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What happens once a flat leasehold runs out?

(18 Posts)
EachandEveryone Mon 25-Sep-17 11:17:57

I rent I'm not saying it will be forever but I don't know that. My bathroom has leaked it's a gradual thing that has been building up for years without anyone realising. It can be a big job or a smaller job. My landlady is paying for the bigger job as there's another 12 years left on the leasehold. It's above a shop in London 1930's style. Does anyone know what it means?

MyBrilliantDisguise Mon 25-Sep-17 11:19:04

It will revert to the person who owns the freehold. After 12 years, your landlady won't own it at all.

EachandEveryone Mon 25-Sep-17 11:47:09

So how is it a good investment then say if she's had it for 30 years plus (I'm just guessing) do you think she might try to sell it before then?

Floellabumbags Mon 25-Sep-17 11:49:36

She'll no doubt have the option to extend the lease.

tectonicplates Mon 25-Sep-17 11:59:40

But extending a lease can be very, very expensive so it does depend on if she can afford it or not.

Allthebestnamesareused Mon 25-Sep-17 12:07:55

She will either need to extend the lease by paying a (large) premium as the premium will go up every year that passes or hand the flat back to the freeholder.

If she tried to sell it would be more likely than not that a mortgage company would be prepared to lend money to someone to buy it. therefore only likely to sell to a cash buyer (if she can find anyone daft enough to buy it without extension).

It may be that she inherited the property and that as she has let it for a long time she has taken the view that she will just take the income for the next twelve years and then hand it back.

EachandEveryone Mon 25-Sep-17 14:14:48

Im pretty sure its inherited as she has many, many properties. My bothroom is in a right state tge bath has nearly dropped through the floor. Im weeing myself!

EllieMArroway Mon 25-Sep-17 14:20:51

She will really struggle to sell it with such a short time left on the lease.

EachandEveryone Mon 25-Sep-17 14:49:47

Shes never mentioned selling it i just wondered how it worked. I mean when you first buy a flat you dont go into it thinkng that you will have to give ir back do you? Im assuming its long paid for but what happens to the money she paid for it?

flummoxedlummox Mon 25-Sep-17 14:55:18

Even if she let the lease lapse 12 years of rent may well make it economically worthwhile to invest in a new bathroom to enable her to keep renting the property.

titchy Mon 25-Sep-17 14:55:40

I can't imagine it's really only got 12 years left on the leashold. It's pretty much worthless if that's genuinely the case. She must have renewed it surely, if she's got multiple properties she must be experienced enough to know that. (not entirely sure what it has to do with you.....)

The money she paid has already gone to the person she bought it off. Although you indicated she'd inherited?

LBOCS2 Mon 25-Sep-17 14:57:31

When you buy a flat, you basically buy the right to occupy a space (the demise) for X no of years. The structure of the building is and remains owned by the freeholder. The value of the property is affected by the length of lease left - when you're buying a lease with 999, 125 or 99 years left, you're paying general market rates. Let it drop below 80 years and your flat value decreases, the cost of extending the lease increases and it (often) becomes unmortgagable.

It's possible that your landlady inherited the property, decided not to extend the lease as it was already expensive and is just taking the rent until it reverts to the freeholder. The closer it gets to 0 years, the more expensive it will be to extend the lease - as obviously if it reverts back to the land owner they can reissue a new lease and essentially sell the flat 'as new', so it's in their interest to have it back.

EachandEveryone Mon 25-Sep-17 15:30:30

Why don't you see what it's got to do with me titchy? I'm allowed to ask questions on here whether it's to do with me or not. We've just had a huge water disaster which has had a knock on effect to other properties and actuallu could've seen the landlord having to do a lot more than just get a plumber in I've had to take four days off work to deal with it. So she told the plumber it has 12 years left on the lease. It's a family business has been for numerous years probably since the 30's. I just asked a question about something I don't understand that's all.

Allthebestnamesareused Mon 25-Sep-17 17:24:51

She'll presumably maintain the flat to a habitable level so she can collect 12 more years of rent before it reverts to the freeholder.

What type of tenancy agreement do you have?

shouldaknownbetter Mon 25-Sep-17 19:49:49

We have a flat with about 25 years left and will hand it back when the lease expires. It was bought cheap on that basis, about 90k in central london 20 years ago and it earns 25k a year in rent at the moment so has paid for itself several times over already. Not worth extending - we're just caining it for rental income whilst we can.

EachandEveryone Mon 25-Sep-17 20:02:18

Good god, so imagine being able to do that twenty times over? Wow.

HopelesslydevotedtoGu Mon 25-Sep-17 20:18:47

Are there any regulations over how much the freeholder can charge to extend the lease? Or can they charge whatever they want? Eg if they want the property back set an extortionate price so you walk away?

How much is the lease extension generally in relation to the estimated purchase price? Eg if I saw a flat with 99 years on lease for £400k, what ballpark figure would extension be?

shouldaknownbetter Mon 25-Sep-17 21:28:43

I think we were quoted about 300k for our lease extension, but we weren't interested and that was a few years ago so probably a bit more now. It wasn't far off the market value of the flat if it had no leasehold. It's a 3 bed ex council flat near old street.

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