Length of leasae

misterstingy

I have an investment property which is a leasehold flat. The remaining lease is 76 years. The original plan was to sell it when the lease was down to 71 years. I am now in negative equity due to the price crash, and I suspect I will still be negative in 5 years time, so will not be in a position to sell.

My question is, at what point would it become difficult to sell, due to the shortness of the remaining lease. I've seen various opinions, ranging from 'less than 80 years is iffy' to 'you're ok down to 55 years'.

My options seem to be:
a) extend the lease now
b) wait until I'm in a position to sell, and extend the lease at that time if I need to
c) forget about the lease, and sell the flat when I can, accepting a lower price than a longer lease flat would have produced

I suppose it all hinges on the question of how much the value increases if the lease is extended (if at all) i.e. if I spend say £5k increasing the lease, I need to be sure that the lease extension will increase the value of the flat by more than £5k otherwise I've wasted my money.

Anyone have any experience of this situation?

G_M

From a buyer's perspective, the shorter the lease the less actractive the property. 80.... 75..... 70....

More importantly, most mortgage lenders have minimum lease lengths. some will not lend on less than 75, some may lend at 70. But basically it becomes increasingly hard for the buyer to get a mortgage, with fewer mortgage options (and higher rtaes/costs).

If you are in negative equity, then unless you have savings to pay off the shortfall, selling is not an option. Do you?

And if you don't, how can you extend the lease?

Unless you have some savings then, your options are limited...

BitterAndTwisted

It all depends: some mortgage-lenders won't lend on properties with leases of less than 65 years, others 70. Once you're into that sort of territory your only pool of potential buyers are cash ones.

If you can afford it, I'd say you should extend the lease as soon as possible. For every year that rolls by the cost of extending will increase.

spendaddict

I don't think you will have too much of an issue selling now, personally I bought a flat with 73 years lease 11 years ago and never had an issue with getting a mortgage or when changing lenders for better rates etc, check the other properties that have sold in the area. As you get closer to 65 years you will find it harder to get a buyer unless you extend the lease which will cost much more than it will now.

misterstingy

for the replies

Richard_Webster

When you bought recently did your solicitors explain the likely need to have the lease extended before you sold? If they didn't then you could possibly sue them!

If you have had the flat for 10 yaers or more then it wouldn't have been an issue, however.

jee

Selling with 75 years is not a problem but the buyer will be looking for the sale price to reflect this and you will probably have to put in notice to extend the lease and transfer this to your buyer- this allows them to extend straight away with the two year wait period.

When you extend a lease you pay for the freeholders and your own legal and survey costs as well as the premium. The buyer will be told this by the solicitor and will probably offer you a lower price than it would cost you to extend the lease and sell.