Buying a flat with a short lease

flower77g

If this has involved an auction, the final sale price at auction would have been lower because of the short lease (those requiring a mortgage would not bid): the original poster hasn't really lost anything, especially as no mortgage required. Many RICS chartered surveyors will carry out the lease extension work as a chargeable service.

Bossypants

flower77g wrote: »

If this has involved an auction, the final sale price at auction would have been lower because of the short lease (those requiring a mortgage would not bid): the original poster hasn't really lost anything, especially as no mortgage required. Many RICS chartered surveyors will carry out the lease extension work as a chargeable service.

Only if they can afford the £20k+fees it'll cost to get the lease extended in the nearish future. Otherwise, they'll be sat on a depreciating asset, with the price of lease extension going up every year.

I suppose they could just do nothing about the lease, live in it/let it out for the 57 years and be done with it, based on their username they're unlikely to need it for much longer anyway...

(Note I am not actually suggesting this, OP should get the lease extended if they possibly can!)

Tom99

Just had a look at the website, the property information pack you can download on the one I looked at included the lease and I expect yours was the same so I don't think you will have any comeback about misrepresentation.

40ish

In addition to this, this morning I’ve received from the solicitor, notification that in November, there was a subsidence claim on the flat!!!
Do I walk away & cut my losses & loose my £6k (plus solicitors fees) as I feel like I’ve naively bought a lemon....or do you think I should pursue, spend more money doing it up and possibly facing loosing money upon re-sale or it not being sellable at all?
I know I’ve been stupid, please don’t point this out. I went into it blindly and am paying the price.
Help, please. What should I do??? ��

Tom99

40ish wrote: »

In addition to this, this morning I’ve received from the solicitor, notification that in November, there was a subsidence claim on the flat!!!
Do I walk away & cut my losses & loose my £6k (plus solicitors fees) as I feel like I’ve naively bought a lemon....or do you think I should pursue, spend more money doing it up and possibly facing loosing money upon re-sale or it not being sellable at all?
I know I’ve been stupid, please don’t point this out. I went into it blindly and am paying the price.
Help, please. What should I do??? ��

That depends. What will the flat be worth when you have extended the lease compared to the price you have agreed to pay and the likely lease extension cost?
If you have overpaid for the existing lease and are likely to actually lose money rather than gain when you extend the lease then cutting your losses may be the right decision.
I cannot make out what's in it for the purchaser with this type of 28day auction? You pay a non returnable deposit of £6,000.

Bossypants

As Tom says, only you can make the decision. Apart from the projected final value of the place, I would consider:

- How much do you really want this specific flat
- How much financial flexibility do you have to cover unexpected costs
- How much time/energy/stress are you willing to put into getting over these hurdles and making this specific flat your home

When you weigh all these points up, DO NOT consider the £6000 you have already spent. They are gone and they are not coming back, no matter what, and falling prey to the sunk cost fallacy can quickly snowball a newbie mistake into a life-ruining catastrophe if you aren't practical about things right now.

SandraX

Look on the bright side - when lease extended, the valuation usually goes up by more than what you paid but not always

ATB

Tom99

Bossypants wrote: »

When you weigh all these points up, DO NOT consider the £6000 you have already spent. They are gone and they are not coming back, no matter what, and falling prey to the sunk cost fallacy can quickly snowball a newbie mistake into a life-ruining catastrophe if you aren't practical about things right now.

As I understand it the £6,000 will form part of the agreed purchase price, not just for a 56 day option so to speak.

40ish

Thank you all kindly for your replies.

Tom99 - I think the flat will still be worth more, even with the cost of the lease. However....I don’t know if the subsidence issue (albeit that there is a ‘certificate of structural adequacy’) will affect the re-sale price??? Any ideas as to how this could affect it?

Tom99

40ish wrote: »

I think the flat will still be worth more, even with the cost of the lease. However....I don’t know if the subsidence issue (albeit that there is a ‘certificate of structural adequacy’) will affect the re-sale price??? Any ideas as to how this could affect it?

[FONT=Verdana, sans-serif]I think a certificate of structural adequacy is issued on completion of the 'works'. I am not sure what sort of comfort or guarantee it gives.[/FONT]
[FONT=Verdana, sans-serif]If the work/claim has been properly dealt with I don't think it would be a big issue on a future sale.[/FONT]
[FONT=Verdana, sans-serif]If not already provided I think I would be asking:[/FONT]
[FONT=Verdana, sans-serif]- What was the date of claim and the final sign off date?[/FONT]
[FONT=Verdana, sans-serif]- Exactly what work of repair was carried out?[/FONT]
[FONT=Verdana, sans-serif]- Has the insurance premium gone up as a result of the claim?[/FONT]
[FONT=Verdana, sans-serif]- Has the subsidence excess gone up as a result of the claim?[/FONT]