70 years lease on flat. Worth to buy?

Joy_mate

Hi all.
Is it worth to buy old flat with 70 years lease remaining? Current ground rent is £70.
What will be the consequences if buying a flat with shirt lease and when these problems will start arise?
I don't have any idea on when and how to play with house lease.
Thank you.

hazyjo

Either the seller renews it as part of the sale, or you pay for it to be renewed. Will cost thousands - probably over £10k. You'll have to own it for two years before you can extend. The cost gets higher yearly.


You are very unlikely to get a mortgage (same when you sell it on).


Hard to sell/mortgage when lease falls below around 80 years.


Jx

AlexMac

I assume you've looked here on MSE...?
http://www.moneysavingexpert.com/mortgages/extend-your-lease

SqueezyPig

I looked at this recently but with a much shorter lease and found there were some willing lenders.

I did find a useful table showing how much you need left on the lease with different lenders but as I'm a new user it won't let me post a link (it was on the council of mortgage lenders website). I spoke to HSBC about getting a 25 year mortgage on a property with a 57 year lease and they had no problem with it. There were plenty that would lend with either 55 years total and/or 30 years remaining at the end of the mortgage, just mainly banks rather than building societies.

It will be harder to sell when you leave if there's not much left though, or at least massively reduce the value, I got the impression that extending the lease pushed up the value a lot more than the cost of extending the lease (and while looking I found several flats with really short leases that were being sold as cash buyers only, I assume because of the impossibility of getting a mortgage on them).

For the one I was trying to buy I had a price for the lease extension (£10k + fees) and the intention to keep that money back from the deposit to cover the cost of extending the lease, the seller was willing to start off the process before I bought so I didn't have to wait 2 years. This was a cheap flat though so I imagine it is a lot more expensive with more expensive flats.

If you can afford to extend the lease then it's a good way to get a cheaper flat, but be aware that if you don't extend it you could have problems remortgaging down the line and when it comes to selling.

AdrianC

http://www.lease-advice.org/calculator/

Let's say it's a non-"prime Central London" flat, which would be worth £150k with a full lease. You're looking at about £8-9k to renew the lease. Leave it two years, and it's likely to be £9-10k. That rapid rise is entirely because of the increase in marriage value, because of the increasing difficulty in financing the flat impacting on the short-lease value.

Think about it from the lender's point of view. If you borrow the money over 30yrs (not unusual for a mortgage term) and they repossess near the end of that term, then they have a flat with only a 40yr lease remaining. VERY hard to shift.