Buying a flat with 17 year lease

ruby2sday

So I’m a first time buyer and I found a flat up for auction in London that I can actually afford but the catch is, it’s only got 17 years left on the lease. There seems to be no way of finding out how much it would cost to extend the lease, from my research it could be anything from 70k to 150k. Also the price of the property is only the guide price and could go up massively in the auction. How do I know what my budget is at auction with no real idea of the lease extension price?

Will mortgage lenders not go near it or will they be able to include lease extension in the mortgage somehow? (I’m aware that cash is required for auction) If there’s no way to know the lease extension cost, does whoever buys it just take the big risk? I know it probably seems more complicated than it’s worth but I’m really hung up on it as it’s still got it’s original mid-century decor and is a real steal for it’s size and location!
Any advice on what to do in this situation would be much appreciated!

csgohan4

you will find it very very difficult to find a lender who will touch a 17 year lease nor will they bolt on the costs for you.

Lenders only lend on the buying the building not the associated costs with it

eddddy

You won't get a mortgage to buy it with a 17 year lease.

(Plus it's difficult to buy any property at auction with a mortgage.)

If you have the cash to initially buy the property at auction, you should be able to arrange a 're-mortgage' to coincide with the lease extension. i.e. The mortgage will pay for the lease extension.

ThePants999

With a 17-year lease, you're not buying a property, you're signing up to a long-term rental where you pay all the rent in advance. They don't do mortgages for that

PasturesNew

Forget it. This is a very limited market - to cash buyers who know what they're doing and can afford to measure/take the risk. You will not get a mortgage.

If you did want it ... the only way would be for somebody you know to lend you the cash, on the understanding that it might go horribly wrong .... so they didn't take you to court if you had future issues extending or getting it mortgaged. e.g. soppy parents awash with cash and time to wait.

The flat + the cost of the lease won't be far off what one would sell for if it had a full lease.

It's a cash/experienced buyer's market. Not every house for sale is suitable for everybody .... VERY few people would ever be able to pull this one off.

downhillfast

Another issue would be that you wouldn't be able to extend the lease straight away as you need to have owned it for 2 years unless the process has already been started by the previous owner - which if it's up for auction probably means it hasn't been...

Cakeguts

This is not a suitable property for a first time buyer. Find something else. You might have to change jobs to one in a cheaper part of the country.

AdrianC

How much would the flat be worth with a full lease?
How much is the auction guide price?

mdori003

ruby2sday wrote: »

So I’m a first time buyer and I found a flat up for auction in London that I can actually afford but the catch is, it’s only got 17 years left on the lease.

If it sounds too good to be true it probably is...