Anyone have experience on selling a house with a short lease?

rachael88

I am selling my shared ownership house and it only has 72 years left on the mortgage, I informed the estate agent who said not to worry about it and she'd inform potential buyers to check their mortgage company are okay with the short lease.
Fast forward past accepting an offer, instructing a solicitor and onto queries, my estate agent said the buyers solicitor has queried the lease but not to worry as long as the buyer can get a mortgage on it it will just be bounced back. My solicitor has just emailed to ask if I have considered extending the lease?!
I can't get hold of my solicitors or estate agent (guessing they've left the offices for the day) but as far as I'm aware there is no way I can extend the lease unless I staircase to 100%.
Really hoping the buyer's mortgage company will accept 72 years and this is just a future thought for the buyer.

eddddy

rachael88 wrote: »

I...as far as I'm aware there is no way I can extend the lease unless I staircase to 100%.

With shared ownership, you cannot 'force' the freeholder to extend your lease.

But your freeholder might be willing to extend your lease informally (voluntarily). You can ask your freeholder.

Similarly, there is no law saying how much they must charge you for the lease extension - so they could ask for a 'silly' price. But you may or may not be able to negotiate them down to a sensible price.

But as your freeholder is a Housing Association (presumably), hopefully they won't try to rip you off, and they will only ask you for a sensible price at the outset.


But if you want the power to 'force' your freeholder to extend your lease at a reasonable price - you'll have to staircase to 100%

rachael88

Thanks, that is hopefully an option then. I don't think the housing association actually owns the freehold, on the paperwork I have it has 4 names but they have no connection I can see to the housing association.
If I do need to extend the lease and the freeholder agrees would I have to pay 100% of the lease extension or do you think the housing association will pay 50% if I ask? Also I had an independent valuation and could only sell at the market value or less, would the lease extension add value to the property and if so could I ask my buyer to increase their offer to cover at least some of the cost?
I know I sound like i'm money grabbing but if this is going to cost me thousands i'm going to struggle to raise the funds along with keeping my credit clear for my next mortgage and getting enough of a deposit from this sale to cover the fees and deposit.

eddddy

rachael88 wrote: »

I don't think the housing association actually owns the freehold, on the paperwork I have it has 4 names but they have no connection I can see to the housing association.

Hmmm... that gets messy. If the Housing Association was the freeholder, they're more likely to ask for a fair price.

If the freehold is owned by a bunch of investors, for example, they're likely to want to make a big wedge of cash from a lease extension, and ask for a much higher price.

Just to double check - what paperwork has the 4 names on?

rachael88 wrote: »

If I do need to extend the lease and the freeholder agrees would I have to pay 100% of the lease extension or do you think the housing association will pay 50% if I ask?

Given the complications around the freeholder - I would just ask the Housing Association if you can have a lease extension, and how much it would cost. And see what they say.

rachael88 wrote: »

I know I sound like i'm money grabbing but if this is going to cost me thousands i'm going to struggle to raise the funds along with keeping my credit clear for my next mortgage and getting enough of a deposit from this sale to cover the fees and deposit.

Assuming you actually get a price for the lease extension, I would present it to your buyer like this...

• You've agreed to buy my house for £x.
• My freeholder has offered a lease extension of n years for £y
• If you want, you can have the lease extended on completion - by paying me £x and paying the freeholder £y

"Lease Extension on Completion" is a concept that any decent EA will be familiar with, and a solicitor should certainly be familiar with.

rachael88

I have the 'official copy of register of title' which has the length of the lease and other information. In section C it says the annual rental charge of £x created by a conveyance between of the freehold estate dated 29 September 1834 made between (1) name (2) name (3) name (4) name and (5) name.
I've presumed these are the freeholders?
Thank you so much for replying eddddy, I think I might actually be able to sleep tonight with the hopes this can be sorted out and I wont be stuck with a house I can't sell for the foreseeable future.

eddddy

rachael88 wrote: »

I have the 'official copy of register of title' which has the length of the lease and other information. In section C it says the annual rental charge of £x created by a conveyance between of the freehold estate dated 29 September 1834 made between (1) name (2) name (3) name (4) name and (5) name.
I've presumed these are the freeholders?

Ok - that's why I asked the question.

It sounds like those people were the owners in 1834.

Assuming the document you have relates to the freehold title, further down - maybe on the 2nd page - does it say "B Proprietorship Register"? That section should give you the name of the current freeholder - but they will be called "Proprietor".

Or you can get up-to-date details of the freehold title for £3 here:
https://eservices.landregistry.gov.uk/eservices/FindAProperty/view/QuickEnquiryInit.do

rachael88

Ah, when referring to the proprietor in the proprietorship register it says PROPRIETOR: my name? further down section C it says 'the land is subject to the following rights reserved by a conveyance of the freehold estate in the land in this title and other land dated 17 June 1966 made between (1) Unilateral property company limited (vendors) and (2) name (purchaser)' though so maybe that is the updated owner.
I'll contact my solicitor first thing in the morning then the estate agent and then the housing association and keep my fingers crossed for some good news!

eddddy

rachael88 wrote: »

Ah, when referring to the proprietor in the proprietorship register it says PROPRIETOR: my name?

Ok - so that sounds like you are looking at the leasehold title. You need to look at the freehold title.

(Under the section "Property Register" does it say "The Freehold land..." or does it say "The Leasehold land..."?)


So if you want, you can download the freehold title details for £3 from here: https://eservices.landregistry.gov.uk/eservices/FindAProperty/view/QuickEnquiryInit.do

(Make sure you select "Freehold" not "Leasehold")

Alternatively, your ground rent bill probably shows the name of your freeholder.

Or you can just wait and ask the Housing Association if they are your freeholder tomorrow.

rachael88

So I phoned the solicitor who says the buyers solicitor is saying that a lease under 85 years is not acceptable which they've taken to mean that they can not get a mortgage on the house (though i only bought the house 6 years ago).
I've phoned the estate agent which is a branch of the housing association who says the buyer is also using their in house mortgage broker so my estate agent will contact them to find out if the buyer can get a mortgage on a 72 year lease and they put me through to the housing association (the office next door) to discuss extending the lease. The housing association are almost certain they do own the freehold but will double check, they said I would need to get an independent valuation of the cost of the leasehold which is £225, pay on application £300+VAT and pay their legal costs which are £750+VAT and then the cost of the actual extension however they will pay 50% as I only have a 50% share (which was the good news I guess).
They have also said that if I or the buyer were to staircase to 100% I/they would automatically gain the freehold for free. I now earn over double what I did earn when I bought the house and have a decent amount of equity in it so could staircase to 100% but need more space.
I think it's going to be a few days before I know where the buyer stands but obviously there are a number of routes to consider and my head is spinning with it all.

eddddy

So you have lots of options, including...

1) Wait to see if your current buyer can get a mortgage and proceed

2) Tell your current buyer that if they (or you) pay £225, they can find out what a lease extension would cost.

3) Tell your current buyer that if they (or you) pay £225 and £300+vat and £750+vat and the premium, they can have a lease extension on completion.

4) If the current buyer walks away, maybe tell the agent to market the property at 2 different prices. £x for a 50% leasehold share, or 2 times £x for the freehold.
(Assuming the HA will cooperate with staircasing to 100% on completion.)

rachael88

The buyer is going for a different mortgage company, the broker is pretty confident everything will be fine, fingers crossed he gets it! His solicitor has already started the searches so he stands to lose a bit of money from walking away too and he has the intention of stair casing to 100% so other than getting the mortgage, the term of the lease shouldn't affect him.
Our solicitors will carry on working in the background so that as soon as the mortgage is approved we're good to go.
I'm praying this works but at least I know my options if this falls through.