Advice please! FTB and extending a flat lease

clayton101

Hi!
I am looking at buying a flat with 86 years left on the leasehold. I'm aware that if the lease drops below 80, the cost of extending the lease goes up considerably.

So if I buy, I'd be looking to extend before that - can someone provide a ballpark figure of how much it may cost to do this? I have looked on the Leasehold Advisory Service which is very helpful on the process, but what it does not provide is perspective: am I turning this into too much of a big deal?

Looks a great property, but at the moment my uncertainty as a FTB in this area (extending the lease, etc), is a big negative against it. General thoughts?

Really appreciate the views of those with some knowledge/experience of this. Thanks!

Note: the current owner would not be able to extend on my behalf, as they are looking for a quick sell.

Burridge60

If the original lease was for 99 years there isn't much to be gained just yet by extending. The problem is two fold

The shorter the remaining lease the less Lenders will be wiling to advance a mortgage on the property. They ask for the current lease and normally have a minimum number of years that must be remaining at the end of your mortgage term. So a 35 year mortgage term (a FTB maybe?) might need 30 years on top of the lease term. Abbey/Santander need 55 years at outset remaining and 30 after the mortgage term. So a FTB using them for a 35 years mortgage would need a leas term of at least 65 years at outset. Other lenders are not so generous.

Secondly the Freeholder that grants the lease to you has only a few ways to make money out of his investment. Ground Rent, Block Insurance and payments to extend the lease as well as fees to grant permissions to do things. The largest of these is the lease extension.

I haven't been involved with a mortgage to purchase involving a lease extension for several years but the last one I did was approximately £14,000 plus around £2000 legal fees on a property worth around £145000.

clayton101

Wow! I definitely did not think it would be this expensive - I'll only consider places with a longer leasehold methinks. Thank you for your insight.

Chyna-s

Just to show you more costings - in order to selling my flat I had to extend the lease (from 76 yrs up to 125 yrs). Cost £7,000 incl. fees etc and my ground rent has now tripled from £50pa to £150pa.