leasehold dilemma

wench90

Hi,

Just wanted to get some advice from the house buying experts on this site. My OH and i have found a great little flat in our area that is priced at £114,995. It's perfect for us and a great price for our area. However, i found out yesterday that the lease on the property is only 74 years. Im gutted, and really concerned about the selling potential of this flat in the future. I have read all about extending the lease etc. I have spoken to the EA about the asking price, he told me that the price didnt reflect the length of the lease because the property was very popular and many people were viewing it so the vendor probably wouldnt be flexible with the asking price. When i pointed out that most of the interest would be from people unaware of the shortish.. lease, he said some people would be bothered, others wouldnt, and that was that.

I know that the vendor bought the flat for around £99000 three years ago so the asking price appears quite reasonable. What should i do? Make an offer and ask the vendor to try to find out what an extension on the lease would cost? Make an offer anyway and deal with the extension later myself, or simply not bother?

I am viewing the property for the second time this evening at 6pm, and would appreciate any advice you can give.
Cheers
wench90

tifnstav

which lender are you proposing to use for your mortgage?

wench90

not sure yet, had quote from halifax, but have also spoken to london and country, who told me to get back to them when i've had an offer accepted.

westernpromise

Unfortunately, below 80 years the cost of buying the freehold is whatever the owner wants for it - you can insist on buying it, but if you can't agree on what it's worth (the issue is something called 'marriage value' - the value of owning both the freehold and the leasehold), you can only go to a valuation tribunal, which is a lottery. It might say the marriage value is £50 or £10,000; no way to know, and either way, you pay the freeholder's legal and survey costs.

If it's reasonably priced at £115k that is probably because it is such a short lease. I'd let it go if it were me.

tifnstav

i wouldn't buy the freehold to a flat - too much hassle and you get the responsibility of sharing the maintenance costs, collecting ground rent, blah blah etc - you would have to get other flat owners in the block to buy their share of the freehold too and form a management company or similar, who could be bothered!

halifax's current requirements are that the length of the lease is at least the length of the mortgage (eg 25 year mortgage) plus 30 years. so i reckon you should be able to get the mortgage from halifax for the property.
given that its a 74 year lease, that means that prospective buyers for the next 19 years should be able to get a mortgage for it. are you planning on living there for 19 years or more?

if you do decide to go ahead, you could ask the seller to apply for an extension of the term of the lease before they sell to you - but they could respond by telling you that it wouldn't benefit them and so you should apply for it after you've bought it.

but ultimately its your decision. good luck.

westernpromise

tifnstav wrote:

i wouldn't buy the freehold to a flat - too much hassle and you get the responsibility of sharing the maintenance costs, collecting ground rent, blah blah etc - you would have to get other flat owners in the block to buy their share of the freehold too and form a management company or similar, who could be bothered!

Many incompetent and greedy management companies rely on such inertia and screw the lessees mercilessly.

At my OH's place the buildings insurance, for instance, was £2,000 a year. When she bought the freehold and became responsible for insuring the place, we found an identical policy for....£350. So that's £800 a year saved right there (2 flats in the house, half of £1650 each...)

And of course maintenance is charged to lessees by the freeholder anyway - lavish, no-expenses-spared maintenance on THEIR asset...which YOU pay for!

tifnstav

i know what you mean about management companies - i am going to get billed next month for our service charges....grrrr!
i am going to be charged £78 for a year's window cleaning - we moved in in Jan this year and the windows were first cleaned in May!
I only have 7 windows and one of them was consistently ignored - it got cleaned for the first time on Tuesday.
I know its gross but I refused to borrow a ladder out of principle (i'm on the first floor and I don't drive so how i would borrow a ladder i do not know) - I just left it, even though that filthy cobwebbed window made me feel like i lived in a haunted house.
so when the bill comes i am going to put my foot down and refuse to pay a proportion of the window cleaning costs....and don't get me started on the cleaning of the communal areas!

cattie

If you want advice regading extending a residential leasehold then these are the people for you. http://www.lease-advice.org/newintro.htm

They willl be able to explain things properly to you & give you good advice, especially on the subject of a tribunal setting the valuation price if that quoted by the freeholder is unreasonable.