70 year lease and £20,500 to renew advice please

widski

Hi

I looked at a flat today the property is on for £245,000 and it seems very reasonable.

However the lease is only 70 years and to renew the lease would cost £20,500. This according to the agent who told me that was what the owner would have to pay to extend it only 50 years.

Does this not seem very steep?
Will this affect the level of mortgage i could get on the property? will the banks look down on a property with a short lease?
is the lease short at 70 years or is this common?

i dont think a freehold at the moment is doable but i dont know as i have not spoken to the others in the block.

thanks in advance for your advice.

dmg24

Have a look at www.lease-advice.org, there is information as to how this figure is calculated, so you can see if it is accurate.

thewelshman_2

Hi OP, I went through this 2 years, ago.

The minimum extenstion to a lease is 90 years, and the ground rent defaults to peppercorn i.e zero. This makes a property much more saleable.

We paid 16k to extend the lease on our flat from 72 years to 162 years as that was the only way we could get the sale to go through.

My advice to you is to negotiate with the vendor, I would look at meeting them halfway, with them paying 10k of the extension or reducing the asking price accordingly.

I went through 4 buyers before I ended up paying for the lease extension. Most people are disuaded by their solicitor.

20k does sound high, we had to pay 16 because the ground rent was 720 quid a year.

There are maximum amounts that can be charged for lease extensions, using a rather complicated calculation. So don't take the 20k for granted, it could be much less or much more.

Hope this helps

thewelshman_2

Forgot to say, 70 years would be fine for the mortgage company as mortgages only last 25-30 years on average. I know nationwide didn't have a problem with mine (77years)

silvercar

Only after two years ownership do you have the right to extend the lease.

To decide if it is worth the fee quoted you need to find the value of the properties with the lease already extended. Then you need to arrange for the lease extension to be done at the time of purchase (ie technically by the current owner). The price you pay for lease extension+ purchase price should be a few thousand less than if you were buying the flat with a long lease, to compensate you for the hassle this will cause you. It will also ensure you are getting the lease extension for the price the estate agent is quoting. If you buy the property and are forced to wait the two years, who knows how much it will then cost.

The hassle factor of sorting this out will depend on how much work has already been done and how efficient /cooperative the managing agent/ freeholders are. It could add a couple of weeks to a couple of months on to the timescale for getting the property; which is why a lot of buyers will walk away and hence the price reduction you should expect.

thewelshman_2

Sivercar is correct, (I thought it was 3 years, but I may well be wrong).

Definitely get it done prior to sale going through, remember the seller is going to struggle to sell with a lease this short.

I personally would try and get the seller to pay for the whole amount.