Selling flat with 67 years leasehold - Advice needed!

Slopesk

Any advice on this situation is very welcome please!


My partner and I both live in Sydney Australia, My partner has a flat in the UK he has pretty much forgotten about over the years - the rent just covers the mortgage & ground rent etc etc.. it ticks over.


However, we now want to sell it and further investigation has shown the property only has 67 years lease left.


Can someone advise the options on this?


I appreciate no-one can get a mortgage on a property with this lease - but we do not have the money to pay to extend right now. So can we sell the property and extend the lease from the equity on the property? Or this something you have to do before selling? What are the steps please?


We have contacted the freeholder for their fees to extend. But using the tool online, it seems it is completely out of our budget range.


I am a little out of the UK property market process and would appreciate some guidance on how to approach this!


Thanks

anselld

It will still sell at the right price.

You should probably serve S42 notice on the freeholder prior to sale. This starts the lease renewal process without significant cost and allows the buyer to continue the process without waiting for two years of ownership.

You can either sell through a normal agent (priced accordingly) or though auction.

You will be looking for a cash/investment buyer if you are selling with tenants in place anyway. Hopefully your agent has kept rent up to market rates and a reasonable state of repair otherwise you will take a further hits on price.

horseymchorseface

with that lease, don't expect it to be go for full price, you will need to take a large hit I am afraid.

eddddy

Slopesk wrote: »

We have contacted the freeholder for their fees to extend.

It's probably better to look at it this way...

You have invited the freeholder to suggest a price and terms for a lease extension.

When you see the freeholder's suggestion, you might then make a counter offer. (Bearing in mind that a freeholder's initial suggestion may be completely ridiculous.)

Who comes out best in the negotiation will depend on who is best at negotiating and/or who is most desperate. (This process is often called "an Informal Lease Extension")

The best outcome might be that you agree good lease extension terms with your freeholder, an then sell the flat with a lease extension on completion.


For example, you advertise the flat as £200k with an extended lease. When you sell, £175k goes to you and £25k goes to the freeholder for the lease extension.

That way it can be sold to somebody who needs a mortgage. (Otherwise, it would be very difficult to get a mortgage with a 67 year lease.)

But obviously, you need a co-operative freeholder to make this happen.

Bigrachel

Working with building surveyors, we had to extend a lease to a minimum of 80 years to be able to sell it. I'm not sure whether it's a legal thing but it's worth speaking to a surveyor.

I think it would be very hard to sell if it only has 67 years left. Where is the flat situated?

strawberries1

See Leasehold advisory service here. http://www.lease-advice.org/faq/can-the-seller-of-a-flat-start-the-lease-extension-process-for-the-buyer/

It is possible for the seller, if they have owned the lease for at least 2 years, to serve a Section 42 notice to start the lease extension process and assign the benefit of the notice to the purchaser. This means that the buyer will not have to wait 2 years to extend their lease. There is no prescribed form for the assignment but it needs to be clear that the purpose of the notice is to assign the benefit of the Section 42. This has to be done before, or at the same time, as the lease is legally assigned.

Alternatively it may be possible to extend the lease informally by agreement with the landlord either before or after the sale. If you are informally negotiating there are no rules and so you cannot insist on the landlord agreeing to grant an extension or transferring the benefit of an agreement to the buyer.

Cakeguts

I would suggest that you get what you can for it in a property auction. It would be a lot less hassle.

Harryp_24

Yeah I don't think paying for the extension with the proceeds from the sale will get you the same amount as if it was already extended. You still won't get a buyer with a mortgage on it. Either continue to rent it out or sell at auction/cash buyer only.