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    • Malena9
    • By Malena9 13th Jan 19, 8:12 PM
    • 2Posts
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    Malena9
    Inherited short lease advice
    • #1
    • 13th Jan 19, 8:12 PM
    Inherited short lease advice 13th Jan 19 at 8:12 PM
    Ive inherited my dads detached maisonete, it has a 30 year lease left on it, i cant afford to extend the lease and aplied for a loan but was declined due to me living abroad.
    I amcurrently renting it out but am confused really as what the best way forward is.
    SELL or just keep it till lease runs out.
    Any advice would be helpful.
    Thanks all
Page 1
    • diggingdude
    • By diggingdude 13th Jan 19, 8:26 PM
    • 526 Posts
    • 687 Thanks
    diggingdude
    • #2
    • 13th Jan 19, 8:26 PM
    • #2
    • 13th Jan 19, 8:26 PM
    have you worked out how much it would cost to extend lease?
    What's the rent?
    House Deposit - Target 20000 April 2019
    Current Savings - 10225 13121.22 14621.22 16021 1729615171 15971 16983 19646
    • ThePants999
    • By ThePants999 13th Jan 19, 8:45 PM
    • 1,420 Posts
    • 1,836 Thanks
    ThePants999
    • #3
    • 13th Jan 19, 8:45 PM
    • #3
    • 13th Jan 19, 8:45 PM
    Since you're living abroad, so owning this isn't going to inconvenience you in terms of stuff like the extra SDLT for buying a 2nd property, I'd probably be inclined to keep it. However, make sure you understand the implications of being a non-resident landlord, e.g. UK tax, the need to provide a UK address to your tenants, etc.
    • pphillips
    • By pphillips 13th Jan 19, 8:55 PM
    • 382 Posts
    • 288 Thanks
    pphillips
    • #4
    • 13th Jan 19, 8:55 PM
    • #4
    • 13th Jan 19, 8:55 PM
    Why would you keep it till the lease runs out? Surely no lease equals no maisonet.
    • Bossypants
    • By Bossypants 13th Jan 19, 9:04 PM
    • 735 Posts
    • 1,435 Thanks
    Bossypants
    • #5
    • 13th Jan 19, 9:04 PM
    • #5
    • 13th Jan 19, 9:04 PM
    Why would you keep it till the lease runs out? Surely no lease equals no maisonet.
    Originally posted by pphillips
    True, but OP would still have the use of it to rent out or live in for 30 years free of charge. 30 years is short for a lease, but it's still a good chunk of the average human lifetime.

    Having said that, in OP's shoes I would find out how much extending the lease is going to cost, how much the place is worth with the current lease and how much it would be worth with an extended term, then work from there.
    • ThePants999
    • By ThePants999 13th Jan 19, 9:11 PM
    • 1,420 Posts
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    ThePants999
    • #6
    • 13th Jan 19, 9:11 PM
    • #6
    • 13th Jan 19, 9:11 PM
    Why would you keep it till the lease runs out? Surely no lease equals no maisonet.
    Originally posted by pphillips
    Yes, and the value if you sell it and the cost of lease extension both reflect that already. There's no arbitrage to be found here - since both the freeholder and any potential buyer have exactly the same information as the OP in terms of the lease length, there's no innate financial advantage to be gained through any option. The OP can either have 30 years' worth of benefit out of it and then lose it entirely, or they can sell it for approximately the net present value of 30 years' worth of benefit, or they can extend the lease for approximately the difference between the sale price now and the sale price with an extended lease. <shrug> It's basically just about what best suits the OP's circumstances.
    • Malena9
    • By Malena9 15th Jan 19, 10:06 AM
    • 2 Posts
    • 0 Thanks
    Malena9
    • #7
    • 15th Jan 19, 10:06 AM
    Inherited short lease advice
    • #7
    • 15th Jan 19, 10:06 AM
    Thanks for allthe replies, cost to extend at the moment is about 80 thou, estimated worth to sell is about 190 thou to 200 thou.
    So selling and buying something else doesnt look feasible after tax and lease extension.
    Would anyone buy on such a short lease.
    Cant afford to extend so feel stuck as to what to do.
    Let it out till it goes back to landlord?
    • Comms69
    • By Comms69 15th Jan 19, 10:15 AM
    • 6,437 Posts
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    Comms69
    • #8
    • 15th Jan 19, 10:15 AM
    • #8
    • 15th Jan 19, 10:15 AM
    Well at say 400 a month rent - That's 144,000 over next thirty years (before tax)


    Or for a loan of 80k, you stand to make 100-120,000 now (well next 6 months)


    How is this even a debate
    • Takmon
    • By Takmon 15th Jan 19, 8:29 PM
    • 88 Posts
    • 91 Thanks
    Takmon
    • #9
    • 15th Jan 19, 8:29 PM
    • #9
    • 15th Jan 19, 8:29 PM
    Well at say 400 a month rent - That's 144,000 over next thirty years (before tax)

    Or for a loan of 80k, you stand to make 100-120,000 now (well next 6 months)

    How is this even a debate
    Originally posted by Comms69
    144,000 minus 30 years of the cost of maintenance and decorating to keep it at a suitable standard. Plus don't forget the OP will be limited in how much of this they can do themselves due to living abroad.
    Once you take that into account and then also consider they can invest the 100k long term and should get a good return.

    The no brainer option of the two would be to take the least hassle of 100k now and make far more over the next 30 years than renting it out.
    • eddddy
    • By eddddy 15th Jan 19, 9:35 PM
    • 7,336 Posts
    • 7,322 Thanks
    eddddy
    Would anyone buy on such a short lease.
    Cant afford to extend so feel stuck as to what to do.
    Originally posted by Malena9
    If the freeholder is cooperative, you could sell it with a lease extension on completion.

    In simple terms, you agree with your freeholder that you offer it for sale with a long lease (say 120 years) at say 200k.

    When the sale completes, the freeholder extends the lease and gets, say, 80k, and you get the remaining 120k.

    It's something that's done quite often.
    • Tom99
    • By Tom99 16th Jan 19, 12:31 PM
    • 3,406 Posts
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    Tom99
    Have you transferred ownership of the flat from your Dad's estate to you?
    If not you have 2yrs from that date your Dad died to serve a statutory lease extension notice.
    You can agree to sell the flat with the benefit of that notice, you contract to serve the notice after you have exchanged contract to sell the flat.
    What is the 30yr lease worth? Maybe 90,000/100,000 but only cash buyers so you may struggle to find a purchaser, however if offered with a lease extension notice you should get a lot more interest.
    If you have already transferred the flat to your ownership I think you will have to wait until you have owned it for 2yrs before you can serve a lease extension notice.
    • G_M
    • By G_M 16th Jan 19, 6:56 PM
    • 46,524 Posts
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    G_M
    Or put it up for auction.


    The advantage is you get cash in your hand; You save the hassle and costs (and risk) of being a landlord. You simplify your tax.



    You lose the income flow; you lose some of the capital value.
    • Tom99
    • By Tom99 16th Jan 19, 7:05 PM
    • 3,406 Posts
    • 2,406 Thanks
    Tom99
    Or put it up for auction.
    The advantage is you get cash in your hand; You save the hassle and costs (and risk) of being a landlord. You simplify your tax.
    You lose the income flow; you lose some of the capital value.
    Originally posted by G_M
    Which you could combine with the offer of a lease extension notice if you are eligible.
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