Leasehold Flat

[justwhy2022]

I'm in the process of buying a leasehold flat, ftb.

I was told to be begin with the lease was 99 years, but turns out its only 64. Now i'm told if I were to buy it I should extend the lease asap. The management company says it will be a premium of 9k including legal fees.

Now that is just about do-able, however I am reading things about 'Marriage value' and have done a few online calculators. Every where is telling me the amount is to be much higher than is quoted by the management company. If thats what they quote, is that correct or is there anything hidden about to pop up and give me a nasty fright? There are service charges but no ground rent.

Wondering if i'm doing the right thing by buying this flat...

Outside of central london and in a big block of ground and 1st floor flats.

@Ilovemycat13

I haven’t read the whole thread, sorry. But I rushed to comment DO NOT BUY A LEASEHOLD. I had a leasehold flat and it was the worst 4 years of my life. Rising monthly maintanence costs, bills, and the last straw was the freeholder (who didn’t pay a penny) wanted to refurb the entire building. Each flat (8 of us) had to pay £4500 each, and the commercial unit downstairs had to pay the remaining 40%. Please re think your decision.

If the OP can only afford a flat then she will be limiting herself severely as about 95% of flats will be leasehold.

The freeholder has a legal obligation to keep the building in a good condition and also has legal responsibilities for safety such as electrical, fire and asbestos checks etc......

If your building needed refurbishment then it is in your lease that you will pay your share of the costs. They can't have betterment but maintenance is required. The building we own the freehold for has in the leases that externally it will be painted every 3 years, so we have to stick to that or else we would be neglecting our freeholder duties and the leaseholders could have a claim against us. So we get it done and then they are charged in their service charges for it.

Thankfully we are in the process of selling the freehold now to the leaseholders, we don't want the hassle now we no longer live in the building. We bought the freehold initially to save all leaseholders money (as obviously we had to pay service charges as well) but it was horrible to be the only freeholders as the other leaseholders blamed us for all charges. I will be glad to get shot of the damn thing!

If the flat is seriously cheaper than usual and you have factored in the costs then it might be ok to proceed.

However, mortgage is unlikely.

It is extremely remiss of the vendors to have got this wrong. Massive difference in selling a leasehold of 64 years vs a leasehold of 99 years!

Now that they know they should be knocking £25k off the asking price.

If there is no ground rent, the freeholder will ONLY have lease extension as a way of making money on the building and it'll be costly.

Don’t do it. You won’t get a mortgage if there are only 64 years on the lease. You also have to wait 2 years to extend after buying, by which time the cost will have gone up. The vendor could extend but that process could take months.

@ItsSnowJokes @Ilovemycat13

Indeed. Unfortunately I am a single woman on Low income and after saving up as much as I can, I can still only afford a Leasehold flat. Only other option would be to rent.

I am now told the vendor is looking into extending the lease and it should be done in the next month - does that sound realistic enough?
As mentioned before, I thought it took months? Not a month.

[quote justwhy2022]**@ItsSnowJokes* @Ilovemycat13*

Indeed. Unfortunately I am a single woman on Low income and after saving up as much as I can, I can still only afford a Leasehold flat. Only other option would be to rent.

I am now told the vendor is looking into extending the lease and it should be done in the next month - does that sound realistic enough?
As mentioned before, I thought it took months? Not a month.[/quote]
It will be a lot longer than a month. We pushed a lease extension through for one of our leaseholders as she wanted to sell her property and it took 5.5 months. It's solicitors and legal timescales that hold it all up. For example if the current owner issues a Section 42 to the freeholder, they have 21 days to ask for further information. If they don't ask for further information the freeholder has 2 months from the date of issuing the section 42 to come back with a counter offer. The owner is responsible for all legal fees and surveyor fees including the freeholders. I would say 6-9 months is a normal timescale for a statutory lease extension.

The owners currently may know the freeholder and ask for a non statutory lease extension to take it up to 99 years or something (statutory lease extension adds 90 years to the lease) which will be a lot cheaper possibly for them, but then the freeholder may up the ground rent (as a statutory lease extension takes the ground rent to £0). But it would possibly be a lot quicker, as you don't have the same legal timescales.

I would be asking which route they are taking, how on the ball there solicitors are and if not satisfied would pull out.

@ItsSnowJokes

Problem for me is the lack of nice flats available at the moment.

I am keeping my eye open for anything coming on for me to switch to, but there is just nothing. I need to move asap basically.

Are you having a mortgage OP? I can see this question has been asked up thread but I cannot see if you have answered.

It is likely that a lender won't lend on a 64 year lease and it is also likely that your mortgage offer may expire before the lease extension is granted.

@HettySunshine

I was offered my mortgage yes, and they were still prepared to lend after finding out the actual lease with a view to the lease being extended.

@justwhy2022 I had a leasehold flat for seven years and no issue with it at all. Maintenance was well managed, our service fees didn’t go up, my neighbours were lovely. MN seems to strongly dislike flats, but I had no problems at all.

That said, I did get the lease extended when I bought, as part of the process. If the current owner has lived there for more than two years, they’ll have the legal right to extend the leasehold - you won’t, necessarily. We tied this in with the purchase, and it took about two months for it all to go through. It was then boosted to 99 years when I took over, and I sold it with 92 years remaining. That would be my preferred option - it’s much easier.

If the current sellers won’t do it and you don’t want to, you’ll need to look at options. It sounds like your mortgage company will lend but subject to the lease being extended - will they need that process to have started to lend? If not, what timescale are they giving you to extend - 6 months, a year?

You need a binding agreement from the leaseholder (who may or may not be the management company) about what it would cost you to extend. Not the current owner, as they don’t need to give you the same offer. £9k seems low, even with no ground rent due - marriage value is usually linked to the value of the flat. For reference, a flat in my old house was for sale when we sold - it had 65 years remaining, and the estate agent listing says it’ll cost in the region of £25k to extend. We’re not in London, and ground rent was £80 a year.

Was the flat initially advertised as a leasehold of 99 years starting in XXXX year; or did they advertise it as a remaining lease of 99 years and then correct themselves? I’d go through the flat management info with a fine toothed comb if they got this wrong…

But like I said, I had a lovely experience in my flat, so I wouldn’t write off flare overall. Just make sure this one can work for you.