Considering purchasing a leasehold property advice needed

JustAmyCov

I am in the Coventry area and considering buying a leasehold maisonette but I am feeling completely overwhelmed by the whole process. I need a professional to advise on the legal requirements and make sure I am doing the right thing. Can anyone recommend any reputable companies that won't charge the earth.

ExEstateAgent

You will employ a solicitor/conveyancer to handle the transaction (and maybe a mortgage broker if you need advice and help with that).  

What are your concerns? 

The main things with leasehold are to ensure it's got a decent length of lease left, check the service charge and if any costly work is likely to be required soon, and also that it doesn't have a high/escalating ground rent charge. 

JustAmyCov

That's the issue, the property I'm looking at is on the market for 75k and I only have 60k it has 37 years left on the lease but as far as I can see its the only was I'm ever going to be able to buy in the Midlands. I was thinking that I could extend the lease at some point in the future when I inherit my share of my mums house. 

gwynlas

It is a short lease and you would not be able to get a mortgage however you could possibly get a loan for the £15 K and pay it off as though  you were paying rent.
You will also have a service charge and perhaps ground rent on top as  well as usual utilities and maintenance.
There is talk of leasehold reform but you can apply to have the lease extended anyway though you probably need to  be aware of this cost before committing to buy.

eddddy

JustAmyCov said:

That's the issue, the property I'm looking at is on the market for 75k and I only have 60k it has 37 years left on the lease but as far as I can see its the only was I'm ever going to be able to buy in the Midlands. I was thinking that I could extend the lease at some point in the future when I inherit my share of my mums house. 

A maisonette with a 37 year lease is a bit of a complex problem - a lot of people might be overwhelmed by the issues surrounding that.

You say you have £60k - are you able to get a mortgage as well, so that you could afford to buy a more expensive property with a longer lease length (maybe  90+ years)?  That should be a lot more straightforward.

Another option might to wait until you have your inheritance before buying a property.



But anyway, looking at the 37 year lease maisonette - you wouldn't get a mortgage on that, so you'd have to find the extra £15k from somewhere (plus legal costs etc)

Under the current legislation, the cost of the extension would probably increase every year. (So the value of the maisonette would might reduce each year, until you got the extension). 

But there is talk of new legislation which might make a lease extension cheaper.

But either way, the cost of a lease extension would probably be well into the tens of thousands.

JustAmyCov

I eddddy said:

JustAmyCov said:

That's the issue, the property I'm looking at is on the market for 75k and I only have 60k it has 37 years left on the lease but as far as I can see its the only was I'm ever going to be able to buy in the Midlands. I was thinking that I could extend the lease at some point in the future when I inherit my share of my mums house. 

A maisonette with a 37 year lease is a bit of a complex problem - a lot of people might be overwhelmed by the issues surrounding that.

You say you have £60k - are you able to get a mortgage as well, so that you could afford to buy a more expensive property with a longer lease length (maybe  90+ years)?  That should be a lot more straightforward.

Another option might to wait until you have your inheritance before buying a property.



But anyway, looking at the 37 year lease maisonette - you wouldn't get a mortgage on that, so you'd have to find the extra £15k from somewhere (plus legal costs etc)

Under the current legislation, the cost of the extension would probably increase every year. (So the value of the maisonette would might reduce each year, until you got the extension). 

But there is talk of new legislation which might make a lease extension cheaper.

But either way, the cost of a lease extension would probably be well into the tens of thousands.

So I was very lucky to come into some money which is where the 60k came from but the problem is I can only work part time due to health issues and I'm not earning enough to pay my bills so that money is diminishing. If I wait for my inheritance I probably won't have anything left and I'd be back in the same boat again with not being able to afford anywhere, not being able to get a mortgage etc. At least if I bought this I would be saving £1000 a month in rent costs and will have enough left from my wages to live on.

Would I be able to find out the cost of extending the lease before I commit to buy?

eddddy

JustAmyCov said:

I eddddy said:

Would I be able to find out the cost of extending the lease before I commit to buy?

There are online calculators which might give you a rough idea of the cost of a Statutory Lease extension...
For example:
https://myleasehold.co.uk/lease-extension-calculator/
https://connaughtlaw.com/real-estate/lease-extension-calculator/

But bear in mind that:

• There will also be legal and valuation costs to pay - which could be as much as £4k to £5k on top

• Each year you delay could add £1k or £2k or more to the lease extension cost

• A change in the law is expected which might (or might not) reduce the cost of the lease extension by £3k to £5k

(As a rough guess, I think your lease extension might cost between £25k and £35k. Is it the one in Kings Norton?)



If your budget is tight, you should also bear in mind that if you buy a property, you will be responsible for maintenance and repair costs.

For example, if the central heating boiler packs up, it might cost £1.5k to £3k to have a replacement put in. Or if the roof starts leaking, you might have to pay a few hundred pounds (or more) towards getting it fixed.

JustAmyCov

(As a rough guess, I think your lease extension might cost between £25k and £35k. Is it the one in Kings Norton?)

If your budget is tight, you should also bear in mind that if you buy a property, you will be responsible for maintenance and repair costs.

For example, if the central heating boiler packs up, it might cost £1.5k to £3k to have a replacement put in. Or if the roof starts leaking, you might have to pay a few hundred pounds (or more) towards getting it fixed.

Yes it is the one in Kings Norton.

I really do think I will have enough money left from my wages to save a little bit each month for possible repairs or unexpected costs and I also have my mum too who I know would help me in a heartbeat.

eddddy

OK - so I guess you need to decide whether £75k... plus, say, £35k for the lease extension, plus £5k fees (i.e. £115k in total) is a fair price for the maisonette.

Assuming I'm looking at the right property...

FWIW, those maisonettes don't seem to come on the market very often. But the one next door sold for £80k in 2018 - it sounds like it already had an extended lease. (It was on the market for £85k and sold for £80k). If it was £80k in 2018, that suggests the current value might be around £90k to £95k.

That makes £75k for this one with a short lease sound expensive - but I don't know the market in that area. Obviously, you could try a lower offer, maybe £60k.

(Don't forget that you'll also have to pay solicitor's fees, etc.)


As I mentioned... if it's a long time before you get your inheritance, the cost of the lease extension could be much higher.

And if your inheritance doesn't come through, and you end-up having to sell without an extended lease - you might have to sell at a loss.