Buying freehold/lease extension

Ed_Jowett

Hi folks. Am in a dilemma and would appreciate any help. have a flat on a 78 year lease. have tried to buy freehold but can't get enough of other 3 leaseholders to agree largely because they are moving. have looked at buying a lease extension as an alternative as I can do that alone.

Lease xtension would be £14k-17 k plus legal costs. Freehold share would be £10K - £12 plus share of legal costs.

Dilemma is working out what is best. Lease is getting shorter and have heard that some mortgage companies are reluctant to lend on anything close to 70 years. It is a hassle negotiating with the freeholder and may be offputting to purchasers if they foresee having to do it themselves. On the other hand buying now would be 'real money' as I would have to take out a mortage extension to cover costs. It would be easier to adjust price downwards when /if I sold. I don't know how long I will be in this flat.

Any experience/thoughts would be gratefully received.

Ed

Bun

I would speak to some estate agentsand see what they think, but I have bought several flats with this length of lease (upstairs has had no problems selling at this length either)and I really don't think it's that short. You could sell once you've been there 2 years, and get the ball rolling for the next people to complete. You may be spending money for the sake of spending it. I believe the Halifax needed 40 years clear of the end of the mortgage ie 63 years to lend on it.
Obviously check these details out, but it sounds a lot of money to spend if you don't need to. OUr old flat has had its lease extended and the sellers have added seven grand to the asking price as it wasn't selling. It's taken from June to sell and had to be reduced again to shift it by the looks of it.

Doozergirl

Where are you? That's a heck of a lot for a lease extension with 78 years, especially when the share of freehold is that much less. I'd be expecting the lease down nearer 60 years for the two amounts you've given

BELOW 70 years (not close to it as you say), mortgage companies, well, you might get some that aren't interested but you can still find plenty of companies willing to lend right down to 25 years + mortgage term. 78 years and I doubt there's any lender out there with a problem with that.

It is true that you could potentially sell soon to someone who isn't particularly well informed, especially in London where shorter leases are all too common It does depend on how long you plan to stay and also the lenght of the other leases. If anyone has extended already, then there's little or no need to buy the freehold.

I still think your lease extension amount is very high when it's only 2 years into the marriage value situation.

Richard_Webster

Whether the length of lease is acceptable depends on the market and where the property is.

It isn't mortgageability as such that is the problem, but a buyer's fear that they will be caught when they try to sell and have to pay a lot of money to a Landlord for an extension. In London it seems many potential flat buyers know that "marriage value" cannot be included if the lease has over 80 years to go and so they look for flats with 82+ years so they can make sure they will be ale to extend before the marriage value issue kicks in.

Up until recently the London market has been so hot that sellers just refused to talk to the Landlord even if they only had say 75 years on the lease and the poor buyer often had no other property around that he could buy as an alternative that had a longer lease for the same price. In London we may now find that buyers start to get choosier about lease lengths and sub-80 year leases may be more difficult to sell.

Where I am in Hampshire, for instance, 78 years doesn't seem to put many buyers off, even though a solicitor acting for a buyer should explain what could happen in a few years time. So it is possible that even with a slower market the penny won't drop for a buyer, or at least not until much later when their solicitor explains the point, and by which time they have invested survey fees etc and are less likely to pull out.

Also the figures you mention for the lease extension at 78 years seem very high, unless the flat is worth £500K +