Advertised lease length much less than actual. What to do?

BigPun

I've recently had an offer accepted on an apartment, which was advertised by the estate agent as having around 990 years remaining on the lease.

I've had a formal mortgage offer, following their valuation (they were told at the time the lease was 990 years remaining), but now the solicitor has come back with some of the searches and there are only actually 110 years remaining!

The lender will obviously need to be notified of this, but I'm at a loss as to what I should do. Having 800 years wiped off the lease length is a total shock.

Guest101

It's rare to have a 990 year lease, 110 years is a reasonable length. Certainly well within mortgagability.

anselld

If it affects the value to you then renegotiate the price.

BigPun

Guest101 wrote: »

It's rare to have a 990 year lease, 110 years is a reasonable length. Certainly well within mortgagability.

It's not the mortgagability, it's more that the difference is so enormous, and I feel that it could affect the value. However, as I'm not experienced in this I'm not sure how much it would affect the value.

xylophone

My first home was a flat which started with a 999 year lease when new- around 990 remaining when I purchased it.

HouseBuyer77

The crucial length at which extending the lease becomes more costly is 80 years. So a prospective purchaser will only be put off if the lease is close to that when you're selling.

So how long are you planning on staying? Less than 10 years and there's nothing to worry about, you'll have 100 years or more left, well clear of the 80 years a purchaser may want to stay clear of.

Significantly more than 10 years and maybe you'll want to extend the lease to make the property more attractive but then if you've been living there that long the cost of the lease extension amortized out over the time you've spent there is marginal.

You may find http://www.lease-advice.org/publications/documents/document.asp?item=75 to be useful reading.

It does sound to be a frustrating situation but not a major problem. Perhaps you can utilise it to your advantage and knock a little off the price?

BigPun

HouseBuyer77 wrote: »

...
So how long are you planning on staying? Less than 10 years and there's nothing to worry about, you'll have 100 years or more left, well clear of the 80 years a purchaser may want to stay clear of.

Significantly more than 10 years and maybe you'll want to extend the lease to make the property more attractive but then if you've been living there that long the cost of the lease extension amortized out over the time you've spent there is marginal.
...

I was planning on living in the apartment for around 3 years, and then keeping it for 20 years as a rental. Even after 20 years, there would be 90 years left on it, but I'll be needing to consider the extension, which will eat into the profits of the rental income considerably.

It's incredibly frustrating, as all of the decisions I've made to get me this far were based on the assumption that I'll never need to consider an extension - which i've found can cost tens of thousands.

HouseBuyer77

Even after 20 years, there would be 90 years left on it, but I'll be needing to consider the extension, which will eat into the profits of the rental income considerably.

I think that gives you a solid negotiating argument. Were you to just say to the vendor, I want £X'000 off because I thought the term was longer, with nothing more to support it they might just dismiss it as trying your luck.

However you can say your offer was based upon the idea you'll rent out for 20 years. This will diminish your expected income over that time and had you known this at the offer time you would have offered less.

Work out the lease extension cost were you to extend now if it only had 90 years left and suggest that as a discount.

G_M

and don't forget to quote the original advertising showing 990 years. Just in case the seller says "I never mentioned a 990 year lease. You must be confused with a different property........"

Bart1

I would wonder what else they may have lied about

Richard_Webster

I agree with Housebuyer 77.

Estate Agents rarely check leases and lots of flat owners simply don't know their lease length. Probably wasn't intentional deception - just lazyness and not thinking to check

Unfortunatley because lots of people don't understand it all, unless thelease is really short there is little difference between say a 990 year flat lease and a 110 year flat lease in terms of what the avaearge buyer will pay and estate agents know this.

However I would certainly press ahead with the line of argument suggested by Housebuyer77.