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Original poster

Would you buy a flat with a new 99 year lease, if the freehold wasn't up for grabs?

26 replies

Rooners · 02/12/2013 17:39

And if so...what are the potential pitfalls?

I think I have gathered that if the lease drops below about 80 years, no one will want to buy it?

But is the value of the flat going to just decrease and decrease in this case? Rather than going up?

Lovely lovely flat but I am really unsure if it's a good idea or not.

OP posts:

pileoflaundry · 02/12/2013 17:54

I would want a lot longer than 99 years on the lease (plus a share of freehold).

The flat will be worth a lot less money in 19 years' time. I think (but you ought to check the latest laws) that if you do purchase you'll be able to extend the lease for a 'reasonable' amount of money, plus both sides' solicitors costs, after 2 years. If you wait 19 years, it will cost you much much more.

Original poster

Rooners · 02/12/2013 18:30

Thankyou...I had a feeling that would be the case.

I asked the agents if the vendor might sell us a share but they said it w as doubtful.

there goes another house!

I wonder if we'll ever find anything decent at this rate.

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Damnautocorrect · 02/12/2013 18:36

Some mortgage companies insist on it being longer, I remember mine I had to have renewed to 125 years before purchase.
The freehold bit no problem

ixos · 02/12/2013 18:36

Wouldn't put me off at all. 99 years is fine in my opinion.

Flibbertyjibbet · 02/12/2013 18:39

Of course you will, it just takes time and trailing round viewing lots and lots till you find one perfect for you.

When you go in it and look around it will feel like home. That's how I found my last one. (This one was dps already and near better schools than mine so we moved here after having the kids).

donteatthat · 02/12/2013 18:40

Insist the current owner extends the lease at their own cost as a condition of your offer, I think this is fairly standard with flats with a short lease. Or enquire about increasing the lease yourself and knock down your offer accordingly although this is slightly riskier as you'll have to assume there won't be any problems extending the lease. Good luck!

spotty26 · 02/12/2013 18:52

This is fine and totally normal for a flat! Don't sweat it or you will never find the right property. If it was 70 years or under then yes some mortgagees may be unhappy but no-one will quibble with 99. You can check all lender's requirements for lease length online.

Original poster

Rooners · 02/12/2013 19:14

Thanks all

I'm a bit confused now.

The situation is this, apparently the vendor is trying to purchase the freehold? That can't be right - or actually owns it already, I'm not entirely clear on this.

the lower flat is occupied by his mother, who is elderly.

The agents didnt think he would want us to have a share of the freehold.

We're cash buyers so mortgage not an issue for us but worried about the resale value iyswim? Or complicated attempts to extend the lease once it runs lower than 80ish.

We really don't want to buy something that's going to depreciate, as it is at the top of our budget anyway. But if it is standard, or there is a way around it, then maybe it is worth doing.

Bit lost...sorry to ask so many questions. I am wondering what the vendor's plan is as I am a bit new to leasehold/freehold stuff and the motivations behind it.

OP posts:

Original poster

Rooners · 02/12/2013 19:15

Btw it will be a new lease on completion, to run from 2014 - I assume at vendor's expense.

I don't want that to become our expense in a few years' time iyswim?

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spotty26 · 02/12/2013 19:23

A share of freehold is ideal and if what you say is right I do not understand why the owner would not want to sell a share of freehold to you. If they will sell you a freehold share then you will also need to make sure the arrangements for the lower flat replicate yours, ie they have put a lease in place that deals with the repair of the structure, insurance etc. Have you got a solicitor yet? I really would not over think this as they will address all these concerns and explain ramifications to you. 99 years is fine, 125 would be better, share of freehold would be ideal but not a huge deal.

If it feels right in every other way then make an offer but state it is subject to a full discussion re length of lease and freehold between solicitors.

Original poster

Rooners · 02/12/2013 19:48

We don't have a solicitor on board yet - haven't found anywhere really. We haven't been looking properly for very long.

I'm not sure why he wouldn't want to sell the share either. It seems a shame. Maybe it is a sentimental thing about the property.

I will definitely talk to the agents in detail tomorrow when we go and see it. It is beautiful and I can imagine living there, but actually, even if he does agree to a share of the freehold how much would that add to the price?

Thanks btw, this is so useful.

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BananaPie · 02/12/2013 21:34

The doubts you're having now will be the same doubts that any potential buyer will have when you come to sell (apart from the lease will be shorter by however many years). So even if it doesn't affect the value, it may make it harder for you to sell.

If I've understood and the vendor is selling with a new 99 year lease, could they be persuaded to change this to (say) a much less worrying 150 year lease?

lalalonglegs · 02/12/2013 21:58

I don't think there's anything wrong with 99 years. If there are only two flats in the building and the other owner doesn't want to buy a share of freehold, then there isn't a legal mechanism to buy a share (unless the freeholder wants to let you). Does the vendor own the freehold (with his mother)?

Once you have owned the flat for two years, you have a right to request an extension which, if the lease is longer than 80 years, will not involve marriage value (the bit where it starts getting really expensive). I agree with banana: it's worth asking for 125 years if it bothers you.

Original poster

Rooners · 03/12/2013 10:56

Hiya,

Thanks for the replies...have seen it this morning and it's lovely. Met the lady downstairs and she seems Ok, been in contact with the agents and they have called the vendor and he is new to leasing and freeholds as well, he is going to ask his solicitor some questions and they will get back to us.

We're talking to our old solicitor next Monday.
So I'm not sure if he owns the freehold yet. Lease will start from 2014 apparently.

We want to make an offer - the thing is, what I don't want is to have any sort of conflict from the off as I want to be peaceful there, and leaseholder/freeholder disputes are quite common and I really don't want to be enforcing stuff that isn't willingly given iyswim. Not at this stage when we could just walk away.

Buying a house would probably be simpler wouldn't it - but I guess you get issues and complications wherever you buy.

Would Christmas coming up make it less or more likely that other people are going to want to buy it? I'm wondering how much competition we will have. If we're going for an extension in the next few years we'll need to hold back a few thousand for that. But it is a very popular road.

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superram · 03/12/2013 11:01

Most people start looking in January. I wouldn't rush into it if it's meant to be and all that. The current lease wouldn't worry me and if I was the vendor and owned the freehold I wouldn't necessarily want to sell you half.

beaglesaresweet · 03/12/2013 11:13

Op, I don't quite see why would do you need to get the freehold? It's entirely normal in London to just own hte lease on a flat and then extend it to a long one, so when you re-sell it wouldn't be an issue. To extend you either need the current owner to transfer his rioght to extend to you (if he was there for 2yrs+), or you can wait 2yrs when you buy and then you have the right to extend. Freeholder has to agree, even though he can take some time (but normally they agree quickly as you aer paying them). The only issue is, it's hard to know exactl yhow much will it cost when it comes to it, but again, there ar some rules legally so it can't be a wild price. Of course you will have to spend on legal fees.

beaglesaresweet · 03/12/2013 11:14

2 yrs after you buy, i mean.

beaglesaresweet · 03/12/2013 11:16

exactly, super, why should he sell the other half, as I say most people just own leases and pay ground rent to the freeholder. He is also responsible for major repairs even though you do contribute, but it's less contribution if you only own hte lease.

Original poster

Rooners · 03/12/2013 11:22

'if I was the vendor and owned the freehold I wouldn't necessarily want to sell you half.'

This is what I am worried about. When we could buy a house and own the freehold in perpetuity, why would we want what is essentially a long term let with complicated legal issues to figure out at some point - what if the freeholder wants to do something to the building, that we don't want him to do - and wants access to our property to do it - and what if he won't repair something that goes wrong?

I can see what you're saying but I really would rather avoid any potential conflict in the future. Lots of places round here have a share of the freehold with the lease. So you each own the freehold to your flat.

I'm not saying he should sell us part of it - more do we want to buy just the leasehold? And if we don't, perhaps we should leave it.

OP posts:

contortionist · 03/12/2013 11:33

So you each own the freehold to your flat.

You each own a share of the freehold of the whole building / block of flats. Not the same thing at all, especially when it comes to liability for repairs.

Original poster

Rooners · 03/12/2013 11:41

Yes I see your point. I do quite like having a landlord as long as it is a good one - and the property looks to have been well cared for so far.

We need to dig around a bit before leaping in. I think this is the crux - we aren't used to it, and want to be really cautious.

Thanks for all the advice and help. It is so useful.

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Peetle · 03/12/2013 11:48

It depends entirely on who owns the freehold. I had two leasehold flats, one 99 years, which I sold at about 92. Freeholder was a shell company and useless (apart from demanding money regularly).

My second I bought at about 95 years and sold at around 80. this wasn't a problem as by then the freehold had been sold to one of the other flat owners. However, they were worse than useless - the didn't pay the building insurance and caused us so much grief when selling the flat that we very nearly lost the house we were trying to buy.

The point is, I wouldn't avoid buying somewhere because it was leasehold but you need to get your solicitor have a good look at the lease, which explains what they can and can't do (and charge you for) and what you have to do as well. And it depends on the landlord - there are angels and arseholes in all positions.

Original poster

Rooners · 03/12/2013 11:53

Thanks so much Peetle. That's really helpful and just what I needed to know.

I suppose when you buy outright you're rejecting the future wrangling that may or may not occur.

Also as it will be a new lease we can't say what will be in it yet...but that might mean we get more of a negotiating stance with the purchase. We can maybe insist on certain things being included and so on.

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beaglesaresweet · 03/12/2013 12:33

the whole thing about flats is - they are NOT freehold. If you own a share of freehold you still depend on other people to agree to pay for building works etc. Also even if your freholder is there and is nice (many freeholders are people or companies who you would never meet), then there is no guarantee they won't sell the flat and the freehold to new people, is there?
What I mean is, you really want to buy a house if you want a freehold, or buy one of those rare flats where the sale includes the freehold for the whoe building - but then you will have to have disputes with other resident regarding repairs if they aer slow to pay. If you want no hassle at all - the only answer is to buy a house! Londoners are used to leases, they just live with all the pros and cons.

Original poster

Rooners · 03/12/2013 13:30

Oh crikey - hadn't thought about him selling it on. Oh goodness.

Thankyou for spelling it out in a way I can understand - that makes perfect sense.

I think we need a house really...way too stressful otherwise. I mean properties especially old ones do need repairs now and again and you're dependant on the person doing it in the way you would wish, and also, choosing tradespeople who won't charge an absolute packet then asking you for half.

I can't see it working tbh. I like control.

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