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    • clarkeycat
    • By clarkeycat 13th Feb 18, 11:41 AM
    • 3Posts
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    clarkeycat
    Purchasing a flat with a 63 year lease
    • #1
    • 13th Feb 18, 11:41 AM
    Purchasing a flat with a 63 year lease 13th Feb 18 at 11:41 AM
    I've been flat hunting for the past few months, and I've finally found a place I really like and would like to make an offer on.

    The property's value is 450k - I will be paying about 300k of the purchase price with cash, and the remaining 150 with a mortgage.

    However, there's an issue. The lease on the property is currently 63 years. The vendor is in the process of acquiring the freehold, along with the leaseholders of the others 2 flats in the property, and intends to extend the lease to 150 years, which is obviously a much better situation.

    My fear is that if I wait for this to happen (which could take months), somebody else will make an offer and get the place. What are my options? Does it seem likely that I'll get a mortgage agreed under these conditions? Am I able to get the vendor to guarantee the lease extension prior to purchase?

    I realise it's quite a complicated situation, so any thoughts are very welcome - first time buyer so I'm learning all this as I go along.
Page 1
    • eddddy
    • By eddddy 13th Feb 18, 11:59 AM
    • 6,122 Posts
    • 5,927 Thanks
    eddddy
    • #2
    • 13th Feb 18, 11:59 AM
    • #2
    • 13th Feb 18, 11:59 AM
    My fear is that if I wait for this to happen (which could take months), somebody else will make an offer and get the place. What are my options? Does it seem likely that I'll get a mortgage agreed under these conditions?
    Originally posted by clarkeycat
    It's very, very unlikely that a lender would offer a mortgage on this property.

    A cash buyer might come along, looking for a bargain - who's prepared to buy a flat with a 63 year lease at a very low price.

    Is the seller desperate, might they accept a low price - or rather wait until the extension is done and get a better price?

    Am I able to get the vendor to guarantee the lease extension prior to purchase?
    Originally posted by clarkeycat
    In theory - yes.
    In practice - probably not (the seller's solicitor would advise them not to). There are too many things that could go wrong along the way.

    In fact, the big risk for you is that you wait many months for this to happen, and find that the lease extension just doesn't happen at all.
    • m0bov
    • By m0bov 13th Feb 18, 12:38 PM
    • 1,267 Posts
    • 857 Thanks
    m0bov
    • #3
    • 13th Feb 18, 12:38 PM
    • #3
    • 13th Feb 18, 12:38 PM
    You can have the lease extended or renewed upon completion.
    • NineDeuce
    • By NineDeuce 13th Feb 18, 12:42 PM
    • 798 Posts
    • 736 Thanks
    NineDeuce
    • #4
    • 13th Feb 18, 12:42 PM
    • #4
    • 13th Feb 18, 12:42 PM
    I've been flat hunting for the past few months, and I've finally found a place I really like and would like to make an offer on.

    The property's value is 450k - I will be paying about 300k of the purchase price with cash, and the remaining 150 with a mortgage.
    Originally posted by clarkeycat
    The other issue is that you wont have enough money. 300k + 150 = 300,150. You are 149,850 short
    • da_rule
    • By da_rule 13th Feb 18, 12:49 PM
    • 2,572 Posts
    • 2,272 Thanks
    da_rule
    • #5
    • 13th Feb 18, 12:49 PM
    • #5
    • 13th Feb 18, 12:49 PM
    As the seller is not yet a freeholder, they could serve a statutory lease extension notice on the current freeholder. This will start the statutory process to add 90 years to the lease.


    You would not be able to do this on completion as you have to have been a leaseholder for 2 years. However, assuming the seller has, he can start the process then assign it to you.


    The things to be careful of are that you become liable for the freeholders legal costs and it will be the seller that will be suggesting how much to pay for the lease extension (although you could agree this between yourselves beforehand).
    • kingstreet
    • By kingstreet 13th Feb 18, 1:16 PM
    • 33,180 Posts
    • 17,916 Thanks
    kingstreet
    • #6
    • 13th Feb 18, 1:16 PM
    • #6
    • 13th Feb 18, 1:16 PM
    It's very, very unlikely that a lender would offer a mortgage on this property.
    Originally posted by eddddy
    I did a 56 a few years ago.

    A few lenders offer mortgage term plus thirty, so 25 + 30 worked. We bought the freehold a couple of years later.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • clarkeycat
    • By clarkeycat 13th Feb 18, 1:58 PM
    • 3 Posts
    • 0 Thanks
    clarkeycat
    • #7
    • 13th Feb 18, 1:58 PM
    • #7
    • 13th Feb 18, 1:58 PM
    Thanks for the feedback everyone, much appreciated.

    It's very, very unlikely that a lender would offer a mortgage on this property.

    A cash buyer might come along, looking for a bargain - who's prepared to buy a flat with a 63 year lease at a very low price.
    That is what I feared - it does seem like a very slim chance that I'd get a mortgage on this.

    It's a slightly confusing situation. If I were in the vendor's position I would wait until the freehold has been transferred, and the lease extension was complete, then market the property. I'm guessing perhaps he is trying to drum up interest? As he must know that at this point, nobody would pay asking price for it.

    Perhaps he's looking for a cash buyer to take it at a discount as you mentioned, though this wouldn't seem very profitable unless he's in a very dire situation, which he doesn't seem to be.

    The things to be careful of are that you become liable for the freeholders legal costs and it will be the seller that will be suggesting how much to pay for the lease extension (although you could agree this between yourselves beforehand).
    Thank you for flagging that - doesn't seem like a situation I want to be in.

    I suppose I may be best off to keep looking, and put this on the back burner in the hope that the freehold/lease extension process moves forward to completion, then maybe I can get an offer in.
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