What is a safe lease length?

the_londoner_2

I am currently in the process of buying my first place. The 150k leasehold flat I have made an offer on currently has 87 years left on the lease? I have tried to research but am finding the whole leasehold thing kind of confusing.

Please could anyone advise me if this is a safe length of lease to buy? I can see me possibly staying there for a maximum of 10 years. Would it be a problem trying to sell this on in 10 years time? When does the length of lease start getting dodgy as I don't want to end up with a flat I can't sell on and then having to pay out a fortune to extend the lease.

Please help!

guppy

Over 70 is fine in my opinion. I wouldn't worry in this case. Check with your mortgage company and solicitor to be sure though.

If you were to renew at 77 years it wouldn't be particulary expensive. Find out who the freeholder is, if its operated by the residents and you are buying share, things would probably be easier.

http://www.homebuying.co.uk/DontMiss/featuresStories/Is_your_flat_out_Oct.htm

You can also get free advice from the government sponsored http://www.lease-advice.org/

Doozergirl

It's always cheaper to extend before 80 years but if you sell before 80 years, then there will be no questions asked.

Slightly after and most people can be persuaded that the lease doesn't need extending or that the price reflects the length of lease (whatever!). Below 70 years is where it might start to get a bit awkward but there are still plenty of lenders happy to lend.

It's such a hard question to answer because different people are scared of different things. Most things aren't much to worry about but you always get people who know very little and panic and pull out over nothing. Equally, you have solicitors who aren't bothered and don't tell their clients about lease extensions at all. We get people who say not to touch anything under 100 years but many, many leases are only 99 years to start with, so it's mainly ignorance that causes problems.

turk3y

i think my original lender insisted that there was 20 years of the lease left after my mortgage was paid of so for my 25 year term I could buy anything with 46 years or more (they where more worried if i was in a block over the 6th floor or something) , from talking to people some are scared of any lease and wont buy anything thats not freehold or share of freehold, others think anything sub 90 is "short", personally i think under 80 is short and sub 70 is time for some seriuos haggling but its not a killer blow, it just means factor in the cost of the extension when you buy, as you will really need to extend to sell. I think alot of people are scared of leases even tho they dont know anything about them. I have one, I am extending it now but still dont fully understand it.

Personally I would always want a lease over 80 as mentioned here its cheaper to extend as you dont pay the leaseholder the marrige fee (half the price increase your property will get due to the increase in lease), but as they say if the price is right......

Richard_Webster

The issue isn't so much whether it will be mortgageable when you sell it, but whether buyers will be put off because they realise that they may well have to pay a four or five figure sum to extend the lease when they want to sell.

This depends on the market. Up until recently sellers seem to have been able to get away with selling leases in the mid 70s of years in London. London Buyers tend to be more aware about the effect of "marriage value" on the premium a Landlord can charge to extend a sub-80 year lease, but with the scarcity of property on the market, have been left with little option.

Where I am in the Southampton area, buyers don't seem to be aware of the issue at all, and I find I have to patiently warn them of the possible costs further down the track.

However, if the market turns, things could be different. The cost of a studio flat in Southampton in 1988 bought a 2 bed terrace in 1994/5, so who wanted a flat? In that situation any flats with any kind of legal issue were very difficult to sell indeed.

kissingthepink

The advice given to me is to extend the lease prior to it going below 80 years as it becomes more expensive after this date due to the "marriage value" being taken into account. The marraige value I believe involves taking the future value of the flat into account when calculating the premium, and this then rockets the premium. So, always extend the lease before this date.

Also bear in mind that the freeholder is not obligated to grant an extension until you have held the lease for two years. In other words, if you are buying, I would be wary of considering any property that has a lease of less than eighty two years. The only way to be able to extend the lease straight after purchase is to ensure that the leaseholder issues notice to the freeholder that he/she intends to extend the lease, and that the vendor's rights to extend the lease are assigned to you, the purchaser. You can then extend it straight away.

Doozergirl

kissingthepink wrote: »

I would be wary of considering any property that has a lease of less than two years.

Whoah! Seriously, there are way more issues than that when you get down to single figures. There's something about 7 years that is exceptionally important and sways things very heavily back to the freehoder. The property is only essentially worth the rental value for the remaining period to a new leaseholder.

It was a couple of years ago now that I looked into it and I'm not worried about much as most things can be fixed, but even I would walk away at that point.

kissingthepink

Doozergirl wrote: »

Whoah! Seriously, there are way more issues than that when you get down to single figures. There's something about 7 years that is exceptionally important and sways things very heavily back to the freehoder. The property is only essentially worth the rental value for the remaining period to a new leaseholder.

It was a couple of years ago now that I looked into it and I'm not worried about much as most things can be fixed, but even I would walk away at that point.

Soz.....that should be 82 years. I will amend my post!