Leasehold shock: what can I do?

arunadasi

It’s a perfect storm.

I was very ignorant about leasehold when I bought my flat in 2004. I didn't know a thing about leasehold -- how could I? I was a German citizen, moving to the UK so my children could attend the schools I'd chosen.
Yes, it was my fault for not seeking advice and informing myself. I acknowledge that. It was ignorance, and I ran into it blindly. We don't have this leasehold thing in Germany.

I did not keep up to date on the lease and the years continued to add up. Now, only 47 years remaining. .Last year I tried to sell the flat -- which is now rented -- but to extend the lease I would have had to pay £49000!!!!

I decided not to go ahead, keep renting and hopefully leasehold will be one day abolished. But now I HAVE to do something, The terms of my mortgage is coming to an end in May. £70000 are still owed, and I don't have that much capital.

PLUS the £49000  leasehold extension.I can't do this. I'm 74 years old and cannot get a new mortgage; that is, I could, there are ways and means, but not with that leasehold hanging over me. Ive been speaking to a mortgage adviser and she was horrified at the amount they are demanding. Is that demand normal? The service charges and ground rent are reasonable.

I'm happy to sell without the extension but need a cash buyer.
I’ll just subtract £50000 from the asking price. It’s doable I suppose. But I’d much rather keep the flat and contnue to rent it. It’s in a popular seaside town and who knows, my kids or grandkids might like to live there some day.

Can anyone think of a solution?

itsthelittlethings

Didn't you use a solicitor when you bought?

itsthelittlethings

You bought it with only 69 years on the lease, how did you get a mortgage?

Diaz09

Contact a solicitor who specialises in leasehold extension - many offer free initial consultations to assess your options. At 47 years remaining, you're past the 80-year threshold where premiums become much steeper, but extension is still possible. Given you're now a landlord rather than owner-occupier, the process and costs will be different, so getting proper legal advice specific to your situation is essential before making any decisions.

arunadasi

https://forums.moneysavingexpert.com/discussion/comment/81973442#Comment_81973442

One of the many mistakes I made. Answer: I don’t know. I didn’t know. Nobody warned me, certainly not my solicitor. I was fresh in the UK and very ignorant of the rules. I made many other mistakes, for instance, agreeing immediately to the asking price. I should have offered 5k less.
Trust me, nobody is more regretful than I am.

arunadasi

I did. Obviously not a very conscincious one. I wasn’t told about the problem.

subjecttocontract

https://forums.moneysavingexpert.com/discussion/6665309/leasehold-shock-what-can-i-do

It used to be that before a leaseholder could extend the lease they needed to own the property for 2 years minimum. Don't know if that still applies, you might like to check as a buyer will probably want more than £50K off the price if they have to wait 2 years.

mills112

https://forums.moneysavingexpert.com/discussion/comment/81973601#Comment_81973601

that has been done away with, thank god! yeah, they will want £10k for the legal fees alone and another discount for taking on the risk of extending the lease, so i would say, more like 80k - 90k off.

mills112

with only 47 years left on the lease, it has become an auction property as you are very unlikely to be able to sell it through the standard method.

if you need the money now to repay the mortgage, then that is the best way to sell it. £49,000 to extend the lease does not sound too much to be honest as they are often unaffordable.

there has been a lot of changes with the lease system but it won't be abolished. new leases are now 999 years as standard, so it becomes more like a freehold as it is so long. new build can no longer be sold with leases.

if you have the money to pay off the mortgage, then you can hang on to the property and hope that the new legislation may reduce the premium to extend the lease as the new rules, which no one has yet come up with exactly how it is going to work! is that the lease extension will be more prescribed and so won't cost so much to do as there will no longer be a negotiation process with the freeholder on the premium but it will be determined with a formula (which they haven't yet come up with!) and so it should in theory be cheaper.

mills112

https://forums.moneysavingexpert.com/discussion/comment/81973460#Comment_81973460

as far as i am aware, whether you live in the property or not has no bearing on the lease extension process.

eddddy

arunadasi said

…but to extend the lease I would have had to pay £49000!!!!

Where did you get that figure?

In simple terms, there are 2 ways of extending a lease…

1. The statutory route (a statutory formula is used to calculate the price)
2. The informal route (you agree a price with the freeholder)

If, for example, you've asked the freeholder to suggest a price and the freeholder said £49k (that would be the informal route) - the freeholder might be quoting a stupidly high price. So…

• You might get a much lower price if you take the statutory route, or
• You might be able to negotiate the freeholder down, if you stick with the informal route

You can use google search to find leasehold extension calculators that will indicate the price you might have to pay for a statutory lease extension.

Here's one example: https://www.bradysolicitors.com/lease-extension-calculator/

There will also be fees to pay, which could add £3k to £5k to the costs.

arunadasi said

I'm happy to sell without the extension but need a cash buyer. I’ll just subtract £50000 from the asking price.

You can certainly sell to a cash buyer, but if the lease extension is likely to cost £49k - I suspect the buyer will expect a bigger discount than £50k.