Buying Share of Freehold flat by Modern Method of Auction

Apolonis

I'm looking at an apartment that was reduced from £270,000 to £240,000 on Rightmove. Initially, it was listed in Sep-21, or 6 months ago...

They sell it now through an auction, with a reserve price of £250,000. I checked the buyer pack, and I can see that the lease now has 84 years left on it. 

I wonder why they didn't extend the lease? Certainly, it would have fetched a higher sell price, right? Why was the price reduced so substantially?

I read that in a share of freehold the lease extension would cost much less than a normal lease. Are maybe the other leaseholders creating issues with it? 

Is there a way I can see how much this lease extension would cost me?

P.S I'm a cash buyer, so no banks will be involved in this transaction.   

deannagone

There could a problem with the lease, without looking at it that's guesswork.  It could be something else, it could have been massively overpriced, unmortgage able or needing expensive renovations. But the Modern Auction method of selling is also a big problem for most buyers.  Google it or search on here 'modern auction'.

You could always ask the neighbours.

eddddy

Apolonis said:

Is there a way I can see how much this lease extension would cost me?

With a 'share of freehold', the lease would normally be extended by agreement/negotiation with all the joint freeholders.

The joint freeholders might agree to extend the lease for free, or they might want to be paid. (There's no rule about how much they can charge.)

You'll also have to pay legal fees.


This is the sort of thing you might want to negotiate before exchange of contracts. One problem is that with the modern method of auction you have to pay a non-refundable reservation fee (often £6k).

If you can't negotiate an acceptable lease extension price and you decide to walk away, you'll probably lose the whole £6k.

(There are other problems with the Modern Method of Auction contract, as well.)