Leasehold flat with tenant... extend lease now or wait?

karie

Hi all

Here is my dilemma.
I own a 1 bed flat, purchased in 2006 for £98k. I owe about £85k.
It now has 72 years left on the lease. The freeholder has offered me a 99yr lease extension for £6.5k plus costs. I have had an independent valuation carried out which valued the lease at £5-£5.5k.

The flat currently has a tenant in it. I tried to sell the flat between June and October last year... had an offer but it fell through because of the buyers finances. The offer was £99k but I would have had to pay £4k towards the lease extension (so £95k in reality).
After the sale fell through I left it on the market for about 6 weeks at a reduced price of £95k, had some viewers but no sufficient interest so I chose to rent it out from November as we were coming into winter.

I have 12 months consent to let from my mortgage company and my tenant is likely to stay at least that long. Her rent covers my mortgage plus fees, and I make about £175 profit each month (however my mortgage is tracking the base rate so this clearly may change in the future... but there is good scope for movement).

I am still considering extending the lease but my concern is that if I sell in the next few years I won't make the money back from the lease extension. I'm not sure that buyers see the value of a long lease.

I would be happy renting the flat out for many years to come - in which case I would buy the lease to get rid of the uncertainty - and just play the long game. But as I don't know how long my mortgage company (HSBC) will let me keep doing that for... and if I had to switch it to a buy-to-let I would probably just have to sell it.

I don't pay a mortgage, or rent, elsewhere.

I know what I probably need is a crystal ball!!!! But any views?

Thanks,
karie