Short Lease: How Low Should You Go?

annetheman

Retired_Mortgage_Adviser said:

If a comparable property with a 99 year lease sells for 250k and you could get this one (with a 70 year lease) for 160k, it's either an amazing bargain or (more likely) has other things to look out for as well.

Assuming you have a decent deposit, the mortgage shouldn't be an issue (assuming everything else stacks up). Any decent broker should be able to get you one at high-street ish rates. The sweet spot (to access mainstream/ish rates) is that you have at least 35 years lease remaining at the end of the mortgage term.

In your place, the things to look out for -

- predatory freeholder (a freeholder bothering to take the effort to manage a house converted into 2 flats always rings alarm bells for me)

- lease conditions

- why is the EPC so low?

- what are the maintenance arrangements

- is it possible to install gas appliances in the property

If you do decide to go ahead, as others have said, you should get the vendor to kickstart the statutory lease extension process.

Based on my experience buying properties to let out, I have often come across sellers who have a psyschological block to selling below the price that they bought for, even though that's what it might be worth. It's not logical but people often aren't. So it could well be that 160k is the floor price below which the vendor will not go, so it would be useful to keep that in mind as well. 

Excellent points I will raise and be aware of at the viewing, which they have moved for the second time... There is someone else viewing on the same day as me now so I'm really annoyed they did that. 
Still, I understand that my low offer might alienate the seller, especially as it is lower than they paid for it 15 years ago. If I'm honest, if they accept my offer or anything under what they paid, I will know for a FACT there is something seriously wrong lol

I will keep in mind though that 160K might be the floor price, but I can build to that, as that is the top of my budget. I have to start low *just* in case, they may be in a desperate enough situation to accept... 

kdotdotdotdot

If the asking price is already at the top of your budget, have you also budgeted for renovation work?  I would expect a few nasty surprises which may end up expensive.

annetheman

kdotdotdotdot said:

If the asking price is already at the top of your budget, have you also budgeted for renovation work?  I would expect a few nasty surprises which may end up expensive.

Definitely why I wouldn't go to the asking price. The max I'm prepared to go is £156,000 but I completely understand if they reject it, based on what I found out about what they got it for. There is a tenant in there now so I assume it's live-able but yes, lots of money needs to be spent on it!

hazyjo

A tenant?! Are they selling with the tenant in situ?

What other info do you have? 

annetheman

hazyjo said:

A tenant?! Are they selling with the tenant in situ?

What other info do you have? 

Lol no the tenant will be gone soon but they are being difficult. According to the Estate Agent, they are the reason my viewing date was moved twice (the tenant insists on being there when there is a viewing...). 

As a current tenant myself, I can kind of sort of understand - they are being booted out probably unexpectedly and considering the state of the place, it's probably the cheapest place in this area! So they are annoyed and perhaps being deliberately uncooperative... Which would be petty because the house it being sold regardless of how many viewings you block!

Tom99

annetheman said:

No the tenant will be gone soon but they are being difficult. According to the Estate Agent, they are the reason my viewing date was moved twice (the tenant insists on being there when there is a viewing...). 
As a current tenant myself, I can kind of sort of understand - they are being booted out probably unexpectedly and considering the state of the place, it's probably the cheapest place in this area! So they are annoyed and perhaps being deliberately uncooperative... Which would be petty because the house it being sold regardless of how many viewings you block!

Make sure the tenant is out before you exchange contracts. 'Booting a tenant out who does not want to go could easily take 6mths+.

annetheman

Tom99 said:

annetheman said:

No the tenant will be gone soon but they are being difficult. According to the Estate Agent, they are the reason my viewing date was moved twice (the tenant insists on being there when there is a viewing...). 
As a current tenant myself, I can kind of sort of understand - they are being booted out probably unexpectedly and considering the state of the place, it's probably the cheapest place in this area! So they are annoyed and perhaps being deliberately uncooperative... Which would be petty because the house it being sold regardless of how many viewings you block!

Make sure the tenant is out before you exchange contracts. 'Booting a tenant out who does not want to go could easily take 6mths+.

Wow should I add this as a condition of my offer or only after the offer is accepted? I definitely don't want a rogue tenant!

hazyjo

It's why I said what other info do you have. Have they served notice? I would be reluctant to spend money until I knew they were going. The fact they're reluctant rings alarm bells. As above, DO NOT EXCHANGE until you have personally made sure they have left.

AdrianC

annetheman said:

Tom99 said:

Make sure the tenant is out before you exchange contracts. 'Booting a tenant out who does not want to go could easily take 6mths+.

Wow should I add this as a condition of my offer or only after the offer is accepted? I definitely don't want a rogue tenant!

Your solicitor won't let you exchange without vacant possession.
The contracts you exchange will require vacant possession on completion, so you won't complete without vacant possession.

So, no, the tenant won't ever be your rogue tenant... But you simply face long delays part-way through the process.

yksi

Just want to make a note about your intention to install cavity and loft insulation - in a leasehold this can be incredibly difficult if not impossible. A common situation is that the freeholder refuses permission on the cavity insulation if it needs to be done from the outside or makes any impact at all on the exterior of the building, and if it's a shared wall, that throws enormous spanners in the works relating to a second freeholder and a second leaseholder. The same issues can occur if you need to replace windows. Freeholders can outright refuse permission. Have you contacted the freeholder about your insulation plans to sound them out? And when you say the lowest EPC rating, did you mean E or G? If you're the one living in it, G only means that it's expensive to heat, it's still legal for you to inhabit (just not let out). The E rating is currently legal for letting on a new lease.