Inherited short lease advice

Malena9

Ive inherited my dads detached maisonete, it has a 30 year lease left on it, i cant afford to extend the lease and aplied for a loan but was declined due to me living abroad.
I amcurrently renting it out but am confused really as what the best way forward is.
SELL or just keep it till lease runs out.
Any advice would be helpful.
Thanks all

diggingdude

have you worked out how much it would cost to extend lease?
What's the rent?

ThePants999

Since you're living abroad, so owning this isn't going to inconvenience you in terms of stuff like the extra SDLT for buying a 2nd property, I'd probably be inclined to keep it. However, make sure you understand the implications of being a non-resident landlord, e.g. UK tax, the need to provide a UK address to your tenants, etc.

pphillips

Why would you keep it till the lease runs out? Surely no lease equals no maisonet.

Bossypants

pphillips wrote: »

Why would you keep it till the lease runs out? Surely no lease equals no maisonet.

True, but OP would still have the use of it to rent out or live in for 30 years free of charge. 30 years is short for a lease, but it's still a good chunk of the average human lifetime.

Having said that, in OP's shoes I would find out how much extending the lease is going to cost, how much the place is worth with the current lease and how much it would be worth with an extended term, then work from there.

ThePants999

pphillips wrote: »

Why would you keep it till the lease runs out? Surely no lease equals no maisonet.

Yes, and the value if you sell it and the cost of lease extension both reflect that already. There's no arbitrage to be found here - since both the freeholder and any potential buyer have exactly the same information as the OP in terms of the lease length, there's no innate financial advantage to be gained through any option. The OP can either have 30 years' worth of benefit out of it and then lose it entirely, or they can sell it for approximately the net present value of 30 years' worth of benefit, or they can extend the lease for approximately the difference between the sale price now and the sale price with an extended lease. <shrug> It's basically just about what best suits the OP's circumstances.

Malena9

Thanks for allthe replies, cost to extend at the moment is about 80 thou, estimated worth to sell is about 190 thou to 200 thou.
So selling and buying something else doesnt look feasible after tax and lease extension.
Would anyone buy on such a short lease.
Cant afford to extend so feel stuck as to what to do.
Let it out till it goes back to landlord?

Comms69

Well at say £400 a month rent - That's £144,000 over next thirty years (before tax)


Or for a loan of £80k, you stand to make £100-120,000 now (well next 6 months)


How is this even a debate

Takmon

Comms69 wrote: »

Well at say £400 a month rent - That's £144,000 over next thirty years (before tax)

Or for a loan of £80k, you stand to make £100-120,000 now (well next 6 months)

How is this even a debate

£144,000 minus 30 years of the cost of maintenance and decorating to keep it at a suitable standard. Plus don't forget the OP will be limited in how much of this they can do themselves due to living abroad.
Once you take that into account and then also consider they can invest the £100k long term and should get a good return.

The no brainer option of the two would be to take the least hassle of £100k now and make far more over the next 30 years than renting it out.

eddddy

Malena9 wrote: »

Would anyone buy on such a short lease.
Cant afford to extend so feel stuck as to what to do.

If the freeholder is cooperative, you could sell it with a lease extension on completion.

In simple terms, you agree with your freeholder that you offer it for sale with a long lease (say 120 years) at say £200k.

When the sale completes, the freeholder extends the lease and gets, say, £80k, and you get the remaining £120k.

It's something that's done quite often.

Tom99

[FONT=Verdana, sans-serif]Have you transferred ownership of the flat from your Dad's estate to you?[/FONT]
[FONT=Verdana, sans-serif]If not you have 2yrs from that date your Dad died to serve a statutory lease extension notice.[/FONT]
[FONT=Verdana, sans-serif]You can agree to sell the flat with the benefit of that notice, you contract to serve the notice after you have exchanged contract to sell the flat. [/FONT]
[FONT=Verdana, sans-serif]What is the 30yr lease worth? Maybe £90,000/£100,000 but only cash buyers so you may struggle to find a purchaser, however if offered with a lease extension notice you should get a lot more interest.[/FONT]
[FONT=Verdana, sans-serif]If you have already transferred the flat to your ownership I think you will have to wait until you have owned it for 2yrs before you can serve a lease extension notice. [/FONT]