To ask whether leaseholds are REALLY UNFAIR?

[Whatamesshaslunch]

We own a flat that now has quite a short lease (less than 70 years). In order to extend it, the freeholders are asking for £75,000!!! This on a London flat that is worth £600,000. We would have to sell the flat in order to pay, but no one will buy it because they'll see the lease and run a mile. Grrr.

So my question is, in this day and age, why do we have this system? We are the only country to have leaseholds like this.

But it's not crazy when it comes to flats. There are shared areas and you can't own the land the flat sits on because all the flats above and below you are on that footprint too. How else do you managed buildings with lots of individually owned properties therein?

Isn't a leasehold a long rent - so you're just paying a shedload of rent upfront? You don't actually own the property?

If you do go the tribunal route you will have to pay your own legal costs and surveyor, the freeholder's legal costs and their surveyor and any tribunal fees.

If there is any dispute in value you may find the gap between £75k asked for and the £52K on the calculator close very quickly. It pays to extend the lease the higher the number of years left on it - so a minimal amount to extend when there is 90 years still to extend to say 125 years.

We paid £7k plus about £1K in costs to extend a lease on a flat in Berkshire from 79 years back to 99 years to enable us to sell. If the lease drops to below 60 it is very difficult to get a mortgage at all. Obviously the longer you leave it the more it will cost.

Have you asked an agent what the difference in value will be were you to extend (at the cost of £75k).

There really isn't much room to negotiate as the freeholder holds the upper hand and knows that it can cost you as much in ££ and more hassle to take it to tribunal if they pitch their "price" properly.

But it's not crazy when it comes to flats. There are shared areas and you can't own the land the flat sits on because all the flats above and below you are on that footprint too. How else do you managed buildings with lots of individually owned properties therein?

Nouveau the way my large block of flats arranges it is that we each own a leasehold on our own flat, and a share of the common freehold. So the freehold chunk isn't for our own particular flat, but reflects that we share the ground and the communal areas. The leasehhold and share of the freehold must be sold together - you cannot buy a flat without getting a share of the freehold like this.

LespritDescalier I'm scratching my head to think of another country with leasehold as the dominant tenure for apartments.

Virtually all developed countries use either strata title or commonhold. Strata title is a much fairer system for owners.

That's interesting Annie as when we looked at buying the freehold here we could buy for the flats that weren't partaking. That notwithstanding you still have a lease with the freehold company (that you own a share of) so your property is still leasehold, it just happens that alongside it you own a share of the freehold. Which is the same as my point - you cannot own all the freehold of the footprint of a building if there are lots of properties above and below you, thus leasehold is necessary.

I don't agree with the leasehold system but if you're going into buy that kind of property, you certainly need to know everything there is to know and not be naive to the system. We have a flat, we turned down ones with short leases (less than 90), because we didn't know if we'd have the money to extend and our mortgage provider wouldn't lend on less than 85ish years. We see lots of short lease flats being sold for much less than market value to cash buyers only. Probably not a problem if you're in London? Our lease is 970ish years (was 999 to start).

LespritDescalier I'm scratching my head to think of another country with leasehold as the dominant tenure for apartments

Really? There is one very close to you.

aintnothingbutagstring I wish we'd been clued up but surely our solicitor should have pointed out that the lease was classed as short and it could lead to problems further down the line. We paid him enough! We just presumed that as I'd be 100 when it expired and the remaining lease was a lot longer than our mortgage that everything was OK.

I don't know about unfair, because no one is compelled to buy such a place, but it sure is a batshit, outdated system. What do they do in Scotland, they don't have leaseholds on flats.