Lease Extenion on first time buy

Crofts

Hi,

I'm looking to purchase a flat with 71 years left on lease for 97000.

Should it be straightforward to get the seller to get a statement 43 issued so I wont have to wait 2 years to get the lease extended. Or could the lease be included in the sale price? What's the best option forward.

If I was to end up selling the flat in another couple of years would it be worth getting the lease extended at all, should it add value to the property? Or should I just sell it on without a lease extension.

Would it potentially loose a lot more value?

Thanks

eddddy

Crofts wrote: »

Hi,

I'm looking to purchase a flat with 71 years left on lease for 97000.

Are you buying with a mortgage? If so, is 71 years acceptable to your lender?

If not, you will have to try to arrange for a lease extension on completion (or before).

Crofts wrote: »

Should it be straightforward to get the seller to get a statement 43 issued so I wont have to wait 2 years to get the lease extended.

I guess you mean a section 42 notice. You just have to get the seller's agreement to do it (some sellers can't be bothered) - the fees will be a few hundred pounds.

Crofts wrote: »

Or could the lease be included in the sale price?

It could be. As above, you could go for a lease extension on completion. But you need to negotiate a mutually acceptable deal with the freeholder. This often proves impossible.

Crofts wrote: »

If I was to end up selling the flat in another couple of years would it be worth getting the lease extended at all, should it add value to the property? Or should I just sell it on without a lease extension.

The flat will be even harder to mortgage with less than 70 years on the lease, So it's value might drop dramatically.

Crofts

If a section 42 is served during the sale process then how long do you have to act on it?

Does it work out more expensive then going down the statutory route after 2 years?

Thanks

eddddy

Crofts wrote: »

If a section 42 is served during the sale process then how long do you have to act on it?

The process starts immediately once the section 42 notice is served.

- The freeholder has up to 2 months to reply with a section 45 notice.

- You then have up to 2 months to negotiate the price.

- If you can't agree a price, you have up to six months to ask a tribunal to determine a price.

If you miss any of these deadlines, you will have to wait until you've owned the flat for 2 years and start the process again by serving another section 42 notice.

Crofts wrote: »

Does it work out more expensive then going down the statutory route after 2 years?

Serving a section 42 notice is going down the statutory route.

(You can arrange an informal lease extension with the freeholder at any time, on any basis. But you are likely to get a worse deal.)

Crofts

Thank-you for your reply. This is the most sense I have got out of anyone so far, including my estate agent and solicitors. At only 71 years remaining would you say it was a huge risk to wait 2 years and get the lease done then. Hopefully it wouldn't make to much difference from 71 to 69?

eddddy

It's probably best to try putting 71 years and then 69 years into one of the online lease extension calculators, and see how the numbers differ.

For example:
http://www.lease-advice.org/calculator/
http://www.moneysavingexpert.com/mortgages/extend-your-lease


I guess there could be issues like:

- You'll have to wait 2 years to start the process
- If the freeholder is difficult, and the Tribunal is busy, it might take up to 18 months to complete the extension process.

So up to 3.5 years in total.

If something happens (e.g. you lose your job and/or you get a job in a different area) and you have to sell quickly in say 1.5 years without a lease extension, you might not get a good price.

But perhaps that's unlikely.

Crofts

Thanks for the reply.

I guess I need to figure out if I was to sell the flat with the lease extension would it definitely be adding money to the property and worth the extra money paid for the lease extension. How can I try and work this out?

So, say the flat purchase price is 97000 and the lease extension costs 12000

How can I know that it will be re-valued at 109000+ when I come to sell it.

thanks

eddddy

Crofts wrote: »

How can I know that it will be re-valued at 109000+ when I come to sell it.

Ask a few estate agents for their opinions.

Letting the lease drop below 70 years might have an impact on price, because a number of mortgage lenders will not lend beyond that.

See: https://www.cml.org.uk/lenders-handbook/englandandwales/question-list/1846/