Leasehold on the property I'm buying

Stubbsy05

Well my Flat i'm buying is £83K which cheap for a 2 bed around here. Have spoke to the management company who seem quite resonable. All the other Flats are still on original leases and no querys have been made regarding extension of their leases.

The Freeholder will be happy for me to extend the lease asap and I wont have had to live there for 2 years.

marcus1981_2

This is a real interesting discussion, especially to people like me who are a little short of knowledge and experience in this field!

My situation is that the flat i want to buy has a 99 year lease that started in 1988, so it has 80 years left. For no reason other than ignorance, i feel slightly uneasy about this. Should I? I'd be much happier if the lease was back to 99 or above. Should i ask the seller to sort this out or negotiate this into the price i offer?

Any advice would be greatly appreciated :beer:

cattie

Yes try to get the seller to find out roughlyhow much it will cost to extend the lease before you buy the flat.

As it canbe a long drawn out process to get a lease extention it may not be possible for your vendors to get this done themselves before the sale completes.

As there is 80yrs left on the lease it will be cheaper to do it now than when it is under 80yrs remaining. It will be worth your while approaching the freeholder as soon as you purchase the flat to ask if he is willing to extend your lease. If he says no at this point then in 2yrs time you will have the right to an extension.

The flat may already be priced to reflect the length of the lease, but you have nothing to lose in trying to get a keener price because it will be less attractive to purchasers once the lease is under 80yrs.

hedgehogpenguin

Interesting reading.. I have just purchased a flat in SE London for 212500 pounds and it has 77 years left on the lease. My surveyor mentioned the marriage value issue, but still thought the price was good even with the 'short' lease. Does anyone have any idea how much it may cost to extend this, and whether it would be worth extending before I came to sell?
My surveryor seemd to think that if, for example, it cost 10000 pounds to extend , then it would add 13-14000 pounds to the value. Is this just wild speculation on his behalf, or is this about standard. This is my first house and woiuld just like to make sure I am understanding the ins and outs of the leasehold situation.

hedgehogpenguin

anyone ?
cheers

nickgatt

I too am in the process of purchasing a property - this only has 69 years remaining. From trawling the web and speaking to various people in the business it seems that when a lease hits 60 years remaing an lower it causes problems with lenders.

I stumbled across this calculator http://www.tenancy-agreements.co.uk/lease.php but I cannot say how good or accurate it is - perhaps some people in that area of expertise here can offer some comments?

I raised the lease extension with the agents and my solicitor and met with the response from the sellers brief:
"your client will have to take this up with the freeholder directly after the sale completes." which met with some negativity from myself!

I went to see the freeholders, conveniently located in London not too far from my work and they advised it would be in my interest to have the seller confirm properly - a process which takes 8 weeks.
They went on to say that few freeholders would be in a position to give an indication of a price - they would all do things properly (valuation/survey etc) as things change very quickly and the price indication of one property is not indicitive in any way to an identical property with the same remaining term next door! The resultant figure would then only be valid for 30 days although some negotiation would be possible to allow time for the sale to complete.
They also advised that the purchase price may have this taken into account and it is something that must be evaluated by the purchaser but (and this is a big but) the shorter the lease gets, the more attractive it is to the freeholder and the more money they potentially make! As they are in business to make money, they will usually try to get as much from you as possible and will look to any way to do this!
In a nutshell, beware of any false promises and get an actual quote in writing that will be valid at the time the extension is made. Otherwise, you could end up stuck!

nrsql

I extended the lease on a flat and completed the procedure a few months ago - took over a year.

You need to own the flat for 2 years to have the right to extend and it is by 100 years (or 99) not to 99 years and with peppercorn ground rent.
There was a case about a year ago (think it was Cadogan) which clarified the law in favour of the freeholder and made it a lot more expensive to extend - about double.

These things rarely go to court - it would probably be far to expensive for you to go through that - but are resolved through negotiation.
So the 2 year rule just means that the freeholder knows you aren't exercising a right but will be in a couple of years.
First step is to contact the freeholder and ask for a price for the extension (you should probably get the person you are buyting off to do this). When I did this I was affered an extension to 99 years with an escalating ground rent (doubling every 50 years). Then ask a solicitor if this is reasonable and get them to negotiate - they will get an opinion from a surveyor so you could probably go straight to them.
Solictor said the price was about double what it should be and that they would explain the law to them - they did and eventually decided the freeholder was right.
It cost about 10k on a £180 flat with 65 years remaining extended to 165 years.

Depends where the flat is as to whther the 75 years matters. In London it probably doesn't but outside it might - ask your mortgage company and estate agent when the remaining lease affects the ability to get a mortgage in that area.

EdInvestor

The price varies quite a lot depending on the area, London seems to be about double elsewhere reflecting the premium on property prices.

It is usually possible to negotiate on the length of the extension term. 125 years is popular as it's cheaper than the full extension,but still quite long.