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Should I extend lease before putting flat on market


Looking for a bit of advice. I have a flat which has 86 years left on the lease.
We are looking to sell early next year and buy a house.
Is it worth extending the lease before we sell? Will the lease length put down the price or put off potential buyers? Or is it better to extend the lease first? I know the process can take a while.
Any advice appreciated.
Comments
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It's hard to say.
Let's say the lease costs £10k to extend...- Some buyers might have a tight budget and would prefer to pay £10k less for the flat now, and then have 3 or 4 years to save up the extra £10k for the lease extension
- Other buyers would prefer to pay the extra £10k on the price now, to save the hassle of going through a lease extension process in a few years
One compromise to consider: You could optionally offer to start the statutory lease extension process before completion.- So if a buyer wants a lease extension, you can start the process and the buyer can finish it
- If a buyer doesn't want a lease extension, you don't start the process
But that's not ideal in all circumstances, because- It's still a hassle for the buyer
- The buyer can't be sure how much the lease extension will cost finally
- The cost of the lease extension probably can't be added to the mortgage - so the buyer would need extra cash / savings to pay for it
What are your timescales? A statutory lease extension like yours typically takes 6 to 12 months.
Ask a few estate agents for their opinions. If an estate agent doesn't seem to understand lease extensions etc, ignore them and move on to another agent.
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Yes, I would personally extend the lease or at least start the process. Shorter leases can limit your target market whilst longer leases and peppercorn rent can add value to the property.I'd start now, use the solicitor you intend to sell with and that should save some time with selling as well (he says optimistically).May you find your sister soon Helli.
Sleep well.1 -
TripleH said:I'd start now, use the solicitor you intend to sell with and that should save some time with selling as well (he says optimistically).
I would be very cautious about doing that. Most conveyancing solicitors don't know anything about Landlord and Tenant law.
However, it might be sensible to use a solicitors firm with a Landlord and Tenant department and a Conveyancing department.
(FWIW, I spoke to a leaseholder recently whose Conveyancing Solicitor said they'd "have a go at doing their lease extension". The solicitor screwed it up badly. Ultimately, the leaseholder felt that he'd been shafted because the freeholder's solicitor was much more savvy than his own conveyancing solicitor.)
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Thanks @eddddy good point.What is the minimum lease term a mortgage provider prefers? My last place had 100+ years on it and my previous had 90 ish years when I sold.I may wrongly have 85 years as a point when mortgage companies get anxious but am probably wrong.May you find your sister soon Helli.
Sleep well.0 -
I'd extend on peppercorn ground rent for 999 years (or however long). Its a statutory extent ion if you have been there 2years+. It will add value and make it much more sellable. No escalating ground rent.0
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Thank you, everyone. This has all been really helpful.
We don't really have a time frame on our move. We are moving to get more space, so it's just a question of how long we can be a bit squashed for vs holding on a bit to allow us to save a bit more.
I will go and talk to some state agents as suggested.
Thanks again.
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In theory, you should be better off extending yourself vs the buyer. For you it is v little difference (except lawyer costs) between spending £10k on extending the Lease vs receiving £10k less when selling it (it's both £10k out of pocket).
From a Buyers perspective it matters much more, as they might not get a mortgage against the £10k lease extension so they might be looking at: 10k higher offer price but only 5-10% in higher equity if you extend (say £1k more out of pocket) vs 10k higher equity requirement (£10k more out of pocket / additional deposit. Not extending it yourself might therefore exclude additional buyers who can only afford the extra 10k if they can get a mortgage against it.
In practice though, I am not certain you get full of 10K value for spending the 10k+lawyer costs on extending the lease. Buyers might look at it and kind of disregard the length of the lease when they make up their offers.
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How much is the ground rent currently and does it ever increase? if yes, what are the intervals and terms?Many flats are difficult to sell because of GR that's too high (becomes an Assured Tenancy) or has onerous terms regarding increases, which lenders don't like.It's important becuase if you do a statutory lease extension your GR will become zero and you will add 90 years to your current lease, which will make the flat much more desirable.0
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m0bov said:I'd extend on peppercorn ground rent for 999 years (or however long). Its a statutory extent ion if you have been there 2years+. It will add value and make it much more sellable. No escalating ground rent.
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Actually, it's 90 years...2024 wins: *must start comping again!*1
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