Disaster - HSBC have valued the flat at 20k under what I offered

chunkytfg

ForzaFifer wrote: »

I’m not sure that’s why it was devalued to be honest, would the bank know how long there was left on the lease when they went to value it?

I’m not keen at all on buying a property with a short lease, I was being told the vendor was in the process of renewing it and it would have at least 125 years on it.

I guess thats what needs clarifying then. Whats happening with the lease extension and will it be complete before you were to complete? Then speak to the Lender to see why the valuation was lower? Was it based on a 70 year lease or a ~125year lease?

Until you know those answers it's not really possible to make a decision

ForzaFifer

The bank are telling me that the lease wasnt an issue in the valuation, it was devalued for other reasons, mainly because it is above a shop and on a main road.

My solicitor has told me it has 68 years left on the lease and in his opinion unmortgageable as is.

So quite frustrating really.

muhandis

You might have already seen it but if not, MSE has a very good article on leasehold-extensions here, with everything explained in simple terms

https://www.moneysavingexpert.com/mortgages/extend-your-lease/

The highlights are -

---

If your lease is ticking down to 80 years, READ ON!
We want to sear a point onto your brain. There is a magic number of years at which leases become much pricier to extend. That magic number is 80.

Freeholders sit around praying you let your lease drop to 80 years or less, as then they rake in the cash. This is because after that you will pay 50% of the flat's 'marriage value' on top of the the usual lease extension price. Marriage value is the amount of extra value a lease extension would add to your property.

If your lease has 83 years left, it's time to really start looking seriously into this.

If you're a flat-hunter, alarm bells should screech if a lease is nearing or below 80 years – don't just accept estate agents' promises of easy extensions.

You have to have owned the flat for two years before you can extend. A seller can get the ball rolling and pass the rights to the purchaser. But if a buyer waits until they've completed the purchase, it'll be another two years before they've a right to extend.

---

Personally, I would keep looking as I wouldn't bother with the hassle of a lease extension and the limited mortgage options for a lease with less than 70 years on it.

ForzaFifer wrote: »

The bank are telling me that the lease
wasnt an issue in the valuation, it was devalued for other reasons, mainly because it is above a shop and on a main road.

My solicitor has told me it has 68 years left on the lease and in his opinion unmortgageable as is.

So quite frustrating really.

Thrugelmir

ForzaFifer wrote: »

Flats in the area aren’t selling much at the minute, so I can’t tell how much they have been going for.

Another indication as to the down valuation given.

ForzaFifer

muhandis wrote: »

You might have already seen it but if not, MSE has a very good article on leasehold-extensions here, with everything explained in simple terms

https://www.moneysavingexpert.com/mortgages/extend-your-lease/

The highlights are -

---

If your lease is ticking down to 80 years, READ ON!
We want to sear a point onto your brain. There is a magic number of years at which leases become much pricier to extend. That magic number is 80.

Freeholders sit around praying you let your lease drop to 80 years or less, as then they rake in the cash. This is because after that you will pay 50% of the flat's 'marriage value' on top of the the usual lease extension price. Marriage value is the amount of extra value a lease extension would add to your property.

If your lease has 83 years left, it's time to really start looking seriously into this.

If you're a flat-hunter, alarm bells should screech if a lease is nearing or below 80 years – don't just accept estate agents' promises of easy extensions.

You have to have owned the flat for two years before you can extend. A seller can get the ball rolling and pass the rights to the purchaser. But if a buyer waits until they've completed the purchase, it'll be another two years before they've a right to extend.

---

Personally, I would keep looking as I wouldn't bother with the hassle of a lease extension and the limited mortgage options for a lease with less than 70 years on it.

I have had a quick read through that, and i think it is way too much hassle for me to be dealing with all that, especially since my solicitor has told me it would cost around 23k plus costs to renew. So definitely not worth it for me at all.

Im tempted at this stage to just say 260 final offer and the vendor pays for the renewal. A bit cheeky maybe but the vendor has been messing me around for ages, and his options are running out.

Oddly, HSBC have told me it isnt a problem for them as long as the lease still has 30 years on it after the mortgage has been paid.

dawid1914

i deffo tots agree with all that to be honest

chunkytfg

ForzaFifer wrote: »

I have had a quick read through that, and i think it is way too much hassle for me to be dealing with all that, especially since my solicitor has told me it would cost around 23k plus costs to renew. So definitely not worth it for me at all.

Im tempted at this stage to just say 260 final offer and the vendor pays for the renewal. A bit cheeky maybe but the vendor has been messing me around for ages, and his options are running out.

Oddly, HSBC have told me it isnt a problem for them as long as the lease still has 30 years on it after the mortgage has been paid.

If you're tempted to still buy it but also prepared to walk away then be extra cheeky. Offer 240k and if they are not interested walk! then when it's still on the market in april try again :beer:

csgohan4

I would walk, 70 years is not very long and you have to cough up more to extend the lease

ForzaFifer

Ah well, he knocked back my final offer and so it’s back on the market, it’ll be interesting to see how he gets on.

��