    Yes, I understand that I was thinking more of when we have shuffled off this mortal coil. Our son might want it as a holiday home, especially as he doesn't drive and he can get there by bus

    Thanks for your other advice, very informative and I'm glad you haven't laughed me off the forum.
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • HouseBuyer77
    • By HouseBuyer77 13th Oct 16, 4:30 PM
    • 756 Posts
    • 716 Thanks
    HouseBuyer77
    • #8
    • 13th Oct 16, 4:30 PM
    • #8
    • 13th Oct 16, 4:30 PM
    Once you have owned for 2 years you will have a statutory right to a lease extension so it is not necessarily a case of "persuasion". Alternatively you could ask the vendors to issue a Section 42 notice and assign you the rights which will avoid the two year wait.
    Though lease is already at the magic 80 years. So could be an expensive statutory extension.

    The shopkeeper is the freeholder and the EA thinks they might be persuaded to extend the lease.
    I'm sure they do, but then as you can't mortgage it this may be a tricky property to sell so the EA will be very keen to sweet talk any proceedable buyer into offering.

    I'd investigate the potential costs in a statutory extension and have a chat with the shop-keeper to work out how ameanable they'd be to extending the lease and for what price and under what terms.

    It's unlikely you could get an actual extension deal sorted in writing before you're exchanging so you'll just to judge yourself for your chat with the shop-keeper how likely that is.

    You do however have the statutory route where you can make a good estimate of the costs in advance.

    You can use that estimate to determine how good of an investment this is and then determine potential upside if the shop-keeper offers you a good extension deal.

    If it looks like a bad buy factoring in the likely costs of a statutory extension doubtful it's worth it unless you seriously trust the shop keeper to offer a far better extension deal.
    • seven-day-weekend
    • By seven-day-weekend 14th Oct 16, 11:42 AM
    • 27,833 Posts
    • 51,080 Thanks
    seven-day-weekend
    • #9
    • 14th Oct 16, 11:42 AM
    • #9
    • 14th Oct 16, 11:42 AM
    UPDATE: Thanks all for your advice.

    We drove out this morning to look at the flat from the outside. It is in very bad condition, rainwater goods sagging and in some places held together with tape, render that needs repairing at the back; and despite being so close to the river manages not to have a river view out of the lounge window (which is at the rear), because of another building in the way.

    So we will not be pursuing it. Thanks again.
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • Pete9501
    • By Pete9501 14th Oct 16, 11:57 AM
    • 414 Posts
    • 389 Thanks
    Pete9501
    What a shame, now you know why its cheap and no one else has bought it. Worth a rediculous offer perhaps? say £60k. The answer will be no and the offer kept on file.

    My parents had a Ledbury estate agent come back to them 18 months after a low offer and a "no" answer begging them to offer the same again. Funny old world.

    Pete
    • seven-day-weekend
    • By seven-day-weekend 14th Oct 16, 12:05 PM
    • 27,833 Posts
    • 51,080 Thanks
    seven-day-weekend
    What a shame, now you know why its cheap and no one else has bought it. Worth a rediculous offer perhaps? say £60k. The answer will be no and the offer kept on file.

    My parents had a Ledbury estate agent come back to them 18 months after a low offer and a "no" answer begging them to offer the same again. Funny old world.

    Pete
    Originally posted by Pete9501
    The EA told me that no-one had bought it because of a) trouble with mortgage due to being over a shop and b) because people didn't like the idea of two pubs and a takeaway nearby. Whilst I understood these reasons, I did wonder why an investor hadn't snapped it up.

    It looks OK from the front, but the back and side is in a bad state of disrepair. So the freeholder obviously doesn't look after it.

    I also am not sure about the parking situation. There are cars parked at the back, but there appears to be no allocated parking. There are double yellow lines at the front.

    All this coupled with the short lease has mad us decide noty to bother. It IS a shame, but I should have known a property in that location wouldn't be that cheap without a very good reason.

    Thanks for your interest.
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • csgohan4
    • By csgohan4 14th Oct 16, 12:43 PM
    • 2,596 Posts
    • 1,605 Thanks
    csgohan4
    What a shame, now you know why its cheap and no one else has bought it. Worth a rediculous offer perhaps? say £60k. The answer will be no and the offer kept on file.

    My parents had a Ledbury estate agent come back to them 18 months after a low offer and a "no" answer begging them to offer the same again. Funny old world.

    Pete
    Originally posted by Pete9501
    Guess some people think their place is worth more than the market value, Karma always comes back
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