Short lease flat - keep or sell?

chrishar

I am looking at buying somewhere to live and either want to sell or keep my current consent to let flat, details as follows:
Lease 63 years, value 190k, rent 750.
Mortgage 77k if I keep would increase to 130k proper buy to let to gain a 53k deposit for another property ( to live in).
Is this worth keeping as it is? I can't really afford a lease extension AND buy another place as I need the money for a deposit for the property I will live in.
Thanks

Hoploz

It's hard to say the current value bearing in mind the short lease. It could be 190k with long lease, but if it's going to cost 10k+ to extend then presumably a buyer will ask for that to be taken off and therefore the value would be nearer 180k.

Just something to bear in mind when crunching the numbers. It could affect a mortgage valuation for your BTL mortgage in the same way, ie if you want to borrow 75% LTV to take out the 25% equity.

chrishar

The 190 k is what an estate agent estimated recently. With a long lease they said 220-230. Extension would cost 21k.

AnotherJoe

Pay the £21k to extend the lease to gain an extra £10k and stop the flat depreciating in value as the lease length keeps dropping. Then sell the flat and buy your new main residence, which would also save money since you wouldn't pay the extra SDLT for a second property.

Hoploz

chrishar wrote: »

The 190 k is what an estate agent estimated recently. With a long lease they said 220-230. Extension would cost 21k.

Have you approached the freeholder about the extension?

I think I would market at around 220+k and get a firm figure, and get the ball rolling on an extension with a view to accepting 200 or slightly less perhaps with the buyer continuing the lease extension.

Then take the cash and run without the extra 3%

£750 rental income is not a huge return ... Where is the financial benefit to staying? Is the property owned outright or do you still have a mortgage? The lease is going to have to be extended sooner or later and will only cost more further down the line so I think there's not a great deal of profit month to month, there's only the capital gain to appreciate.

ognum

chrishar wrote: »

I am looking at buying somewhere to live and either want to sell or keep my current consent to let flat, details as follows:
Lease 63 years, value 190k, rent 750.
Mortgage 77k if I keep would increase to 130k proper buy to let to gain a 53k deposit for another property ( to live in).
Is this worth keeping as it is? I can't really afford a lease extension AND buy another place as I need the money for a deposit for the property I will live in.
Thanks

You have now posted the same question multiple times over the last year or so.

How has the situation changes?

chrishar

Hi the situation hasn't changed much, just want to make the right decision. I've always been told property is good to own and never sell, but maybe things have changed now.

Hoploz

It's always good to hold an appreciating asset.

However, your asset currently has the lease issue, which isn't going to go away, and in fact will cost more the longer it is left.

You can find the cash and renew the lease and keep it, but then you will have less cash to put in to your next property. It's a bit of a cake-and-eat-it thing.

As you cannot afford both, I'm suggesting you dump the flat with the lease issue and move on to something which hopefully won't.

chrishar

Thanks appreciate your advice. I could probably do without the hassle of btl to be honest and maybe concentrate on getting a better job!

chrishar

Hoploz would you suggest I extend the lease via credit cards money transfer as I have a quote already for 21k from the freeholder. Or would you just market it with optional extension for a new buyer?

chrishar

It has also been suggested the diminishing asset could be seen as an income only and the capital depreciation ignored as the remaining lease will probably outlive me. Is that bad advice?