LEASEHOLD ON FLAT IS 86years IS that

Lovingitifitsabargain

LEASEHOLD ON FLAT IS 86years IS that a good investment or a bad one - my daughter is looking at buying a flat with her OH he said its a bd thing that there's on 86 years left as the value will go down rather than up - seems a strange way to think as surely if this was the case people wouldn't ever buy other than new builds when it comes to flats - Have tried looking for some advise on this on the net but all I can find is legal jargon can anyone help ? thank you

seven-day-weekend

We sold a flat with 76 years on lease in 2005 and the values of those flats are still going up.

I always look at it that the lease will last more than that person's lifetime.

He could maybe apply to extend the lease if it means that much to him.

Uncle_Fester_2

If she's thinking long-term, she will have to pay a kings ransom to increase it, as letting the lease expire further will only devalue it.

if, in a few years, she wants to sell, then she'll be okay, as most people would be able to get mortgage on 80 or so years, but they'll have the same thoughts your having right now regarding future saleability!!! :rolleyes:

harryhound

People do not buy flats with their own money, they have to get a mortgage.
When the remainder of the lease gets to the point where it is not sufficient security for a mortgage its price will slide off a cliff. Don't panic, there are a good few years to go yet.

I inherited the freehold of what really looked like a Victorian terrace but had been built as two flats. (One of my grandfather's less successful investments bringing in 12 GBP a year in ground rent !).
There were only 15 years to go on the leases and a pushy young man inherited the top flat and proceeded to dump building materials in the front garden infront of the downstairs flat.

I had great "fun" playing one tenant off against the other as to who wanted to buy the freehold. Always get on with your neighbours, if they had ganged up against me, they could have bought it for half the price.

The middle aged woman living downstairs with her family, was told by her solicitor she was offering too much, which was a shame because I would have
rather sold to her. Silly solicitor, go back now after 12 years and answer the question again.

Far more important than the exact number of years to go on the lease, is the structure for holding the freehold and the arrangements for extending the lease. It still could be a nightmare (back in Edwardian times, the clerks were on piece work, so they threw every stupid clause into the lease that they could think of, to up their pay.)

Talk to the neighbours - something you should always do before moving into a property. Most people are curious/worried about who might move in next door and will probably offer you a cup of tea. If they are nasty, do you really want to live next door to them ? The neighbours should be able to tell you about the structure and management of the building.

Harry.

mixu

As long as there's more than 80 years on the lease left it is possible to extend the lease before the 'marriage value' kicks in, which basically means it costs more to extend.

You can extend after two years so there will still be 84 years left — seems fine to me.

Liz33

I think once it gets down to about 75 years then it costs a lot more to extend the lease but the freeholder can't refuse to extend the lease so they should go ahead and buy if this is the only thing thats stopping them and extend as soon as possible.

Otherwise they could ask the vendor to extend this now (providing they have been there more than 2 years) and come to some arrangement regarding price this will save them paying for solicitors at a later date.

Doozergirl

You can extend a lease at any point, you don't have to have been there for two years. Two years is the point at which you can legally force the freeholder to sell you an extra 90 years.

86 years is ample. Your daughter should consider how long she wants to be there for as this will depend on whether she renews the lease. If she intends to stay for more than 6 years, then I *might* extend the lease to be prudent but 86 years is not a reason to pass a flat by, it really doesn't affect value at this stage. You can sell a flat down all the way down to 70 years without comment from a mortgage company and below that from many. I had no trouble obtaining a mortgage on a flat which had 63 years left to run.

Once you are into 70something years, some people will start to wonder about the lease, others will have no problem with it at all so you can still sell at full market value without problem though your market may be slightly smaller.

In London especially, flats are sold off on 99 year leases, so 86 years is perfectly normal! Let's be frank too, so you seriously think a mortgage lender would lend money on a 'bad' investment?