Buying a short lease flat - seller wants to use money from sale to extend lease??

ILW

Eve1 wrote: »

Hi ILW

I thought that if they agreed to extend the lease - the property would be bought with the understanding that it would be with a long lease - surely they would be in breach of contract if they in turn didnt end up getting it extended?

As said, there is no contract to breach until exchange.

mlz1413

Eve1 if it helps put your mind at rest this happened when I bought a flat, the owner had died and the estate didn't have the money to extend the lease until it was sold. So everything was done as Doozer & Richard have explained.

I would highly recommend to use a good solicitor and not some online conveyancer. My solicitor ensured the contract was such that I was protected, he also checked past sales within the block to ensure that no previous problems had been experienced - which I think was more to do with the management company of the leasehold. Anyway everything went as it should.

jimbarrison

Very useful post!!

I have viewed a property a couple of times with the same short lease problem (60 years) but complicated further by the fact it's a repo.

The flat is being advertised as being for cash buyers only (which sadly im not) as most mortgage lenders wont lend on a property with such a short lease.

As I didn't realise this simultaneous approach was possible, my first thought was to try and get say a 15 year mortgage and then extend the lease, which the EA has said will cost £10k. I know you normally have to wait 2 years but he reckons the freeholder is happy to extend straight away. is that possible?

Would a mortgagee in possession engage in a simultaneous transaction such as the ones descirbed and would they increase the price as the flat is worth more with the longer lease?

I could find the £10k to buy the lease extension but would prefer to use mortgage funds if possible.

Any (more) help much appreciated.

Richard_Webster

As I didn't realise this simultaneous approach was possible, my first thought was to try and get say a 15 year mortgage and then extend the lease, which the EA has said will cost £10k. I know you normally have to wait 2 years but he reckons the freeholder is happy to extend straight away. is that possible?

Yes, it is possible. I have done it where there was a house converted into three flats and the freehold was owned by a company owned by the residents. Abbey had repossessed and the other two company members were happy to extend the lease as part of the deal. We sorted it all out so it happened together.

The only thing I would say is that it is not wise to trust estate agents on this kind of thing - you need to contact the freeholder yourself or through your solicitors to make sure what the agents are saying is right. Sometimes agents just say that lease extensions are easy, they will cost about £x,xxx, just to fob the buyer off and hope he doesn't push the point, when the agents haven't even contacted the freeholder!

jimbarrison

In that case, if the lease extension is going through at the same time as the purchase would I be able to get a longer length mortgage (eg 25 years)?


Richard - Don't worry I have quickly learnt with EAs that you have to take what they say with large pinch of salt and verify the facts with your own research.