Would you buy a property with 50 years lease left?

[Deedee37]

A cheap property came up in my area - cheap obviously because not many years on the lease left and extending the lease would be very expensive at this stage. I can be a cash buyer so no issues with not getting a mortgage. I couldn’t afford extending the lease at the time being. Am I crazy to consider it and not extend the lease? Part of me thinks to gamble and hope that leaseholds will not be a thing anymore in 20+ years time (or that it will be much cheaper to extend/buy the leasehold than it is now). The government seems to head into this direction?

Will you need to sell it? Or pass money on?

If you’re neither interested in selling it one day, or passing money on, then buy it.

If you want to do either of those things - I think it’s a risk. Unless you’re certain you can renew the lease and can afford it.

Despite the words coming from the government they have not changed the leasehold laws yet. They are supposed to end Marriage value in short leases. But there is no guarantee is will happen and the freeholders have strong voices (which the Tories tend to favour). Labour may not see it as a priority

With a lease that short it will get more and more expensive to renew each year and there’s no guarantee that leasehold reform will apply to very short leases or when it will happen. I don’t think I would take the risk.

The government are doing absolutely nothing but paying lip service to the issue of freeholds/leases. Do not buy anything in the hope it will be sorted within 20 years.

Marriage value could seriously make extending it financially unviable.

Put in to an online calculator how much it will cost to renew. This will increase year on year as it has marriage value attached.

It is looking likely that the tories won't get in at the next election so any leasehold reform they are proposing may not happen (they also have a lot of friends with a lot of freeholds and they won't want them to lose money).

I personally wouldn't if you could never afford to extend, it just seems a waste of money as you are basically renting and will have all the service charges, ground rent and property maintenance when you won't have that from actually renting a place. I say this as an ex freeholder!

This is a very short lease. Is this reflected in the price? If so, then do check first how easy it would be to renew and how much, because the flat will need to be sold one day.
I sold mine and renewed the lease for the new owners at the same time (this was reflected in the sale price, obviously). It was quite a task as the landlords weren’t easily accessible.

Is the cost of extending the lease more than the saving on the property price? I probably wouldn't risk it unless I could extend the lease at the same time as the purchase. It will become more and more difficult to sell so the value will drop rather than (hopefully) increasing with most house purchases. Catching a falling knife comes to mind.

I wouldn’t personally

Do you know how much it will cost to extend/buy the lease? Might not be as much as you think

If you would otherwise be renting until the end of your life and this gives you security of tenancy.. and you can afford on-going maintenance and running costs.. then maybe it could be worth a gamble.. but if the alternative is buying a different house without the gamble.. then I am not sure I would..

Thanks all. I think the price for this property is fair and takes the costs of a lease extension into account. I’m tempted because I would like to stay mortgage-free and I could afford the current price with cash savings.

If marriage value gets abolished in future then I could extend the lease, that’s my hope. It’s the current law with marriage value on top of the lease extension which makes it unaffordable. But obviously it is a gamble.

Have you actually got a price from the leaseholder though? I thought it was very much a case of name your price, within reason, or is that just for buying it rather than extending? I got a price to purchase my lease (was longer that yours, 70 or 80 yrs left) before I went through with the house purchase

I’ve just sold my dad’s flat after his death and it had 48 years left on the lease, cost us £53k to renew the lease as part of the sale. The renewing of the lease was a pain and a lot of work for me as his executor, but worked out in the end. I’m not sure if we would have been able to sell it without a lease extension as it wouldn’t have been mortgageable.
If you are not planning on moving (or dying!) for a long time then it might be worth buying as it is and any lease extension could be left to a later date or to be dealt with by your executors. However the cost will increase the longer you leave it and it would depend on whether you want to leave the stress and expense of sorting it out to your executors.
Another alternative is to explore it being renewed as part of the purchase, or negotiate enough of a discount on the property to cover the cost and time of renewing it yourself - the sellers will be limited in the amount of buyers they can sell it to, with its current lease length. You’d also want some kind of confirmation or estimate from the freeholder that they would renew it and at what likely price.
personally I would negotiate enough of a discount and then renew it either as part of the sale process or soon after, so you don’t need to worry about it and it’s all done.