Only a 55 year lease on a flat I'm interested in-help!

clarelutwyche

I am a first time buyer, just seen a flat I really like but it only has 55 years left on the lease.I say only, this sounds a long time to me but apparently not. can anyone help me with answers to the following questions pleeeease!:
1. I've been told you shouldn't go near flats with less than a 70 year lease. Why?
2. How does a low lease affect my ability to get a mortgage?
3. How do I go about getting the lease extended - should I contact a solicitor, should the estate agent help me, should I talk to the vendor, should I find out who the managing agent is and contact them directly?
4. How much (roughly) does an extension of a lease cost?
5. Who should pay for it? - should it be refelected in my offer price? should the vendor pay for it? should we split it?
6. What should it be extended to (years)?
7. AND FINALLY (!) If I want to put in an offer to register my interest - is this a good idea? should it be 'subject to lease'? should I just hold off until I know the lease situation?

Right, that should keep you busy for a little while! I'd be really grateful for any advice though, thanks

Clare

stanmoresaver

clarelutwyche wrote:

1. I've been told you shouldn't go near flats with less than a 70 year lease. Why?
2. How does a low lease affect my ability to get a mortgage?
3. How do I go about getting the lease extended - should I contact a solicitor, should the estate agent help me, should I talk to the vendor, should I find out who the managing agent is and contact them directly?
4. How much (roughly) does an extension of a lease cost?
5. Who should pay for it? - should it be refelected in my offer price? should the vendor pay for it? should we split it?
6. What should it be extended to (years)?
7. AND FINALLY (!) If I want to put in an offer to register my interest - is this a good idea? should it be 'subject to lease'? should I just hold off until I know the lease situation?
Clare

Normally a lender will not lend without 30 years or so left on the lease after the mortgage term- not only for you but the person who buys it from you ( they will probably need a mortgage to buy!)

Lease extentions can cost a lot, the freeholder states a price and you pay it so it depends on many factors including their desire to sell. You should offer the price with the lease as it is, or discuss with the agent/vendor the option of a simultanious purchase of both the new lease and property.

Presuming you are buying in England and Wales, If you want the property, talk to the agent- making an offer is ok as there is no commitment but sensble dialogue is more sensible.

Also, ask about how long the property has been on the market and also about any abortive purchace attempts.

cattie

You should ask the vendor if they have ever made an application to extend the lease or purchase the freehold. For when selling a flat with only 55 yrs left on the lease, it would certainly have been in the vendors financial interest to have tried to get an extension on the lease before puttting the flat up for sale. Find out if there is a valid reason for them not doing this, if indeed they haven't ever applied.

About 6yrs ago I was selling a purpose built Victorian maisonette with 80 years left on the lease & applied to the freeholder for an extension, as I knew it would not only increase the selling price some, but appeal to a much wider market.
The freeholder told me that at that present time he wasn't increasing leases, but made me an offer on my maisonette. It was nowhere near what I sold it for as it was a sort-after property.
At that time you had to have owned the property for more than 3 yrs to apply to buy the freehold & I'd only been there 2 years, but I think the legislation on that has changed now. Had I stayed there longer I definitely would have applied to buy the freehold, which is what my buyers planned to do eventually.

There used to be a Leasehold Advisory Bureau somewhere in central London. I don't know if it's still in existence, but if so it may be worth giving them a call for more advice.

EdInvestor

cattie wrote:

There used to be a Leasehold Advisory Bureau somewhere in central London.

http://www.lease-advice.org.uk/

There's been a load of new legislation, mostly benefitting leaseholders, in the last couple of years

RiskAdverse100

I would be extremely concerned about a flat being marketed with such a short lease. The Seller and the agents must know that there are already some lenders around who would not accept it as security for a mortgage.

There are two ways to extend a lease. You can negotiate a voluntary extension with the landlord or you can force him to extend the lease by using the procedure in the 1993 Leasehold Reform, Housing and Urban Development Act.

The Lease website mentioned above contains a huge amount of extremely useful information on the 1993 Act procedure.

I would certainly want to know why the Seller has not already contacted the landlord to see on what terms the lease could be extended voluntarily. It could of course be that the landlord is not prepared to agree a voluntary extension and the only way to increase the length of the lease would be to use the 1993 Act procedure. Forcing a landlord to do something that he is not prepared to do voluntarily can sometimes be a bad idea.

You really need to find out as much as you can about the cost of a lease extension before going any further. Using the 1993 Act procedure will involve adding 90 years to the remaining term of 55 years. The agents should first of all be asked to say how much a similar flat would sell for if it had 145 years left on it. This will give you a very rough starting figure for the cost of an extension.

If at all possible I would look at other flats and make sure that the agents confirm to you that there are 80+ years left on the lease. It is certainly possible that the flat has been marketed at a lower price because it only has a short lease and that other flats which have longer leases are more expensive and out of your price range.

Extending a lease using the 1993 Act procedure can take a long time to deal with and, unless you are prepared to wait several months while the Seller sorts this out, or deal with it yourself after completion, it is not something to consider unless you have fully investigated what is involved and have a very good idea of what it is all going to cost.

RiskAdverse100