Lease length of 50 years - Leasehold is it worth to buy

[Metaphor]

Why is my son considering purchasing a maisonette that he likes, which has a lease length of 50 years and an annual service charge of £400? It fits our budget, but we're worried about whether it's wise to invest in a leasehold property with only 50 years remaining on the lease. Is it possible to extend the leasehold? I would appreciate your advice the pro and cons. Thanks

Are you buying it?

No, it would be inadvisable to buy one with that lease length and possibly mortgage lenders wouldn't agree to it.

It's unlikely to be mortgageable with such a short term remaining. Yes, you can apply for an extension but it will cost ££££s.

I would seek a price to extend the lease before any attempt to purchase the maisonette.

The property will hugely devalue as the lease reduces, and the cost to extend the lease may exceed the value of the home.

Google, 'buying a flat with a short lease'. There's lots of information online.

Short answer is he will find it difficult to get a mortgage and will find it difficult to sell if he is unable to extend the lease (which can be tricky and costly).

No I wouldn’t advise buying that. The lease will likely be extremely expensive to extend with such a relatively short period left on it. We went through the pain of extending a lease with 68 years left on it, it was a 2 bed flat, it cost in excess of 25k to extend and that was a decade ago now.

It was in London, but I would expect a substantial amount (5 figures easily) to get this lease up to a decent duration.

I wouldn’t.

I live in a leasehold flat and we’re putting it on the market. We’ve been there 25 years and the lease had gone down to about 75 years. Below 80 years it is £££ to extend it but mortgage providers won’t touch it. We ended up paying 54k plus legal fees to get it to a level where mortgage providers would lend. If a property has only 50 years it would be even more. Once bitten twice shy, next property will be freehold, or share of freehold. The only exception is a 999 lease which is as good as freehold really.

avoid.

Don't do it

No don't do it

The cost of the lease extension will be huge and mortgage companies won't lend on that lease term

depends where it is, and how desirable the area - the more so, the more it will cost to extend the lease. Ask your solicitor. The seller has probably already investigated the cost of the lease extension, and if they are starpped for cash not doing it themselves.

The incredibly short lease is why he can afford it. I've noticed that before when looking for new places to live. Somewhere amazing will appear that I thought I couldn't afford and when I look at the lease I realise why it's so cheap. After he leaves that place it will be worthless.

You say your son is considering buying the property but it suits 'our' budget. So sounds like you are helping him to buy. The property in question is probably being marketed at an attractively low price purely because of the lease problems. Steer clear.

The service charge is also quite low.

You won't get a mortgage on the property. Depending on the purchase price you will be looking at 30-50k most likely to extend the lease. My advice is walk away unless you can fund it in cash for both purchase and lease extension.

Here's a good illustration of a very short lease, price of the flat and cost of the lease being extended....

https://www.rightmove.co.uk/properties/143925200

I would not consider such a short lease for amount - when he comes to sell it will be even lower . Without a guarantee and price for extending lease beyond 99 years min I would not touch it with a beanpole .

https://www.kfh.co.uk/services/lease-extensions/?gad_source=1&gclid=CjwKCAiAt5euBhB9EiwAdkXWO778XQpuZvHNeULHOrWl2SR_kvIE97oZeMxyCwXwAkFVkc5dCHfaVBoCs5kQAvD_BwE

There's an estimate calculator you can try here. I wouldn't touch it with a stick unless I had the full details of the lease renewal and was happy with the price and terms.

The answer is, it depends IMO.

The lease will cost a lot of money to renew, but that will surely be reflected in the purchase price (or should be). So the question is does the purchase price + lease renewal cost represent good value compared to similar properties ?

If for example you are not interested in leaving an inheritance but want somewhere relatively cheap to live it could be worth buying and not renewing the lease. It will of course become worth less and less with time, but if you are old and not interested in leaving an inheritance and are highly likely to die before the lease expires maybe you don't care about that at all.

If you need a mortgage the situation will be different as the mortgage is secured against the value of the property which will be low because of the lease issues so it may be difficult to get one.

But the situation does require some careful thought and professional advice/analysis IMO.

You may for example find renting offers better value for money.

Not worth it. My cousin viewed an empty property with a short lease (<70 years). The estate agent said the freeholder wouldn't even entertain a discussion about extension until an offer was accepted. Did her own research and cost estimates were in the tens of thousands, not even factoring in legal fees for both the leaseholder and the freeholder. Wasn't worth it for the price the property was on the market for or even what she thought she might be able to negotiate it down to. She moved on.

Below 80 years and the Marriage Value kicks in and the lease can then costs thousands to extend. Service charges can go up, very rarely down, our flat was £300.00 per year then we had to contribute thousands towards a new roof. I would check out the National leasehold campaign on FB. There are horror stories re leasehold properties on there, never buy one.

thank you all, very useful information, dropped the idea of buying the leasehold property.😀

No you'll never resell it and he'll lose ownership in his lifetime if he's still there

To give you an idea, we sold a flat 9 years ago with a lease of 76 years remaining. It was too short for a lot of mortgage lenders and it cost us £26k to extend back to 125year.

Lease term purchase is potentially very costly. Value of property is taken into account alongside the ‘marriage value’

Do your homework

It won't be mortgageable and you can't extend a lease for 2 years after purchase.

Fwiw leasehold isn't necessarily a bad thing if you can get one with a peppercorn rent and 0 service charges, they do exist.

To give you context I've just been quoted £10k to extend my lease which has 84 years left on it. It's a 3 bed ex-council maisonette in SE London zone 2.
Depends on where it is.. Like all these things, it's all solvable, you just have to buy it at the right price, and probably not with a mortgage, with a bridging loan or cash.

selling something like this should be illegal. don't let your son do it! good luck