Extending short lease at exchange of contracts

eshroom

I am looking at buying a property with a short (63 years) lease. The vendor does not want to serve notice (I am unsure why, but they simply refuse to do it).

I have managed to get in touch with the freeholder, who seems like a very friendly chap. Is it possible subject to his agreement, to extend the lease at the time of exchange (or completion), of course I would assume any relevant costs. And if this is possible, would a bank then also agree to lend seeing as they would be lending on a property with a long lease?

I understand I only qualify for lease extension after 2 years of ownership, but I also understand that I can extend it informally, assuming we agree a price, before the 2 years is up. Is my understanding correct?

eddddy

Yes - everything you suggest should work ok.

Obviously, explain your plans to your solicitor, and he/she should ensure that both transactions are linked. (So you don't end up with just the lease extension, but not the lease, or vice versa.)

Also, make sure the freeholder is quoting a fair price and fair terms - in line with the guidelines for a statutory lease extension.

RichardTheComic

watching this thread with interest, in a similarish position, although my partner is buying a shared ownership lease where the housing association is the headlease.

Hoploz

Are you buying with a mortgage? If so the lender would need to know what's what with the lease and have it all done properly

eshroom

Very confused. Conflicting answers. I am hoping to buy with a mortgage, but on LandLord Zone it has been suggested I wouldn't be given a mortgage under these circumstances - even though the lease extension and completion would happen concurrently.

pinkteapot

You need to ask a mortgage broker for advice. Try asking on the "Mortgages and endowments" board.

Mortgages are sometimes made subject to things like personal debts being paid off on completion, so I wonder if they can be made conditional on a lease extension, but I have no idea what the answer is. Guess it depends on whether the bank can get any guarantee that it will actually happen?

PasturesNew

Best/proper way to do it would be to get the current owner to apply for the lease extension and when your money hits their solicitor, for their solicitor to pay the lease extension and to then transfer that as part of the sale to you, so you receive a proper lease extension, in the right way, without the current owner having to fork out money up front.

eshroom

PasturesNew wrote: »

Best/proper way to do it would be to get the current owner to apply for the lease extension and when your money hits their solicitor, for their solicitor to pay the lease extension and to then transfer that as part of the sale to you, so you receive a proper lease extension, in the right way, without the current owner having to fork out money up front.

Yes, unfortunately, for some reason, the vendor refuses to serve notice or apply for a lease extension.

Hoploz

Speak to a broker who deals with the whole market, they should be able to advise. There will probably be lenders who will take on properties with short leases - yours isn't super-short so someone would probably consider it. But other lenders will require the lease to be extended as a condition of the loan, or won't lend at all.