Flat Lease Question

[andrew]

Hi,

I was wondering if somebody could give me some advice, i'm currently looking to buy a maisonette with a remaining lease of 79 years. The property is a repossession (currently owned by a bank) which means that it's going for around 30k less than other places down the same road.

Now, i know that extending a lease when there is less than 80 years remaining can be a costly business, i just wanted to know whether i should avoid like the plague or just to go with it and extend the lease once i've been living in the property for 2 years.

My partner and i will be able to save around 20k in two years so we should have more than enough money to cover an extension, i just wanted to know if anyone here could give me any advice on whether i should bother or just buy a more expensive place to start off with.

Obviously we'll have to speak to a solicitor if we put in an offer and it gets accepted, i just want to know if i should bother or not.

The place is in need of a total refit which we've budgeted for, it's currently on the market for 135k (we want to offer 130). Once we've replaced the kitchen, bathroom and made it liveable it might sell for around 160k.

So, do we go for it, tart it up and extend the lease in 2 years or do we walk away.

I understand that there are systems in place that mean freeholders can't charge what they like for an extension, i've also heard that if they want they can drag the whole process out which could be a bit of a nightmare.

Thanks,
Andrew

[Vin]

A solicitor is really the person to ask. But 79 years doesn't sound too bad to me. But remember you are the buyer and the bank will want to sell. The 79 year lease is their "problem" not yours...yet. If you want the place I'd start negotiating and see how it goes.

Edit: If you can stretch to getting a freehold place I'd do that.

[andrew]

The problem is that there aren't many reasonably priced houses where i live and a lot of banks won't touch a freehold flat because they don't want to become landlords if they have to reposes.

It's either stretch ourselves to buy a 2 bedroom house which i don't see as wise in the current market or go for this place that is a great price that we could add some actual value to in the coming years. It's just the lease that worries me /slightly/.

[Vin]

It seems like you are doing research which is good. Its been a while since I had a leasehold place so you must take professional advice.
Another expense to look out for is the annual service charge for the flat.

[andrew]

[MarJay]

[MarJay]

[Vin]

[andrew]

Thanks for the advice guys, i'm going to go for a second viewing tonight, if i still like it i'll put an offer in. I'd like to find out more about the landlord so might speak to one of the neighbours to see what they say.

Obviously i'll get legal advice but i feel a lot better about the whole thing now.

Cheers,
Andrew

[Phoenix]

Just remember that once you dip under 80 years the longer you wait the more it costs to extend the lease or buy the leasehold (enfranchisement) due to the introduction of marriage value which doesn't occur before 80 years. It goes up every year you wait, if you do extend the lease it's likely that it'll come with a peppercorn ground rent which is virtually nothing so may save a few quid a year on that, the service charges will remain though.

Ultimately it is all down to the freeholder, they will quote you on the extension and sometimes they don't want much at all, others will try and screw you and if that's the case you're entitled to go to a tribunal and they will enforce a price based on recent local cases. As an owner after 2 years you have the right by law to buy or extend the lease for what is considered to be a reasonable amount.