Buying Short Lease Property and Waiting to Extend?

notaround

There is a property which I am interested in purchasing but the lease only has 78 years remaining. I know this will affect the mortgage deals available to me.

I have read that new laws are due to be implemented over the next few years abolishing marriage fees for extending the lease. In this situation, would you recommend to:
- Buy the house and immediately extend the lease.
- Buy the house and wait until law changes come into place to extend the lease.
- Not buy the property full stop.

The buyer has said they are not interested in extending the lease themselves, although I have spoken to a solicitor who says they can arrange the extension in line with the purchase of the property if I wish.

Additionally, does anyone have any experience of how much worse the available mortgage deals would be with a lease of this length?

notaround

Should have said "the seller has said they are not interested in extending"

ExEstateAgent

Speak to a mortgage broker. 

Is this a house or flat? If it's a house I'd enquire about the cost of buying the freehold rather than extending the lease. 

notaround

It's a flat.

I asked a broker, but they were quite vague on the possible implication, saying there would be a slight affect but there would still be some deals available. They didn't seem to want to speculate on the law changes. However, this broker was just the one I was put in contact with through the estate agents, so maybe it would be worth finding my own broker?

[Deleted User]

Most mainstream lenders would require at least 85 years left on the lease to consider a mortgage application.

Personally I'd not buy this property but look at others with standard lease terms.

ExEstateAgent

As it's a flat you would need to get a valuation for a lease extension and then ensure that you're offering a price for the flat that takes the lease costs into account. You would also need to have the cash for that in addition to your mortgage deposit. 

The vendor is really limiting their market by trying to sell a short lease but then again many vendors (and agents) ignore lease lengths when coming up with their asking prices! 

mlz1413

I went to a flat with 58 years on the lease (some 20 years ago) and the mortgage company said no.
It was a probate sale and the estate ended up getting a deal to extend by 25 years for a fixed fee.  Which went over the magic 80 years and all proceeded.

I should have extended within 3 years to stay over the 80 years and away from the dreaded marriage value but just didn't have the cash so I now have a short lease.  

So I am also hedging my bets about do I hang out for the reforms.  But the discussion started pre-covid and this government say they want to review what the previous government started... which means delays.

There are lots of online calculators, I would do 3 of them and see what the average is.  Use that to decide if you can get the flat cheap enough to extend the lease yourself. 

With a low lease this flat may have to wait for a cash buyer.

eddddy

notaround said:

There is a property which I am interested in purchasing but the lease only has 78 years remaining. I know this will affect the mortgage deals available to me.

FWIW, mortgage lenders were asked "What minimum unexpired lease term does the lender accept?" - their answers are here:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1846/

notaround said:

...although I have spoken to a solicitor who says they can arrange the extension in line with the purchase of the property if I wish.

Do you mean a "lease extension on completion of the purchase"?  If so, the flat's freeholder would have to cooperate with that.

Has the freeholder indicated that they would agree and cooperate?

Or is the solicitor talking hypothetically... "If the freeholder agrees, I can deal with a lease extension on completion"?  If so, that would be a massive, huge "if".

notaround

eddddy said:

Or is the solicitor talking hypothetically... "If the freeholder agrees, I can deal with a lease extension on completion"?  If so, that would be a massive, huge "if".

I assume they were meaning this. I agree this is a big if, and I was surprised when they said this so confidently.

I'll probably look for other properties, since as others have stated, the short lease just brings too many problems and even with the removal of marriage charges, there's still a fair premium to pay on renewal.

mlz1413

FWIW, mortgage lenders were asked "What minimum unexpired lease term does the lender accept?" - their answers are here:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1846/

Thanks for this link, very helpful. 
I had fallen in the side of going for a full lease extension but this shows me that the fixed fee / lower years opinion wouldn't make the flat mortgagable with the bulk of lenders.