Leasehold Advice - 57 years to go!

steves_uk

Hi All,

I'm after some advice as I've been studying this for hours and going round in circles!

My partner and I are looking to purchase a Flat we've seen for approximately £190,000.

We'll require a mortgage of approximately £110,000 which will be fine with our Earnings etc.

The question we have is that the Flat only has a 57 year lease remaining!

1. Can you explain what this means for us in both the short and long term?

2. Do you know a ballpark figure for the renewal? What are the chances of a renewal being refused?

3. Will we be able to get a mortgage with a lease of this length - and is it wise to??

Anything else you can think of?? I know it may seem messy - but we've fallen in love with the flat so it isn't easy walking away!

Thanks.

BitterAndTwisted

I think with only 57 years remaining on the lease the property will be unmortgagable.

Unless the current leaseholders can arrange to buy an extension on the lease from the freeholders before selling your situation is hopeless.

You need to find another mortgagable property

ILW

I would expect a lease estension to be £50k or so.

de1amo

it all depends on what type of block it is in and where--in london leases are much shorter and lenders accept this as the norm.
i bought a flat with 67 years left on the clock but the leaseholders were planning to go for the freehold--it had 12 flats in the block and each flat was about the same value as your intended -we got the freehold for 7k per flat---i knew they were intending to buy the freehold when the block questionaire was done.----if its above commercial premises avoid it at all costs as its impossible to get the freeholds

poolboy

I bought a 60 year lease flat with a mortgage but I tied up purchase with a lease extension. I got 999 years for 8k, in fact, 17 of the 20 flats bought the lease extension, 3 didn't. Each buyer effectively paid 20/17ths to cover the non purchasers.

There's a few shortish lease flats on the mkt, they should be cheaper than they are pitched at to cover the risk.

I wouldn't avoid lease issues, but should be priced accordingly.

steves_uk

HSBC have said they'd be willing to give me mortgage aslong as the lease has 25 years left after the mortgage ends.. which it will have.

Are my next steps to ask the estate agent how i renew the lease?

And if proceed, would I be able to get the mortgage to cover this as technically the value of the flat would shoot up?

Can I renew the lease as soon as I move in or do I have to wait a few years?

Sadly the flat is a repossesion, so there's no room for the seller to start the renewal process off.

Not sure I understand the freehold thing?! would I need to convince the entire block of flats??

Thanks for the replies so far! Sooo many questions!

emg

Although your mortgage lenders might be ok with the length, you need to think about when you come to sell. It will be really difficult if not impossible to get a mortgage on within a few years. That lease length basically means that in 57 years the freeholder could just take that flat back without paying. Also, the shorter the lease gets the more it will cost to renew it. You need to think about your long term plans. If you are planning to ever sell that flat (or even if you plan to live in it for more than 57 years) you will need to renew the lease and the sooner that happens the less it will cost you.

mart.vader

Steves-uk

You need to contact Lease Advice -
I can't post the link here but see this thread below.

https://forums.moneysavingexpert.com/discussion/comment/39507646#Comment_39507646

Mart.

simonSE15

You need to be in the property for 2 years to force the free-holder to extend the lease, although if the freeholder is amenable to an extension then you can do it as soon as you want. Probably best to get the current owner to extend and negotiate payment.

BUT this could take a long time to go through.

Ideally you want the freeholder to agree a price for the extension which is less than would be set by arbitration.

If you have to do it you're probably looking at around £15k but this depends on the ground rent etc. Offer a lot less and see what happens.

Use this calculator:
http://www.tenancy-agreements.co.uk/lease.php

steves_uk

Thank you all for the replies, you've all been really helpful. I'll get on to the freeholder and find out how we can proceed. Heres hoping it works out easier than I first thought!

kmmr

As an aside, don't listen to what the EA says. They are always optimistic about extending leases or purchasing freeholds. The real power in this situation is with the freeholder, and the relationships with the other tenants.

Best idea is to speak direct to freeholder, and even get something in writing.