The ground rent issue

Miranda25

NameUnavailable said:

Miranda25 said:

user1977 said:

Miranda25 said:

Can anyone explain to me - what should I watch when buying a flat with lease granted before 30th June 2022 please?

My possible plans are to buy a flat in London, live for 5-10 years and sell it.
I want to make sure that I can sell the flat and it is not staying on Rightmove for a year without any viewings.

What do you all do? Do you just buy a flat or you do immediately deed of variation or lease extension please?

It depends what the lease says.

Obviously, 99% (or so) of leases will have been granted before 30 June 2022, so it will take a very long time for them to be regarded as unusual or difficult to market.

so what should I watch when I look at Rightmove please? how to be on a safe side?

If buying in London then the AST thing becomes a problem if the ground rent exceeds or could exceed £1K.

My advice - look for a flat that has a share of freehold, it should then also have a peppercorn ground rent AND a long (over 900 years) lease, although there are many SoF with leases under 100 years.

You also need to consider the service charges. A SoF flat should be better in that respect as you won't have some 3rd party freeholder looking at the leaseholders as cash cows for him to milk dry!

It is not so many flats with SoF. 
I would buy new-build property to avoid all these issues. But I am thinking about a specific area and that area does not have any new builds.

Miranda25

NameUnavailable said:

Miranda25 said:

user1977 said:

Miranda25 said:

Can anyone explain to me - what should I watch when buying a flat with lease granted before 30th June 2022 please?

My possible plans are to buy a flat in London, live for 5-10 years and sell it.
I want to make sure that I can sell the flat and it is not staying on Rightmove for a year without any viewings.

What do you all do? Do you just buy a flat or you do immediately deed of variation or lease extension please?

It depends what the lease says.

Obviously, 99% (or so) of leases will have been granted before 30 June 2022, so it will take a very long time for them to be regarded as unusual or difficult to market.

so what should I watch when I look at Rightmove please? how to be on a safe side?

If buying in London then the AST thing becomes a problem if the ground rent exceeds or could exceed £1K.

My advice - look for a flat that has a share of freehold, it should then also have a peppercorn ground rent AND a long (over 900 years) lease, although there are many SoF with leases under 100 years.

You also need to consider the service charges. A SoF flat should be better in that respect as you won't have some 3rd party freeholder looking at the leaseholders as cash cows for him to milk dry!

Any good websites which would give me an option to tick the box and view only flats with SoF?
Or tick the box and view the flats not on ground floor please?

I am surprised that Rightmove is so undeveloped and does not give me those options and I really need to waste a lot of time and click and view something which is not suitable immediately.
Rightmove should change their graphic designers.

CSI_Yorkshire

Miranda25 said:

mark_cycling00 said:

It's ok to ask but they genuinely may not know. It you're serious about a place then they will try to find out but at the early stage in the process they'll probably be relying on the honesty of the seller rather than requesting all the leasehold documents. 

Many, many apartments are 'peppercorn' ground rent which means 'free' and the seller may have no idea what you're talking about because they'll never get asked to pay the peppercorn and may not be aware what ground rent is.

Please search this forum to see how much of an issue ground rent is.

Leases are a very different issue and tragically many elderly people lose their homes because they're unaware that their lease is due to expire, or that their home is now unsellable due to a very short lease.

In my place we were offered a heavily discounted legal fee to extend every apartment from 100 to 999 years, so long as every owner in the block agreed to it.

Sadly the majority simply didn't care. So instead of £1000 we each had to do it ourselves for £2,500 or so.

Don't forget that service charges can be relatively horrific in a small development and you can be paying £2500+ a year for very little "service"

In a larger place at least you'll be getting that gym, parking and gardens 

Thank you Mark.

What would be a very short lease please? Below 80 years. I am going to live for 5-10 years.
To be on a safe side - shall I go for leases above 100 years old? Or still it could impact a saleability of the flat in 5-10 years time please?

Why elderly people lose their homes? Because they do not have money to extend the leases?

You want the lease to have at least 85 years left when you sell.

NameUnavailable

Miranda25 said:

NameUnavailable said:

Miranda25 said:

user1977 said:

Miranda25 said:

Can anyone explain to me - what should I watch when buying a flat with lease granted before 30th June 2022 please?

My possible plans are to buy a flat in London, live for 5-10 years and sell it.
I want to make sure that I can sell the flat and it is not staying on Rightmove for a year without any viewings.

What do you all do? Do you just buy a flat or you do immediately deed of variation or lease extension please?

It depends what the lease says.

Obviously, 99% (or so) of leases will have been granted before 30 June 2022, so it will take a very long time for them to be regarded as unusual or difficult to market.

so what should I watch when I look at Rightmove please? how to be on a safe side?

If buying in London then the AST thing becomes a problem if the ground rent exceeds or could exceed £1K.

My advice - look for a flat that has a share of freehold, it should then also have a peppercorn ground rent AND a long (over 900 years) lease, although there are many SoF with leases under 100 years.

You also need to consider the service charges. A SoF flat should be better in that respect as you won't have some 3rd party freeholder looking at the leaseholders as cash cows for him to milk dry!

Any good websites which would give me an option to tick the box and view only flats with SoF?
Or tick the box and view the flats not on ground floor please?

I am surprised that Rightmove is so undeveloped and does not give me those options and I really need to waste a lot of time and click and view something which is not suitable immediately.
Rightmove should change their graphic designers.

You're lucky if the estate agent knows the length of lease and ground rent!

It's not something that is always mentioned or even understood - I was looking at a flat a couple of years ago, I knew the block was a shared freehold but the agent told me that this particular flat wasn't (if when the freehold was bought a particular leaseholder chooses not to participate, then they don't get a share and they remain just a leaseholder).

I decided not to offer only to find out some weeks later on another viewing that it did in fact have a share of freehold and was already under offer. I most likely would have made an offer if I knew that!

Speak to local agents and ask them specifically about shared freehold properties.

Miranda25

CSI_Yorkshire said:

Miranda25 said:

mark_cycling00 said:

It's ok to ask but they genuinely may not know. It you're serious about a place then they will try to find out but at the early stage in the process they'll probably be relying on the honesty of the seller rather than requesting all the leasehold documents. 

Many, many apartments are 'peppercorn' ground rent which means 'free' and the seller may have no idea what you're talking about because they'll never get asked to pay the peppercorn and may not be aware what ground rent is.

Please search this forum to see how much of an issue ground rent is.

Leases are a very different issue and tragically many elderly people lose their homes because they're unaware that their lease is due to expire, or that their home is now unsellable due to a very short lease.

In my place we were offered a heavily discounted legal fee to extend every apartment from 100 to 999 years, so long as every owner in the block agreed to it.

Sadly the majority simply didn't care. So instead of £1000 we each had to do it ourselves for £2,500 or so.

Don't forget that service charges can be relatively horrific in a small development and you can be paying £2500+ a year for very little "service"

In a larger place at least you'll be getting that gym, parking and gardens 

Thank you Mark.

What would be a very short lease please? Below 80 years. I am going to live for 5-10 years.
To be on a safe side - shall I go for leases above 100 years old? Or still it could impact a saleability of the flat in 5-10 years time please?

Why elderly people lose their homes? Because they do not have money to extend the leases?

You want the lease to have at least 85 years left when you sell.

would buyers still buy if the lease is 85 years old? they are not silly and understand that lease extension would cost them thousands of pounds.

[Deleted User]

Read through this https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/buying-a-flat-with-a-short-lease/  

CSI_Yorkshire

Miranda25 said:

CSI_Yorkshire said:

Miranda25 said:

mark_cycling00 said:

It's ok to ask but they genuinely may not know. It you're serious about a place then they will try to find out but at the early stage in the process they'll probably be relying on the honesty of the seller rather than requesting all the leasehold documents. 

Many, many apartments are 'peppercorn' ground rent which means 'free' and the seller may have no idea what you're talking about because they'll never get asked to pay the peppercorn and may not be aware what ground rent is.

Please search this forum to see how much of an issue ground rent is.

Leases are a very different issue and tragically many elderly people lose their homes because they're unaware that their lease is due to expire, or that their home is now unsellable due to a very short lease.

In my place we were offered a heavily discounted legal fee to extend every apartment from 100 to 999 years, so long as every owner in the block agreed to it.

Sadly the majority simply didn't care. So instead of £1000 we each had to do it ourselves for £2,500 or so.

Don't forget that service charges can be relatively horrific in a small development and you can be paying £2500+ a year for very little "service"

In a larger place at least you'll be getting that gym, parking and gardens 

Thank you Mark.

What would be a very short lease please? Below 80 years. I am going to live for 5-10 years.
To be on a safe side - shall I go for leases above 100 years old? Or still it could impact a saleability of the flat in 5-10 years time please?

Why elderly people lose their homes? Because they do not have money to extend the leases?

You want the lease to have at least 85 years left when you sell.

would buyers still buy if the lease is 85 years old? they are not silly and understand that lease extension would cost them thousands of pounds.

85 years is about the limit, because then they can hold the lease for 2 years and start the extension process before hitting the marriage value at 80 years.  Some might push that even closer.

Miranda25

NameUnavailable said:

Miranda25 said:

NameUnavailable said:

Miranda25 said:

user1977 said:

Miranda25 said:

Can anyone explain to me - what should I watch when buying a flat with lease granted before 30th June 2022 please?

My possible plans are to buy a flat in London, live for 5-10 years and sell it.
I want to make sure that I can sell the flat and it is not staying on Rightmove for a year without any viewings.

What do you all do? Do you just buy a flat or you do immediately deed of variation or lease extension please?

It depends what the lease says.

Obviously, 99% (or so) of leases will have been granted before 30 June 2022, so it will take a very long time for them to be regarded as unusual or difficult to market.

so what should I watch when I look at Rightmove please? how to be on a safe side?

If buying in London then the AST thing becomes a problem if the ground rent exceeds or could exceed £1K.

My advice - look for a flat that has a share of freehold, it should then also have a peppercorn ground rent AND a long (over 900 years) lease, although there are many SoF with leases under 100 years.

You also need to consider the service charges. A SoF flat should be better in that respect as you won't have some 3rd party freeholder looking at the leaseholders as cash cows for him to milk dry!

Any good websites which would give me an option to tick the box and view only flats with SoF?
Or tick the box and view the flats not on ground floor please?

I am surprised that Rightmove is so undeveloped and does not give me those options and I really need to waste a lot of time and click and view something which is not suitable immediately.
Rightmove should change their graphic designers.

You're lucky if the estate agent knows the length of lease and ground rent!

It's not something that is always mentioned or even understood - I was looking at a flat a couple of years ago, I knew the block was a shared freehold but the agent told me that this particular flat wasn't (if when the freehold was bought a particular leaseholder chooses not to participate, then they don't get a share and they remain just a leaseholder).

I decided not to offer only to find out some weeks later on another viewing that it did in fact have a share of freehold and was already under offer. I most likely would have made an offer if I knew that!

Speak to local agents and ask them specifically about shared freehold properties.

Oh my god, it is even more complicated than I could imagine. 
I would never think that the same building can have a mixture of flats with leasehold and SoF.
Thank you for sharing.

NameUnavailable

Miranda25 said:

CSI_Yorkshire said:

Miranda25 said:

mark_cycling00 said:

It's ok to ask but they genuinely may not know. It you're serious about a place then they will try to find out but at the early stage in the process they'll probably be relying on the honesty of the seller rather than requesting all the leasehold documents. 

Many, many apartments are 'peppercorn' ground rent which means 'free' and the seller may have no idea what you're talking about because they'll never get asked to pay the peppercorn and may not be aware what ground rent is.

Please search this forum to see how much of an issue ground rent is.

Leases are a very different issue and tragically many elderly people lose their homes because they're unaware that their lease is due to expire, or that their home is now unsellable due to a very short lease.

In my place we were offered a heavily discounted legal fee to extend every apartment from 100 to 999 years, so long as every owner in the block agreed to it.

Sadly the majority simply didn't care. So instead of £1000 we each had to do it ourselves for £2,500 or so.

Don't forget that service charges can be relatively horrific in a small development and you can be paying £2500+ a year for very little "service"

In a larger place at least you'll be getting that gym, parking and gardens 

Thank you Mark.

What would be a very short lease please? Below 80 years. I am going to live for 5-10 years.
To be on a safe side - shall I go for leases above 100 years old? Or still it could impact a saleability of the flat in 5-10 years time please?

Why elderly people lose their homes? Because they do not have money to extend the leases?

You want the lease to have at least 85 years left when you sell.

would buyers still buy if the lease is 85 years old? they are not silly and understand that lease extension would cost them thousands of pounds.

That should be taken into account in the asking price of the flat. You need to have owned a leasehold for at least 2 years before you can formally extend the lease. If it drops below 80 years it becomes a lot more expensive to extend due to marriage value (basically the freeholder becomes entitled to an additional payment for the added value of the property having a longer lease).

I sold my last flat with a 93 year lease and I think that's about the minimum you can get to without it really impacting the value. Depending how long the next purchaser lived there it will probably need a lease extension before selling again.

Miranda25

Thank you, appreciate your help.