FTB with no knowledge of lease extension

thecolour

Hi everyone!

I am looking at a flat on for 355K which has a 72 year lease. I have been told my mortgage lender is fine with that. However, the current owner cannot afford to extend the lease before selling. The estate agent (foxtons) are saying that we should factor in about 10-30K for a lease extension into the asking price.

My first question: is 72 years good or bad?

My second question: how much of a risk is involved buying a leashold flat in these circumstances? Apart from the cost of renewal, are there any hidden problems (like what if the freeholder does not want to extend)?

My third question: had anyone had experiences similar to this who could enlighten?

Very grateful for any guidance you may have.

Thanks in advance.

Wyndham

Well, at the risk of hijacking your thread, this afternoon my conveyancer has told me that I really need to have 80 years on the lease. This is because most lenders want a full 50 years at the end of the lease term, and many mortgages are now 30 years. Lenders are also looking at more reasons to say no, and he told me I wouldn't get a mortgage for a lease at less than 75 years.

However, the estate agent has told me that I'll have no problem until 60 years - but a we all know, EAs are maybe not the best people to ask!

I'm now torn, and think the OP should take advice and be careful.

evoke

72 years is quite low. £10K to £30K for an extension sounds about right. However, there is usually a sting in the tail with lease extensions: ground rent may go up. Also check if the ground rent is always the same or whether it goes up after every 25 years or so.

geoffky

foxtons...oh dear...you are playing with fire..

Doozergirl

Foxtons don't really know what they're talking about either then. The lease can be extended as part of the sale. So if they negotiate the price, you can pay for the flat inclusive of the lease extension. It can be done on completion with no major issues except a probable delay in your moving in date whilst it all gets negotiated and dealt with.

There are some pitfalls in that you don't know how much the freeholder will ask once you've bought. It might be worth knocking on doors! Or, as I said, make it the vendor's problem to deal with. There is a calculator on the Leasehold Advisory Service website. https://www.lease-advice.org Have a play with that.

You can get mortgages where the lease needs to have 25 years left at the end of the mortgage term, but once you're under 70 years, you're starting to affect the value of the place so your asset is depreciating.

You can force the freeholder to sell you a 90 year extension after you have owned for 2 years. You can ask before then, but they are legally obliged to say yes after 2 years. Not a lot will say no to free money!

Fire_Fox

Do not listen to estate agents, they are paid by the vendor to sell snow to Eskimos. If you can get a mortgage all well and good, but can you afford to finance the lease extension without a loan (fees as well as cost of extending)? Is your solicitor experienced in leasehold matters or simply a conveyancer? Have you been told you need to wait two years to apply to extend the lease, if you do not do so at purchase? Note that once two years have elapsed the freeholder doesn't have the option of not extending, or at least not without breaching the legislation.

This website is pretty much the Bible when it comes to leasehold, I highly recommend a thorough read. There is a calculator for cost of extending on the front page. http://www.lease-advice.org/publications/

Fire_Fox

Ooooh cross post with Doozergirl!

Doozergirl

Yay Fire Fox! 'Lease stuff' company again It's been hard work without you!

Fire_Fox

Doozergirl wrote: »

Yay Fire Fox! 'Lease stuff' company again It's been hard work without you!

Aw thanks chicken, it's nice to hear my lectures have been missed. :rotfl: How are the renovations going in the recession? Last time I checked in you were still managing to turn a profit!

thecolour

Thanks guys. More background. Foxtons tells me the current owners have no cash at all and therefore cannot extend the lease before selling. Does this sound like a normal reason or should I be suspicious?

mr_rush

The estate agent (foxtons) are saying that we should factor in about 10-30K for a lease extension into the asking price.

Foxtons are scum of the earth estate agents. I have refused to deal with them in London after seeing my friends have multiple bad experiences.

Bulls**t that the seller has no money - it takes money to actually sell a property. And the costs of arranging a lease extension are not large - a couple of thousand.

AVOID!!!!!!!!!!!!