Leasehold Problems

mels123

Can anyone give me some advice about leasehold.

We are currently selling our 3 bed semi and there is only 64 years left on the lease. Our solicitor when we bought the property advised us not to buy the freehold as the management company would charge over the odds for it. However, our buyers' solicitor is asking if we will buy the freehold for the buyers. We simply cannot afford to as it will cost £6K plus and we have already knocked £5K off the asking price already. We need as much equity as possible to start our new lives in Canada.

The buyers have had their survey done and everything was fine and are just awaiting their mortgage offer. If there is a problem with the lease, will this be flagged up in the mortgage offer conditions? Will the lender insist we purchase the freehold?

We are under so much stress at the moment with the big move and can't take much more!!

Any advice appreciated

Mel

continualdiamond

Depends on the lender and mortgage term. I've had this problem with buying a leasehold with 69 year lease. My lenders requirements are when the mortgage term ends the lease must have 35 years remaining. My bf and i orginally had a 35 year mortgage as we were told the lease was 75 years, when the new info came about, we of course had to reduce the mortgage term to be able to get the place.

We actually wanted the lease to be extended but the vendors couldn't afford to do so, but we love the place too much and are prepared to extend it ourselves after the 2 years.

The above is all we needed to sort out for everything to be okay again.

Doozergirl

When they applied for the mortgage, they would have had to say how many years were left on the lease. The mortgage company would have provisionally accepted them on the basis of the length they gave. As long as they gave the correct information, they should be okay.

Whether you buy the freehold or not? Depends on whether they have you over a barrel that you feel you can't hang around for another buyer. If you were open about the length of the lease at the beginning and say that the asking price already reflected this, they mightn't have too much of an argument.

mels123

Thanks for the information.

Continual Diamond did this hold the sale up for weeks, or was the mortgage offer quickly re-newed for the shorter term? Did this increase your monthly payments by a lot?

We were honest about the house being leasehold and feel that if we buy the freehold we are practically giving the house away. We will lose £11K, plus we had already reduced the price £5K, so if you look at it that way we will lose £16K.

If they want the house to be freehold, in my opinion they should pay for the freehold.

Hopefully we should hear about the mortgage offer terms any day.

cattie

The normal thing for a buyer to do, if they have made an offer knowing the length of such a lease, would be to ask you to get the lease extended but that they meet the cost of it.

An extended lease will increase the sale price & saleabilty of your property so it will be for their benefit & they are being unreasonable if they expect you to fork out so much for something that is no benefit to you when you've already dropped £5000 off the asking price.

Stick to your guns & remind them they they will reap any benefits of an increased lease.

Norroy

The problem for your buyer will be that they have to wait two years before they can extend the lease which will make it even more expensive than it is now.

The solution is for you to ' serve notice' on your landlord (freeholder) that you wish to extend it , and then sell the property with this in place . It will mean the new leaseholders can extend immediately.

The freeholder cannot hold anyone to ransome over this. There is a formula for calculating the price, and if the freeholder is unreasonable in his demands he can be taken to a Leasehold Valuation Tribunal.

cattie

Norroy wrote:

The problem for your buyer will be that they have to wait two years before they can extend the lease which will make it even more expensive than it is now.

Not true, they have to have owned the property for 2yrs before they have a legal right to a lease extension, but there is nothing stopping them applying to the freeholder before this. He doesn't have to agree before the 2yrs are up, but he may be more than willing to oblige.