What happens when the lease on a leasehold property comes to an end?

seven-day-weekend

My son's flat has a 65-year lease, which he is going to extend when he has owned it for two years in 2014.

But it got me thinking, because I know people in this same development with similar length leases who are not going to renew.

So, as in the title...what happens when the lease on such a property reaches its end in 65 years' time?

HappyMJ

Not much really. The current occupier can stay in the property. The property will likely be sold before the lease runs out due to the death of the owner. The new owner will probably then extend the lease.

katejo

HappyMJ wrote: »

Not much really. The current occupier can stay in the property. The property will likely be sold before the lease runs out due to the death of the owner. The new owner will probably then extend the lease.

Are you referring to the freehold owner or the leaseholder? If the leaseholder tries to sell and the lease is below 70 years, it will be harder for a mortgagee to get a mortgage and the selling price will be lower. I sold my old flat before it reached the 80 year cut off time.

mrschaucer

I think the legal position is unless you pay the freeholder for an extension of the lease, then after the 65 years the flat reverts back into the ownership of the freeholder. That's why the shorter the remaining lease, the more expensive it is to renew. But don't quote me.

tim123456789

HappyMJ wrote: »

Not much really. The current occupier can stay in the property. The property will likely be sold before the lease runs out due to the death of the owner. The new owner will probably then extend the lease.

This requires both parties to be willing. As the cost of a new lease increases expontentially the shorter it gets the tenant may not be able to afford to take up the offer.

It would be a foolish freeholder who sold for less that the lease was worth in this situation.

tim123456789

mrschaucer wrote: »

I think the legal position is unless you pay the freeholder for an extension of the lease, then after the 65 years the flat reverts back into the ownership of the freeholder. That's why the shorter the remaining lease, the more expensive it is to renew. But don't quote me.

Yes, but that doesn't fully explain the position of the tenant (leaseholder) when this happens.

Assuming that he is using the property as his main home, then the lease reverts to some form of secure tenancy (I'm unsure of the type).

The tenant can remain in situ, paying a requlated (I believe) market rent, and cannot be given notice by the leaseholder (provided that they pay that rent, of course).

Whilst this isn't something that you would want to let happen to a lease with 65 years remaining, buying up a property with a very very short lease of under 5 years remaining is effectively a way of getting a secure rental property for the rest of your life.

And yes such properties are occasionally available for purchase.

HappyMJ

katejo wrote: »

Are you referring to the freehold owner or the leaseholder? If the leaseholder tries to sell and the lease is below 70 years, it will be harder for a mortgagee to get a mortgage and the selling price will be lower. I sold my old flat before it reached the 80 year cut off time.

The leaseholder. What if the leaseholder has no dependants and didn't care that it would revert to the freeholder? Why bother extending the lease every 20 years at a cost to the leaseholder and the value of the property going to the government on death or when the leaseholder goes into a retirement home therefore having to pay for it from their own money. If they have a worthless property then the council can take it if they wish to cover care expenses but it won't be worth anything.

seven-day-weekend

Thanks all. Tim123456789, that is very interesting. It is a very good way to get a secure tenancy, as you say.

However, my son fully intends to extend his lease!

seven-day-weekend

HappyMJ wrote: »

The leaseholder. What if the leaseholder has no dependants and didn't care that it would revert to the freeholder? Why bother extending the lease every 20 years at a cost to the leaseholder and the value of the property going to the government on death or when the leaseholder goes into a retirement home therefore having to pay for it from their own money. If they have a worthless property then the council can take it if they wish to cover care expenses but it won't be worth anything.

I know a couple who have a lease of 65 years the same as my son, they are in their late 60s/early 70s, they are not going to bother to extend it, all they are interested in is that when they pop off that their son will be able to realise enough from it to extend the lease on HIS flat. (They do own a house as well).

tim123456789

HappyMJ wrote: »

The leaseholder. What if the leaseholder has no dependants and didn't care that it would revert to the freeholder? Why bother extending the lease every 20 years at a cost to the leaseholder and the value of the property going to the government on death or when the leaseholder goes into a retirement home therefore having to pay for it from their own money. If they have a worthless property then the council can take it if they wish to cover care expenses but it won't be worth anything.

A statutory extension is an additional 90 years, so you only have to do *this*once in your lifetime (assuming you stay in the property).

Suffering all the aggro involved and then choosing a non-statutory option ofa new 99 year lease, instead of the statutory extension is a foolish thing todo. Though quite a few do :-(

tim

katejo

tim123456789 wrote: »

A statutory extension is an additional 90 years, so you only have to do *this*once in your lifetime (assuming you stay in the property).

Suffering all the aggro involved and then choosing a non-statutory option ofa new 99 year lease, instead of the statutory extension is a foolish thing todo. Though quite a few do :-(

tim

But what does the leaseholder need to do to secure their statutory extension? I had a very difficult and rude/uncooperative freeholder. I suspect that he would have created all the obstacles possible. Luckily I didn't have to try as I sold up and got a house but I heard of others in my road being quoted large sums to extend their leases.