How much will my 79 yr lease affect the sale of my flat?

PJD

Is there anything to be said about leases under 80 years? 79 years is surely a long time, certainly a lot more than a mortgage lender will be concerned about.

I imagine extending the lease another 90 years will not add much value to my flat, but will the existing 79 put most people off?

Doozergirl

Reading jackieblue's post above, I don't think most people really consider the lease length, especially in London where it's commonplace. At 79 years, I don't think that any lender has a problem with a lease of that length. If you consider that many leases are only for 99 years, it's hardly a surprise that leases get down to 79 years, is it?

I doubt it will affect your sale much. It might be worth getting a quote for the extension at least, to be prepared if you are asked for it. If someone were particularly concerned then at least you can answer the question quickly and get it out of the way.

When we sold with a similar length lease, we were questioned on it and simply told the buyer that the asking price reflected the length, which it did, but in hindsight, I know we panicked when we hadn't has an offer in (shock horror) 4 weeks :wall:

PJD

Thanks for your input DG.

Well - Jackieblue's post reflects my worry. You're right, a lot of people, especially FTBs won't consider the length of the lease, but then someone will mention it to them somewhere down the line etc & it will become a concern. Jackie's on the verge of pulling out at the point of exchanging!

Unfortunately it costs a lot of money just to find out how much it'll cost to renew the lease.

I actually had a good offer on my place which I accepted, but then they pulled out because of the term of the lease. It was partly my fault I feel, as they asked how much it would be to renew & I babble & said to much (probably didnt know what I was talking about). I said that it could be anything from 3k to 35! And it'll cost about £500 JUST to get a quote! Which is true. Obviously this scared them off. I should have just said "it'll probabably cost a couple of grand, but I can't tell you exactly how much it'll cost".

jackieblue

PJD,

Hi. My vendor said she didn't know. My EA gave the estimate of £3k. It's probably because I don't like (trust ?) verbal estimates in anything in life that it occurred to me to check. The checking has taken ages - I first mentioned checking the figure to my solicitor on 11th March.

I was simply browsing on the forum yesterday when for the first time ever on the subject of leases I read about "marriage value". I had never guessed that the cost of extending the lease shoots up when there is less than 80 years because the leaseholder is entitled to 50% of the increase in value of the property with the extended lease.

I'm certainly not getting a bargain and don't think the price reflects the lease of less than 80 years. Actually two flats in the same block show on Rightmove as sold in Jan and Feb for £9k less than I'm paying (both £107k whereas I'm paying £116k). You can see that £6.5k to extend the lease is quite a significant amount on those kinds of prices). I obviously don't know if they are the same but it also gives me food for thought. They weren't showing on Rightmove when I made the offer - but I have to say in my area there isn't much for £116k. Makes me think perhaps those two may have been reduced because of the lease issue, because I had seen one of them advertised at £113k.

I didn't like to add initially to your post as I wanted to leave people free to answer your question.

I guess I was really lucky to be able to find this information out for so little (£49 plus £31 to get an immediate answer). I just wish it hadn't taken so long because I've paid for the Homebuyer report and clocked up hours with the solicitor chasing so much paperwork.

I was also being asked often by the EA to chase my solicitor because the vendor was becoming impatient. My solicitor never held things up - the vendor's solicitor and management company were just slow. Now I think I know why the EA was keen to exchange !

PJD

Hi Jackie,

two & a half months just to get a quote. What an absolute joke. A measley 19 years before you have to get a lease extention, when a 99 yr lease will probably still be around when you & are dead is also an absolute joke. I've heard that leases are more expensive to renew after 80 yrs, but I didnt know why...

So what are you going to do, do you reckon? Try & re-negotiate the price based on the expense you'll have to pay to get the lease renewed? (sorry havent read your other thread yet)...

jackieblue

Hi PJD,

I haven't decided 100%, but I will probably not now buy.
Generally I'll post on my thread just to keep everything in one place. It's the magic 80 year cut off which I now understand from other posts and following some of their links. Until the lease has less than 80 years to run, it's a simple cheapish thing to extend. Once it has less than 80 the figure is unknown because it depends how much the value is considered to increase by having a lease extension. However much that increase is 50% of that goes to the leaseholder. This is what ups the lease extension cost suddenly at 80 years.
I have written to my solicitor and depending on her explanation I will make a decision.

If I were you, I would pay to find out the cost so that you can answer honestly. Otherwise maybe you'd end up with a buyer like me who changes their mind. On the other hand if I'd had to pay a couple of hundred for the info maybe I wouldn't have bothered. Also if I hadn't read about "marriage value" yesterday I may not have been concerned. So many posts refer to the 80 year thing. If you read the other thread there are many buyers who will never look into the cost of lease extension - but only those that don't read MSE !

All the best but if you do look at the other thread, "Worried" is also considering pulling out of a purchase having found out the 80 year bit.

Worried

It is a shame you didn't cop on to the 80 year thing a year or two ago, but you might have no problem selling your place, it does depend on a number of factors and as we know a lot of people aren't aware of the consequences of buying with leases below 80. I'm sure estate agents will market your place at full value and it might well sell no probs, but you might find people ask about an extension and worse case you might find a buyer and they may only realise the impilcations some way into the transaction and may want a extension then, or pull out. I would prob find out what sort of price they are wanting for the extension. It's best to be informed. You may be fine in selling though. My friends have just sold their flat with a 71 year lease and not had to take a hit in the price and they were no questons raised about the lease. As JackieBlue knows, solicitors don't always pick up on this, so your buyer won't neccessarily know about it. I think just suck it and see maybe.

I'm worrying about this two, as the flat I am/was buying has only 80 years left. If the vendor is not open to the idea of extending before completion, I will have to decide about whether to proceed with the sale and then try and sell it on with 77/78 years and see if I hit the problem of buyer resistance due to the lease.

missk_ensington

Don't quot me on this, but if you're concern is thjat someone else will be concerned about the lease running out when they're in it, aren't there laws? If you lived somewhere and the lease ran out, I don't think the Freeholder could charge you another £100,000 for a new lease. I'm not an expert I just know from my Mum, who always buys freehold properties and then leases them off.

I'm fairly sure they cannot refuse you an extension on the lease, however you'd need to check it out.

missk_ensington

PS. I thought leases on homes were 999 years????

PJD

Well my lease was originally 99 years, & if I want to extend it, they'll extend it to a further 90 years (???).

Yes, there is no problem getting the lease renewed, it's just a case of how much it'll cost.... that is what will put any buyer clued up about leases off.

missk_ensington wrote:

Don't quot me on this, but if you're concern is thjat someone else will be concerned about the lease running out when they're in it, aren't there laws? If you lived somewhere and the lease ran out, I don't think the Freeholder could charge you another £100,000 for a new lease. I'm not an expert I just know from my Mum, who always buys freehold properties and then leases them off.

I'm fairly sure they cannot refuse you an extension on the lease, however you'd need to check it out.

PJD

Worried,

Yeah, I've only just found out about this 80 year business - the lease at the moment is 79 & a half years! I'm six months out.

It seems as it's a case of - sell for a price which reflects the term of the lease, more than likely to a buyer who hasn't got a clue how much of a pain in the backside leases are (me four years ago)...

I'll suck it & see...