Stelling leasehold garage

katxxx

Hi I hope someone can help me.
Me and my ex are selling our former family home and have hit a snag. It's a freehold 1960s mid terrace with a leasehold garage in a block round the back. The lease for the garage only has 44 years left on it and our buyers solicitor wants us to buy the freehold before proceeding. The garage is a concrete block on a bit of waste land and peppercorn rent of £5 a year. The freeholder will sell the freehold to us for £10,000 which I think is too much, I think they have deliberately gone way over the market value to put us off buying it. The garage is no way worth that much. I believe the sticking point is the buyers mortgage lender being unwilling to lend on a property with such a short lease but I can't get any solid information from our solicitor about what the lenders requirements actually are and how much short fall there would be if the mortgage was just secured on the freehold house (I guess far less than the £10k for the freehold). I've been going round in circles for a month now my solicitor doesn't seem to have a plan to resolve this other than paying the £10k which really should be a last resort given that the house is only worth £170k. Is it reasonable to expect the buyers to go back to their lender/broker and change the terms of their mortgage offer? What should my next move be?
Thanks 

Norman_Castle

Presumably the valuation takes account of the short lease on the garage. Is the property worth more with a longer garage lease. will the buyers be paying more once the lease is extended?

Ask the buyer how much they are willing to pay to extend the lease and offer that to the freeholder.

AdrianC

How much does the freeholder want to extend the lease?

davidmcn

Would it upset the valuation for the house too much if it simply was assumed not to include the garage ie does the lender really need a mortgage over it with an acceptably long lease at all? 

silvercar

How does £10,000 compare to the value of the property. If it is small, you may want to just accept it. If you lose your buyers over this then you will have incurred legal costs and have to start again.

katxxx

Thank you for your replies. I will get some more information from the freeholder on Monday regarding extending the lease rather than buying the freehold.
davidmcn said:

Would it upset the valuation for the house too much if it simply was assumed not to include the garage ie does the lender really need a mortgage over it with an acceptably long lease at all? 

I asked this very question weeks ago and didn't get an answer. Our solicitor seems to be bowing down to every whim of the buyers solicitor. The buyers side are implying that the only acceptable solution is for us to pay the £10k for the freehold. Surely there must be other ways round this.

eddddy

katxxx said:

The garage is a concrete block on a bit of waste land and peppercorn rent of £5 a year. The freeholder will sell the freehold to us for £10,000 which I think is too much, I think they have deliberately gone way over the market value to put us off buying it. 

If they didn't want you to buy it, I think they'd just say "no".  More likely it's an initial 'punt' - to see how desperate you are.

Did you didn't mention to the freeholder that the garage issue is blocking your house sale? If you did, they may feel they've got you over a barrel, and can get you to pay a ridiculous price. 

You can try negotiating with the garage freeholder over price - but, as above, a better solution might be if the buyer's mortgage lender disregards the garage for valuation purposes (i.e. values the house as if it has no garage).

But the buyer could also argue that they made an offer on the assumption that the garage was on a long lease, so they would want to reduce their offer.

Norman_Castle

katxxx said:

 The buyers side are implying that the only acceptable solution is for us to pay the £10k for the freehold. Surely there must be other ways round this.

That is the easiest solution but the property would then include a freehold garage which needs to be accounted for in the asking price. If the buyer wants to own the leasehold garage why shouldn't they pay for it?

View £10k as an asking price. How much do you think the freehold is worth, try negotiating down to a price you think is reasonable. Offer to split the reduced cost with the buyer.

Find the cost of splitting the freehold house and leasehold garage. Asking about this you'll know if its a possibility and demonstrate to the buyer and freeholder you have other options.

greatcrested

Sell the garage lease seperately.

Buyer gets mortgage for freehold house - I can't believe the valuation will be much different.

Or tell buyer how much the garage freehold costs and increase your selling price by that amount.

katxxx

I thought I would update this with the resolution in case anyone looks at this in the future. The estate agent had just called me and it turns out that the buyers solicitor hadn't even contacted the lender to see if the short garage lease would be a problem. They have now contacted the lender and the lender are happy to lend so we are good to exchange contracts soon. Thank you all for your input

searchlight123

katxxx said:

I thought I would update this with the resolution in case anyone looks at this in the future. The estate agent had just called me and it turns out that the buyers solicitor hadn't even contacted the lender to see if the short garage lease would be a problem. They have now contacted the lender and the lender are happy to lend so we are good to exchange contracts soon. Thank you all for your input

many thanks for update.
it's always interesting to hear how these things pan out.
glad you got it sorted to your satisfaction and wish you good luck and health in your new home.