Buying flat with low lease

susshe1

I'm considering buying a flat with a 72 year lease. The seller is open to the idea of getting the ball rolling with extending the lease (avoiding the rule of having to live in the property for 2 years) so that I can pay to extend the lease after completion. The neighbour downstairs owns the freehold. I read an article that indicated that at such a low lease, it might work out the same price to buy a share of freehold from the neighbour and then extend the lease. Would it be possible for the current owners of the flat to start the process of buying share of freehold for me to take over once exchanged instead of just extending the lease? Does anyone have any experience of knowledge of this.
I'd be really grateful for any advice.
Thanks

oli_ro

Hi,

I have done something slightly similar, but I don't recommend it. (search "Lease extension at completion"). My case was simpler though as the flat came with share of freehold and all the other flats extended to 999 a few years ago.
A good conveyancer should be able to advise you. I suggest you do that before you put an offer.

It is not straightforward and don't expect the banks to just go with it. Your problem is that the banks will have to use the current term of the lease for valuation, which will be a problem, because most surveyors assume min 75Y when coming with a price.

Some of the lenders, for example Halifax, expect 75Y at the time of application, period.

The question is: is the flat worth all this hassle ?

moon_river

Technically, yes the cost of extending the lease would be pretty much the same as buying a share of the freehold.

We did come across similar situation before (the sale eventually fell through because the vendor decided not to sell afterall, but it's a different story), but for us, there were only 2 flats in total. The downstair flat owners owned the freehold. Basically they were not keen to sell the share of freehold, which was fine by us. However, one issue that I could think of at that time was, as the neighbour decided to keep the freehold, they are responsible for the upkeep and maintenance of the building. It could be kinda awkward to ask your neighbour to do the repair work. But it could be just me anyway :rotfl:

Our solicitor was very helpful and she said that it's possible that the vendor gets the ball rolling re. extending the lease. Also some lenders will lend with 72 years of lease left.

What we did was politely knock on the prospective neighbour's door and have a chat with them re. the lease extension. That was very helpful IMO.

Good luck with your flat!

susshe1

Thanks Oli_ro and Moon river.

AdrianC

If the neighbour owns the freehold as an individual, then buying "a share" is going to involve the costs of setting up a company (with each of you as equal shareholders), transferring the freehold to it, and then ongoing legal costs for filing accounts etc.