Negative equity & leasehold property

hazyjo

pinkshoes wrote: »

Are you in receipt of any benefits so that you could qualify for the government boiler scheme?

http://www.boilergrants.info

This needs to be your priority rather than selling. You need to research any sort of scheme that might give you a low interest loan.

Could one of you take on another job to bring in some extra cash?

how much would it cost to rent a two bed property compared to what your mortgage interest is?

If it's going to sell to an investor, or be auctioned, I would not bother with the boiler - especially as there's other stuff that needs doing. Obviously if they're entitled to have a new one for free, that's different


I'm looking at a bit of a wreck at the moment and appreciate everything will need doing - if it had a brand new decent boiler installed where I wanted it, I'd be grateful; otherwise I'd rather they'd just left well alone so I could put my own in where I wanted it, and chosen the make I wanted. It's like when they put a naff kitchen in to sell - I've taken two straight out again before! Would rather they'd left the old one in!


Jx

continualdiamond

StumpyPumpy wrote: »

See in-line for comments

[Edited to add:]Cross posted this with your latest comments - just wanted to add, I can't believe that if your flat has a market value of £85k with an extended lease, that you would get anywhere near £78k/75k without one when you say the cost of an extension would be £10k!


SP

My estate agent last year predicted that it would be worth £85,000 would a lease extension. I didn't get a quote to extend it, it's about £140 to get a quote and my estimate of £10,000 to do so is just from looking online.

For me to get a quote to extend the lease my leasehold company needed a valuation of it with the lease extension so I asked my estate agent for one.

Must point out we're not in tower block flats, they're purpose built in that it's just ground floor and 1st floor. When you walk into the front garden a front door is in front of you for upstairs and my front door is at the side of the property, the whole street is like this.

continualdiamond

Let me try and reply to other's questions....

The boiler hasn't stopped working yet, the hot water tank has and the boiler has been made to now heat hot water as well.

We would have to rent privately and no we don't get any benefits to qualify for a free boiler, I looked into this before getting quotes.

I have rang my mortgage company again and been told they have a shortfall scheme and I can sell in negative equity, they'd get a valuation themselves against what we accept if an offer was made.

AdrianC

continualdiamond wrote: »

My estate agent last year predicted that it would be worth £85,000 would a lease extension. I didn't get a quote to extend it, it's about £140 to get a quote and my estimate of £10,000 to do so is just from looking online.

For me to get a quote to extend the lease my leasehold company needed a valuation of it with the lease extension so I asked my estate agent for one.

OK, there are two ways to extend a lease.

There's the way you seem to describe, by agreement with the freeholder. And then there's the statutory way. This is ALWAYS going to be the cheaper, better way.

https://www.gov.uk/leasehold-property/extending-changing-or-ending-a-lease
http://www.lease-advice.org.uk/calculator/

But... if the property is worth £85k AFTER a £10k extension, then it is NOT worth £75k now. Also, does that £85k take into account the knackered kitchen and boiler? If not, then reduce that value even further. I strongly suspect that, if the peak for similar flats was £92k in 2008, you really are being wildly optimistic and the £85k is after the kitchen and boiler are renewed. If that's so, then I suspect you're probably looking nearer £60k as-is.

continualdiamond

sheff6107 wrote: »

You need to tell us why your credit is poor. CCJs? Missed credit card payments?

Things might not be as bad as you think. If you sort out your credit reports over the next 12 months you will be in a stronger position to take positive action.

You need to sit down with a independent financial advisor / mortgage broker. I have two friends who were in a similar position and with the help of a broker they now own another house and are renting out their old one which was in negative equity.

Our credit is bad due to bad decisions when we bought this flat. We moved in and put in double glazing, bought furniture stupidly all new. My husband had a CCJ and since 2008 we've been in a debt management plan.

We have no credit what so ever, well the mortgage and a car on hire purchase, that is all. Since 2008 we've taken nothing else on and focused on repaying into out debt management plan. This is why nothing is going towards the interest part of the mortgage, but then I know both of us stupidly thought we'd make money on this property and the interest part wouldn't matter as we'd move on happily to a family home and not be in this depressing situation.

It's all down to me when it comes to money, I love my husband to bits but he just ignores everything. I'm the one who has a budget file on the laptop and break down every single thing we need to buy, right down to buying a newspaper etc. I basically have to tell him what he can and cannot buy as otherwise he'd just buy things without thinking what that £10 or £20 spend means.

The quote for the boiler was purely to know how much it would cost as I'm terrified it will give up all together as it's not designed to heat hot water but is now.

I know it's not an option to get credit and I have cancelled the boiler installation date.

My husband wants to wait until after our holiday to put the flat on the market where as I want it on asap and gone due to the lease issue.

Obviously we wouldn't be going on holiday if we funded it, it was a surprise from my parents.

continualdiamond

AdrianC wrote: »

OK, there are two ways to extend a lease.

There's the way you seem to describe, by agreement with the freeholder. And then there's the statutory way. This is ALWAYS going to be the cheaper, better way.

https://www.gov.uk/leasehold-property/extending-changing-or-ending-a-lease
http://www.lease-advice.org.uk/calculator/

But... if the property is worth £85k AFTER a £10k extension, then it is NOT worth £75k now. Also, does that £85k take into account the knackered kitchen and boiler? If not, then reduce that value even further. I strongly suspect that, if the peak for similar flats was £92k in 2008, you really are being wildly optimistic and the £85k is after the kitchen and boiler are renewed. If that's so, then I suspect you're probably looking nearer £60k as-is.

It won't take into account the boiler as that issue arose with the hot water tank whilst I was in hospital after having our 2nd daughter. The kitchen yes.

The flat that sold for the most was in 2008 for £89,995 and then sold in 2014 for £74,500. We bought at the wrong time as paid £82,000 for ours in 2006 and the people before us only paid £59,950 for it in 2004.

The flat above me has just sold for £70,000 but has had no work done to it at all. I'm not prepared to sell mine for less than that as mine is in a far better condition. I know what it looks like inside as a previous person living in it flooded the kitchen with flooded my bathroom and I had to go in to speak to them. I'm hoping mine having the room to extend into the back garden accounts for something as the upstairs flat has the front garden but cannot do anything to it as they're not allowed to obstruct views to the ground floor flat.

StumpyPumpy

AdrianC wrote: »

OK, there are two ways to extend a lease.

There's the way you seem to describe, by agreement with the freeholder. And then there's the statutory way. This is ALWAYS going to be the cheaper, better way.

I don't think it is quite as straightforward as that. I extended a lease with a voluntary agreement on one property rather than a statutory one because I was selling up straight after.

The upfront cost to do so was significantly cheaper than the statutory amount that one of my neighbours pursued (in an identical property) I started the process of getting mine 3 months after they started and got mine completed before they did.

Now, the leasehold I got was certainly a worse deal in the long term - no peppercorn ground rent and 60 years extra rather than 90, but these worse terms had absolutely no impact on the selling price so I ended up very much quids in. In twenty or thirty years the new owners may not thank me for doing the deal, but I won't lose any sleep over that. If I had been planning to keep the place, I would have gone the statutory route, but I wasn't so I didn't and it saved me money.

SP

Richard_Webster

You bought in 2006 with what was then a 69 year lease and 100% mortgage.

Did your solicitor warn you that you would probably have to find the money for lease extension when you came to sell?

69 years was just about mortgageable then and less so now, so if there was no clear warning you might have a claim against them for negligence.

silvercar

I have rang my mortgage company again and been told they have a shortfall scheme and I can sell in negative equity, they'd get a valuation themselves against what we accept if an offer was made.

Then do this. Find yourself a rental, sell up and walk away from something that has become a millstone.

If you keep it you risk having to pay out money you haven't got eg if the boiler completely breaks down. The lease extension will always be a burden to tackle. Selling when its a buyer's market will be more difficult and your kitchen and the whole flat will start to look more tatty as you have 2 kids running around.

I would seriously sell up while your lender will allow it. If you don't take advantage now, the lender may not have a scheme in the future and then you will have bigger problems.

Also if money is tight when you are renting, your debt is all unsecured.

Hoploz

I can't help thinking the best thing to do would be to hang in there for a little while.

If the boiler goes then you must be able to get either some sort of hardship grant or discount, or else get a company to do it on a credit arrangement, with a much lower rate than 34%.

The lease and the kitchen are not relevant unless you decide to sell. As you are managing to pay for the roof over your heads ok then stay as you are for as long as you can, and with any luck the small shortfall of negative equity will even out within the next couple of years.

It will be inconvenient living in small conditions for that time, but hey ho, the children can indeed share, and you are a lot better off than others might be.

Once you can pay off the mortgage with the proceeds of the house then things will be a lot easier.

You clearly don't have the finds for the lease extension, so stop worrying about that for now, it doesn't matter.

Good luck