Q:Hi,
I am considering buying a flat which is priced at ￡200k. However, it has its original lease of 99 years from 1963/4. This leaves just 54yrs on the lease.
A number of things concern me:
1. I don't think the current price takes account of the shortness of the lease, and if I were to make an offer, I'm not sure how much to take off the price.
2. The agent reckons it would cost about ￡12k…but don't know where that has come from.
3. Could I get a mortgage on the property, perhaps if the vendor initiated the right to extend the lease?
Is there any way of finding out prices paid for leases, to give a better idea? Also how much would it cost to get the valuation and solicitors fees?
Incidentally, the property needs about ￡10k spent on it to modernise and bring it up to standard.
Any advice gratefully received.
Thanks.
It doesn't really matter, in fact, it's probably better for your freeholder to have a genuine interest in the upkeep of the property and not just hear their cash register ringing
The identity of the freeholder could be important. There are some out there who will use prevarication and exploit the statutory lease extension process for all its worth to get as much as possible from you for the extension – this runs up costs for you so you then become desperate to settle. Also, although unlikely, there are some freeholders who are such bad news that if they own the freehold I would advise a buyer not to buy at all!
I've checked the freehold, and it is owned by a leaseholder in the same block. They have received an invite from the freeholder to extend the lease by 145 years for for ￡20,415. Not sure I like the idea of the freeholder living in, but maybe that's better?!?!
The identity of the freeholder could be important. There are some out there who will use prevarication and exploit the statutory lease extension process for all its worth to get as much as possible from you for the extension – this runs up costs for you so you then become desperate to settle. Also, although unlikely, there are some freeholders who are such bad news that if they own the freehold I would advise a buyer not to buy at all!
Also consider how you are ever going to sell this property if you ever intend to, or even if you will be able to sell it. With the lease as it is causing concerns and problems, unless the lease is extended, it will be even shorter when you come to sell it. Consider what the lease may be when you come to sell and what consequences that may have.
I would have thought Maidenhead might be South East rather than outer Met, though?
I also think prices have slid slightly since Q4 2007.
Yes, you might be right – I used http://www.nationwide.co.uk/hpi/ which gave the difference in Q4 2006 and Q4 2007 for outer metropolitan. Suppose there would be wide variation even within this group… but lack of sales in the area make it difficult to judge.
Sounds unlikely to me that house price inflation has been 8.5% since just over a year ago; even without the leasehold issues it sounds expensive.
In my head, the flat isn't worth paying more than ￡165,000 for. So you're seeing clearly IMO.
Find yourself a whole of market mortgage broker and ask the daughter to obtain a quote from the freeholder for extending the lease. That will give her a reality check
If you bought without the lease extension, it might just be possible to get a mortgage but you will be limited to the number of lenders and, to be honest, it's the sort of thing I'd take a risk on but not many average people will.
Where is the flat? What do you think comparables fetch? Do you know what the ground rent is each year?