Extending a lease

[kirinm]

We viewed three places yesterday and were intending on putting an offer on all three except we found out one of the flats only has 84 years left on the lease. The owner will assign the lease to get around the 2 year ownership rule but the cost of extending the lease will be approx £12k plus fees (both our own and the freeholder). In reality, we are looking at the best part of £20k if not more.

Any offer would have to take that cost into account but my concern is how we find that money. Has anyone extended their lease and if so, did you fund it just by saving or is there anyway of persuading a mortgage company to lend you the extra?

Possibly clutching at straws but was hoping if we made 3 offers, we must have a chance of getting 1 accepted but extending the lease so soon sounds like an expensive hassle.

Could you ask the owner if he/she will extend the lease? The conveyancer you appoint should raise enquiries about this anyway. The owner may have difficulty selling to a potential purchaser - many mortgage lenders will not loan on anything below 80 years and this is very close to that.

£12k sounds very expensivet I extend a lease that has more than 80 years left to run. Are you sure the seller has his figures right? Likewise£8k in fees also sounds excessive.

Did the search on the gov website. Property price £430k which seems to have an effect (not entirely sure how it works tbh).

We could ask the vendor but given competition in London I doubt they're going to have too many problems selling. Places are going for £30/40k over asking prices so we'd have to stick close to the asking price and just try and use part of the deposit. Apparently the process can take as long as a year if you're dealing with a difficult freeholder - I don't know how that would fit in with the purchase? I'm a solicitor although don't do conveyancing but will see if I can get some info from work - except their sage advice to me was 'don't buy leasehold' which might be fine in their part of the country but is completely ridiculous in London.

I'd take advice from your colleagues but, as the marriage value element of a lease renewal is still four years off, I don't think the flat would be "devalued" as such by a 84 year lease. (I sold a flat with 86 years left to run last year and no one tried to knock off money because of that.)

Put in a low offer and see what happens with the condition that the seller at least puts in the paperwork to extend the lease so that you get a true idea of costs and don't have to wait two years to qualify? My hunch would be that, if the owner doesn't get an offer soon, the price will have to come down as, post-April, there will be far fewer BTLers in London and the market will contract, for a while at least.

If it does contract do you think it'll end up with more properties coming on? None of the places we've seen have been tenanted.

Don't know until it happens really. People with BTLs already and low mortgages won't necessarily want to sell - in fact, they have every reason to sit tight on what they have - but, as fewer BTL buyers will want to buy after April because of the extra stamp duty they will have to pay, I can't see the market staying as competitive. The same homeowners whose properties you are viewing at the moment will still want to move for whatever reasons (more space/job relocation/divorce etc) but they might find they have to be more flexible on price.

If I'm still house hunting by then it'll potentially be good for us money wise - although prices are increasing monthly - but to be honest, I really want the process over!