Stamp Duty and Leaseholds

colinfleming

Hi,


I'm looking to put an offer in on a property with a 69 year leasehold. The value without extending the lease is probably around £480k. Could anyone answer the following questions.


1. I have a mortgage in principle would that still stand if the lease was not extended before I bought the property? Would the bank refuse to offer the mortgage on a lease under 80 years?


2. Would we be able to offer £480k for the property but then pay the owner for the lease to be extended before we exchanged. Assuming this cost £25k would we pay stamp duty of 3% on £480k or 4% on £505k (assuming this is the offer price plus the cost of the lease extension).


Many thanks
Colin

ethank

Every lender will have their own policy. The information is in the Council of Mortgage Lenders Handbook. Visit the website at http://www.cml.org.uk/cml/handbook/e...stion-list/321 - it will list all of the lenders and what their minimum lease length is. I sold my flat in Bedfordshire 7 months ago with 72.5 years to go, there was no issues at all.

You need to have been in the property for two years before you obtain the right for a lease extension. You can ask the vendor to submit the necessary notices to the freeholder and have the benefit of the extension. It could take a long time for the extension to go through between exchange and completion!

RickyC_IFSWP

Typically mortgage providers would want the lease to have a minimum of 30-40 years on top of the mortgage term. However, for your own protection of capital, 69 years is definitely on the short side in my opinion. As you're probably aware, the value of the leasehold will fall as the remaining term on the lease decreases and will also make it harder for the next buyers to secure a mortgage on.

Re #2, this you would need to consult with your solicitor. I would imagine stamp duty is on the purchase price only (£480k).