999 year lease

baby_boomer

Another friend has asked me about a flat with a 999 year lease. Two questions.

1) Roughly how might you compare its value, it's in good condition and made of Yorkshire stone, compared to similar size properties with 95 years left on a 99 year lease?

2) Why would anyone create a 999 year lease rather than a shorter one?

Thanks in advance.
baby_boomer

kinger101

It gives the freeholder the opportunity to make a nice sauce for their steak once a year when they collect their peppercorns.

eddddy

I doubt that a 999 year lease vs a 95 year lease would influence a buying decision too much - so it wouldn't impact much on price.

e.g. Somebody likes 2 flats - one with a 95 year lease, the other with 999 year lease - I doubt lease length would be high on their decision criteria.

[Deleted User]

Except that with a 999 year lease you wouldn't ever have to think about
getting it e x t e n d e d

POPPYOSCAR

eddddy wrote: »

I doubt that a 999 year lease vs a 95 year lease would influence a buying decision too much - so it wouldn't impact much on price.

e.g. Somebody likes 2 flats - one with a 95 year lease, the other with 999 year lease - I doubt lease length would be high on their decision criteria.

Yes it would.

When they came to sell if the lease was then less than say 70 years they would have to negotiate an extension if they did not want to limit their buyers to cash only as many lenders will not lend on a lease below this.

zagubov

Depends if there are clauses about how charges can change over time, which could make this a headache for future owners such as our kids/inheritors.

Richard_Webster

A few smaller lenders now want 85 years before they will lend, so 999 years definitely better. However, because not many people understand this the difference in value won't be great.

davidmcn

AFF8879 wrote: »

If you bought a flat with 95 years then that's 25 years til it hits 70. I can't imagine too many people are going to be planning to live in a property for that amount of time, especially a flat.

Hardly that unusual. The seller of my current flat had been here for about 20 years. The landlord of my last flat has owned it for about 20 years and counting.

csgohan4

I would rather buy a flat with 999 years than 95 years, it's not cheap to extend leases you know.

TBagpuss

999 years leases are (or were) a way for the landlord to continue to control how land was used, as well as a way to secure an ongoing income.

If you sell a property, it is wquite dificult to put any long-term restrictions or positive obligations on the buyer; if you lease it to them, even on a very long lease, you can.

Benefits of the longer lease to someone buying the property:
1. No need to worry about renewal or difficulty in selling / mortgaging due to a shorter lease in future
2. Buying ou the lease, if you wish to do so, is likely to be less expensive.
3. In many cases, very long lease = older original lease - often these don't have clauses allowing the freeholder to make huge increases so there is much less risk of the ground rent becoming unaffordable or a major bar to being able to sell in future (I used to have a house built in 1901, under a 999 lease. the ground rent was still £1 year as the original lease set the fuigure but had not mechanism to increase it. But of course you / your friend would need to check the specific lease to see what it said for the particular property concerned.

Soundgirlrocks

Interesting, I look after a block of flats (Director of the free-holding company as well as a leaseholder) We are looking at amending the leases on the property to enable us to sell the garden. We have to consider how long to make the new leases for, I discounted 999 years as it ties the hands of any future management company. We will probably opt for 125 year leases, long enough for it to never trouble any of the current leaseholders but in say 50 years time if money is needed to maintain the block lease extensions can be charged at the going rate and the money put into the sink fund etc.