Less than 60yrs left on lease of house - thinking of selling - help!

nataz

Hi Im trying to get some advice for my parents.

They have recently decided to put the family home up for sale, all going well till today, when they had the first valuation, at £134,950. Good sum but they were informed that with just 57yrs left on the lease they may have trouble selling it.

They really arent in a position to spend £000's on the freehold and would like to just extend.

Questions are -

Do they have to?
Will they sell if they dont?
And if they go for extension, what are the likely costs going to be?

They were told that they should contact their freeholder, send a cheque for an unknown amount! and then they will get the figure back they have to pay???

Any help greatly appreciated.

GDB2222

Yes, if they extend the lease, they'll get much more than it costs them. There might be some half-way house where they start the lease extension process now, but leave actually paying for it until nearer a sale.

They should get a surveyor, not an estate agent, to advise them on the lease extension and negotiate a price.

nataz

Sorry, not sure what you mean by 'they'll get more than it costs them' ? Sorry if a bit dim this morning.

ILW

Without the lease ext the value of teh house is probably £40 or 50k below the valuation figure. Extending the lease should cost considerably less.

nataz

Thanks.

OK whats the next step, do we need to contact the freeholder direct or a surveyor? Really not sure where to start.

GDB2222

Use a surveyor who has done this sort of work many times before.

nataz

Are they likely to ask for money up front?

kingstreet

I recently conducted something similar for a client whose purchase had 56 years left to run. By our calculations, houses which were being sold with the freehold were commanding approximately £40k more than the leasehold equivalent.

There were still approximately twenty lenders left available to us, as the minimum appears to be mortgage term, plus thirty years. So a 25 year mortgage would just fit a 55 year lease.

They purchased the property with a mortgage from Abbey and will look at purchasing the freehold in two years for anything upto £15k. This is what's been indicated as the likely cost by the surveyor.

GDB2222

So, in that particular case, Kingstreet, the vendors could have sold for around £40k more if they had bought the freehold for £15k. Have I got that right?

And, Natas, yes the surveyors will want paying for their work. Why not ask around for fee estimates.

kingstreet

GDB2222 wrote: »

So, in that particular case, Kingstreet, the vendors could have sold for around £40k more if they had bought the freehold for £15k. Have I got that right?

Yup. As part of our investigations, we looked at which properties in the street had been sold with the freehold and established the price differential. We then spoke to the surveyor who carried out the valuation and found out he'd experienced a freehold purchase on the same development and the price had been agreed at £15k + legal costs.

The vendor had done nothing to establish the cost of the freehold and we were happy to buy for the lower price and look at purchasing after seeing out the two year post-purchase period.

nataz

Just spoke to mum and the freeholders have said 4k for freehold and 2800k for 125 yrs extension. She's getting quotes so will see what happens

Is ve amazed at 40k extra... houses only sell for 130-5k anyway