Lease..56 years left...help please

RobbieS

Hi

We have just found out that our lease has only 56years left and that apparently no one could get a mortgage on this. If it were a cash sale and we tell the purchasers about this would that be ok? Obviously they would have to buy lease before they could sell in a few years time. Thanks for your help guys.

olly300

Why don't you extend the lease yourselves then sell it on?

pie81

I think that purchasers will automatically find out about it as their lawyer will ask to see the lease (and/or they will ask the estate agent), and (i think) it will also be in your HIP that you have to provide as a seller.

Yes in general people will struggle to get a mortgage on a 56 year lease, anything under 80 years can be a bit tricky, under 60 and it's definitely difficult.

Cash sale would be fine as no mortgage involved, and yes they should be able to purchase extra lease. however of course the purchaser will want a reduction in price to reflect the cost and hassle of doing this, so it's worth doing a bit of research to find out how much a lease extension will cost. cash only purchasers will also reduce your pool of buyers which in turn may affect price.

Just curious, how come you only just found out... you must have known the lease length when you bought?

RobbieS

We are selling the house for £20,000 below asking price as its a cash sale and dont want to buy/extend the lease as this will cost us another £4.500.

IHS88

Hi RobbieS

You're right, at 56 years, your lease is short and mortgage lenders will not be keen to lend.

You need to find out exactly what it will cost to extend. Get in touch with your freeholder to see how much it would cost. Best to do this through your solicitor.

To check that the freeholders assessment is correct you could employ a RICS suveyor to provide a second opinion. This would cost you £400 approx.

I'm afraid the freeholder also has the right to charge for providing you with this information.

Once you have a price, you could pay for the extension prior to selling or assign your right to extend the lease to a purchaser and pay for the extension out of the money you get from the sale at the time of completion. A lender would be happy with this.

Lease extensions must be done through a solicitor which obviously incurrs costs.

Its all very annoying. It happended to me a few years ago.

Good luck!

RobbieS

Sorry I meant we had only just found out about some one not being able to get a mortgage. Our property is valued at £160.000 and we are prepared to accept an offer of £135.000 from a cash buyer providing they either purchase freehold for £4.500 0r extend lease for £3.200. Just wanted to know if there would be any problems with the lease part as they do not need a mortgage. Thanks

cattie

Have a look at this website as it has a calculator to help you work out the rough cost of extending the lease. It's information that any prospective purchaser will want to know.

Knocking off £20k may not be enough for a flat with so short a lease. A flat near me was sold last year with a lease of 48yrs & it was priced at about £70k under what a flat with a new healthy or long lease would have been.

RobbieS

cattie wrote: »

Have a look at this website as it has a calculator to help you work out the rough cost of extending the lease. It's information that any prospective purchaser will want to know.

Knocking off £20k may not be enough for a flat with so short a lease. A flat near me was sold last year with a lease of 48yrs & it was priced at about £70k under what a flat with a new healthy or long lease would have been.

We have checked with Shenstone and it will cost £3.200 to extend for 125yrs, and £4.500 to buy lease. Its a bungalow by the way. Thanks for the advice.

zzzLazyDaisy

Your best course of action would be to buy the freehold yourself, if at all possible. How much equity is there in the house? Could you extend the mortgage for a short time to cover this expense and make the house more marketable?

A few years ago I viewed a flat with a short lease. The owners refused to make an application to extend the lease. I COULD have raised the money, but if banks won't lend on a property like that, I wasn't going to risk my money either, so I walked away. Two years on, the flat was for sale with a different agent, having been repossessed.

A freehold bungalow would be worth a lot more than a bungalow with a short lease, and as others have said, at that point you then open up the market to everyone who can get a mortgage, which gives you an much better chance of selling than hoping that a cash buyer might come along.

chickmug

http://www.lease-advice.org/

This link may help.

cattie

chickmug wrote: »

http://www.lease-advice.org/

This link may help.

Whoops, the link I meant to include before the early onset dementia kicked in.:p Thank you chickmug for having a fully functioning brain.