House with a lease of 99 years

StrawberryMoon

Hi, I am new to the forum and I'm looking for some advice please.

Myself and my boyfriend are first time buyers and are in the process of buying a house, however the searches have identified that the house is leasehold on a 99 year term, with currently 61 years left (.

Mortgage Broker cannot offer much advice at the minute as he has never come across this before, although has informed us that we are unlikely to get a mortgage as the term is short.

Vendors have been contacted to see if they are willing to extend the lease or buy it.

We are now undecided on where to go from here. I have looked into this on-line today but I am a little confused as leasehold of houses seem to differ from that of flats.

From what I can gather, the lease can be extended for a further 50 years or bought, looking at thousands as it has fallen below the 80 year mark? (Or is this just for flats?). If the vendors agree to extend/buy, the value of the property could increase and therefore they could ask for more once this has been done?
We are not prepared to pay any more for the house than was accepted due to the amount of renovation and updating the property needs. If the vendors refuse to extend/buy the lease then we cannot obtain a mortgage and therefore cannot purchase the house so it seem like a lose-lose situation for us.

Another concern is the time it may take for the vendors to extend/buy the lease, I have read this could take many months.

We are of the opinion that the best course of action is to walk away from this property but I am looking for advice on what others think and if I have missed anything out.

Thanks for reading and I hope you can make sense of it.

Talc1234

Seems to be too much hassel, I would walk

kingstreet

There are lenders who will accept a short residual lease term. Have a look through the list here;-

http://www.cml.org.uk/cml/handbook/englandandwales/question-list/321

whether proceeding with such a purchase is a good idea is another matter.

Mr_Moo_2

You need to get the Vendor to extend the lease (at their cost), which will take time, or drop your offer by the potential cost of extending the lease. You'll need to do something as when you come to sell the problem be even worse.

One to walk away from......

princeofpounds

This is not uncommon. It's not the 99 years that is the problem - that's quite normal. It's the amount of years remaining.

It's not hard to solve the problem, but it is a time-consuming hassle.

Normally the vendor will pay for and arrange an extension. If the freeholder is a pain then they might need to go to the LVT, which takes time, but they will get an extension.

If the vendor does not have the resources or time then they will need to sell to a cash buyer or someone borrowing from one of the few lenders who will lend (which typically will cost more) and so they are looking at a reduced price to compensate.

If you own it then you will need to wait 2 years before you can force a lease extension.

You should tell the vendor to sort it out and forget about it until they do so.

If you buy now, you will need a chunky discount to account for the more expensive mortgage you will take, the bill for a lease extension, and the hassle.

StrawberryMoon

Thank you for the replies.

My boyfriend is optimistic we can proceed, whereas I am leaning more towards pulling out of the sale so we have decided to wait a week/two and see what the vendors come back with before making a decision.

Thanks again

Noddy32

I sold a flat approx 18 months ago it was a leasehold flat. The original lease was 99 years with a peppercorn rent. Unfortunately the lease term was <80 years when we sold and the buyer obviously wanted it extended. It cost us £8k for the pleasure plus independent valuers costs. This went straight into the pocket of the leaseholder who by chance owned the upstairs flat (many years ago they owned both properties) this was most annoying as he was a bit of an !!!!. Quite frankly I wouldn't purchase a leasehold property again after this experience. The property was only worth £100k I feel when I purchased the flat 7 years prior this should have been highlighted by my solicitor acting at the time. Live and learn....

Tumtitums

I am a first time buyer and from my experience you should note
i) Its my understanding that most leasehold properties you cannot extend the lease in the first 2 years of living there
ii) Once 80 years is reached then a marriage value is charged during lease extensions. This can make a significant increase to the cost of lease extensions
iv) Go direct to a few mortgage lenders websites to get a general feel for what they require in terms of the number of years left in the lease
v) I looked at a property in which it had taken 9 months for the vendor to extend the lease
vi) As a result if the property has less than 82 years left then i just am not interested in this hassle. There are properties which have over 900 year leases so why bother with this ?

theGrinch

walk away and look for something else.