Short lease mortgage and home sale

Grenate

Good morning all,

Hopefully you will be able to help.

We have a flat that we have been in for around 20 years (unfortunately), when we bought the flat had 82 ish years on the lease. we are now trying to sell the property but we are unable due to the fact that it has below 70 years on it. It will cost around 35-45k to renew but we just dont have that available to spend, we cant remortgage as the bank wont give us a remortgage because it is below the 70 years on the lease. we cant release equity on the flat because of the lease. we dont want to get a loan  because that will wipe out the deposit on the next home we try to move into, any advice on this would be great.

Do you think there are any grounds for mis-selling of the mortgage in the first place due to the fact it was under the 99 years (at the time)? Grasping at straws maybe.

Regards,

Grenate

user1977

No, it's not the job of the mortgage lender to give you advice about whether you ought to buy a property, so you're grasping at something which isn't even a straw...

Potentially your solicitor may be liable if they failed to give you any advice about the implications of the remaining term - was the length of the lease a surprise to you? Presumably the price you paid reflected the term?

BungalowBel

You could sell it as a cash sale  - might take longer but someone will buy it because it will be cheaper than comparable flats because of the length of the lease.

Or put it in an auction.

BungalowBel

Also, how much extra could you sell it for once the lease has been extended?  You might find it is more than you paid for the lease extension, in which case it might be worth getting a loan.

In my son's block of flats, the ones with short leases sell for around £45-£50k, the ones with extended leases for £85-90k,.  It cost my son £13.5k to extend the lease, so it was well worth doing.

_Penny_Dreadful

Grenate said:

Good morning all,

Hopefully you will be able to help.

We have a flat that we have been in for around 20 years (unfortunately), when we bought the flat had 82 ish years on the lease. we are now trying to sell the property but we are unable due to the fact that it has below 70 years on it. It will cost around 35-45k to renew but we just dont have that available to spend, we cant remortgage as the bank wont give us a remortgage because it is below the 70 years on the lease. we cant release equity on the flat because of the lease. we dont want to get a loan  because that will wipe out the deposit on the next home we try to move into, any advice on this would be great.

Do you think there are any grounds for mis-selling of the mortgage in the first place due to the fact it was under the 99 years (at the time)? Grasping at straws maybe.

Regards,

Grenate

Grasping at straws.  The mortgage lender didn't sell you the leasehold, they sold you a mortgage to purchase a lease with 82 years on it and nothing you have said indicated it was mis-sold.  It was your choice to allow the lease to drop below 70 years which is when you enter the leasehold danger zone.  

You're most likely looking at cash buyers only. 

It is possible for the you (the seller) to start the lease extension process and give the buyer the right to extend (assign the benefit of the notice). This means that the buyer will not have to wait 2 years to extend the lease and it has to be done at the same time as the purchase of the property is going through but I don't know if that would still limit you to cash buyers only.  Even if someone could get a mortgage if you assign the lease extension I'd expect the cost of the extension to be included in the sales price.

eddddy

As you may know, there are 2 types of lease extension - a statutory lease extension, and an informal lease extension.

Where did the £35k to £45k figure come from? Is it...

• An estimate from an online calculator for a statutory lease extension?
• An estimate from a lease extension valuer for a statutory lease extension?
• A price quoted by your freeholder for an informal lease extension?
• Or something else?

In your circumstances, it might be useful to see if you can agree a sensible price with your freeholder for an informal lease extension. But unfortunately, most freeholders will ask you to pay for a valuation before discussing anything with you.

If the freeholder cooperates, you might be able to do either of the following...

• 1) Arrange to complete the lease extension and remortgage on the same day. i.e. on the day you get the remortgage, you will have a 160 year lease (instead of a 70 year lease) - and the lender should be happy with that.

• 2) Arrange to complete the lease extension and complete the sale of the property on the same day. i.e. The buyer gets a 160 year lease. £45k of the buyer's money goes to the freeholder, and the rest goes to you. (This is often called "Lease Extension on Completion".)

You might be able to do option 1 with a Statutory Lease Extension. The problem is that timings (and precise costs) are not predictable.

For example, you might get a remortgage offer that lasts 6 months, but then the statutory lease extension takes longer than that to complete.