Length of Leasehold v effect on value

Victors_Bruvver

My wife and I are looking to buy a flat in the south east soon and will finance the purchase from the sale of our current property, so no mortgage is required.

We have noticed that quite a few flats have in the region of 99 to 120 years left on their leases, and whilst we obviously will not be around in 99 years we were wondering how this affects the value of such properties should we wish to sell again in a few years time.

Looking through the threads posted here I note the comments that mortgage providers are not happy to lend money on leases of 60 or less years, so at what stage will the remaining "ticking clock" start to put off future prospective buyers and more importantly devalue our investment?

Doozergirl

80 years is the point at which a purchaser would have to consider the length of the lease as something called the 'marriage value' comes into play and the freeholder becomes entitled to a portion of the value of the building at the point of the lease extension. It's very minimal to start off with though. It really depends on the purchaser as to whether it affects value at that point as generally it is only a small percentage of the asking price.

As long as you extend the lease before the 80 year point, which you are legally entitled to do, the cost of renewal is small and there is no question of any detrimental affect to the value of your lease.

Victors_Bruvver

Thanks Doozergirl, all much clearer now.

Anyone know what has happened to the "thank you" button?

Ben_Baileys

Oh no - this is our big problem as well!

We've had an offer accepted and have found out the leasehold is 78 years. My solicitor has advised me to demand that the vendor extends the leasehold as otherwise it could end up costing us a lot of money a few years down the line. Guess I'm gonna have to be strong and assertive with the estate agent!

Any advice? Or ideas as to how much it would cost to extend a 78 year lease on a property worth 215000?

zain

A friend recently extended their lease from 68 years to 99 on a 170k flat and it cost 10k. I think it all depends on how reasonable the freeholder is. This is why people suggest that you get it done before the property is put on the market. I guess once the process starts you have little option but to agree on the suggested figure.

I recently bought a share of the freehold with my neighbour downstairs and we are going to extend the lease to 999 years. We had exactly 78 years left on the lease. I am a bit worried about what might happen when we sell it as some people suggest that shared freehold is not ideal. However, there are only 2 people involved in this.

HTH

Supernova

zain wrote:

A friend recently extended their lease from 68 years to 99 on a 170k flat and it cost 10k.

Including all solicitor's costs? And whereabouts? Thanks

zain

Mus wrote:

Including all solicitor's costs? And whereabouts? Thanks

No not including costs etc and in Surrey ( Near Guildford i think)

Hippychick

I work in the biz,

the cost of extending the Lease can depend on the freeholder, some are greedy and demand quite a lot. However if you feel the price they are asking is too high you can ask for the Leasehold valuation tribunal to value how much they think it is worth. Although you will probably have to pay the tribunals costs.

If the leases you are looking at are 99 years plus i wouldn't be too worried about it, although you never can tell what a potential purchaser may demand.

If you can buy a share in the freehold then that is a good position to be in as at least then you can have some control over the costs of a lease extension.

zain

Hippychick wrote:

I work in the biz,

the cost of extending the Lease can depend on the freeholder, some are greedy and demand quite a lot. However if you feel the price they are asking is too high you can ask for the Leasehold valuation tribunal to value how much they think it is worth. Although you will probably have to pay the tribunals costs.

If the leases you are looking at are 99 years plus i wouldn't be too worried about it, although you never can tell what a potential purchaser may demand.

If you can buy a share in the freehold then that is a good position to be in as at least then you can have some control over the costs of a lease extension.

Given that you are in the biz....

I have recently bought a shared freehold with my neighbour downstairs ( just two flats in a conversion). Do you have any views on potential problems when it comes to selling 'shared freehold'. I was under the impression that this is the best position to be in and there would be no problems selling but i have read in other posts that it need not be the case?

Thanks in advance

Tassotti

From my experience, it is more beneficial to have 1 Freeholder, and several lesees.

Shared freehold can complicate situations UNLESS the freehold/leasehold agreements are written clearly

weatherwax_2

Hippychick wrote:

I work in the biz,

the cost of extending the Lease can depend on the freeholder, some are greedy and demand quite a lot. However if you feel the price they are asking is too high you can ask for the Leasehold valuation tribunal to value how much they think it is worth. Although you will probably have to pay the tribunals costs.

If the leases you are looking at are 99 years plus i wouldn't be too worried about it, although you never can tell what a potential purchaser may demand.

If you can buy a share in the freehold then that is a good position to be in as at least then you can have some control over the costs of a lease extension.

Hippychick, I'd be much obliged if you could have a look at this thread (bottom half of page), and tell me what you think:

http://forums.moneysavingexpert.com/showthread.html?t=167154&page=2&highlight=weatherwax

As I've said, the link given does'nt work for me and I have no idea what to charge. I want to make things as easy as possible for my neighbour, who has been wonderful, but I also want to benefit from increasing the G/R for her buyers. Any advice on a fair price for extending the leasehold for her and a beneficial (for me!) price for future G/R would be very welcome.