FTB- 68 years left on lease

tristyb

Hello

I'm interested in a leasehold property in London that is selling for £169k. I spoke with the current leaseholder and found out that the lease has 68 years remaining which was a concern for me.

He has contacted the freeholder with a view to extend the lease but he indicated that the freeholder is only interested in selling the freehold(£20k) to him and just hasn't been addressing his question of lease extension.

There are two flats in this building and the other flat has 83 years remaining and therefore they don't wish to buy the freehold.

He said that he was considering to take them to court to remedy the situation, but I don't currently know all the specifics.

My questions are this.

A. What would be a reasonable offer considering the circumstances and considering that Im a cash buyer? ( I know they purchased it for £160k in 2004)

B Is it wise to buy it at a reduced price and do the extension ourselves i.e time, £££ ?

C If he is ready to go to court how far is he through the process already?

All your help and advice is greatly appreciated,

Tristyb

property.advert

Not my area but I'd research the "marriage value" of the lease and freehold. There is a good reason why lenders do not wish to advance against properties with short leases and you would come up against that were you to want to sell it later on. You would not want to be renegotiating the lease or buying the freehold when prices were at their peak.

Hippychick

If you bought the freehold yourself then it does not matter how long is left on the lease, when the time comes you could then just grant yourself a new lease extension and all it would cost you is the legal fees. It could be worth finding out the value of the freehold as well.

At the moment the vendor would find it hard to sell to anybody who requires a mortgage as that may be considered too short a lease for most lenders requirements, you could use it to your advantage and negotiate the price down.

Would it be worth it to you to buy the freehold as well? ie could the flat be worth 189k total outlay?

Peterxxxx

given the 2004 price, it sounds as if your vendor probably has taken the short lease into consideration in pricing. If you take inflation into account, you are probably buying that flat at a 2002 or 2003 price. So even if you pay 20K for the freehold, you're not going to be paying over the odds, I would have thought. So if raising that money is a possibility for you, I would have thought it's worth taking seriously as an option.

Fire_Fox

tristyb wrote: »

Hello

I'm interested in a leasehold property in London that is selling for £169k. I spoke with the current leaseholder and found out that the lease has 68 years remaining which was a concern for me.

He has contacted the freeholder with a view to extend the lease but he indicated that the freeholder is only interested in selling the freehold(£20k) to him and just hasn't been addressing his question of lease extension.

There are two flats in this building and the other flat has 83 years remaining and therefore they don't wish to buy the freehold.

He said that he was considering to take them to court to remedy the situation, but I don't currently know all the specifics.

My questions are this.

A. What would be a reasonable offer considering the circumstances and considering that Im a cash buyer? ( I know they purchased it for £160k in 2004)

B Is it wise to buy it at a reduced price and do the extension ourselves i.e time, £££ ?

C If he is ready to go to court how far is he through the process already?

All your help and advice is greatly appreciated,

Tristyb

There is no a court case, this would be heard at a Leasehold Valuation Tribunal if needs be. When you say "he is considering taking them to court" who is 'he' and who is 'them'? The leaseholder and his neighbours? The freeholder and all the residents? The leaseholder and the freeholder?? Lease extension calculator here
http://www.lease-advice.org/

Once you purchase the lease you will have to wait two years before you have the right to apply for a lease extension, so it would be advantageous for the current leaseholder to start the process and then it is completed as part of the conveyancing. Expect this to take several months if the freeholder is going to be difficult.

Unless the current leaseholder has served notice on the freeholder then legally he has not started the process of extending the lease. Once notice has been served (usually by a solicitor) then the freeholder is obliged to reply within a given time frame. If he does not that is where the LVT comes in.
http://www.lease-advice.org/publications/documents/document.asp?item=8
http://www.lease-advice.org/publications/documents/document.asp?item=10

The other option is for you to purchase the freehold for the entire block, notice *may* need to be served on the other leaseholder once you have agreed a price. Certainly in collective enfranchisement it is possible for the flats nominate one person (e.g. you) to buy the freehold. This will mean a crash course in leasehold law as you manage the block, but it could be lucrative as the other flat will need to pay you to extend the lease probably within the next eight years. You could then offer to sell them half the freehold if you so wished: share of freehold flats are more desirable than leasehold, providing they are well managed.

You need to check you have instructed a solicitor who is experienced in leasehold disputes rather than simply a conveyancer, my experience is some have a very sketchy knowledge of this area of law.