Low lease on a prospective flat

[oopsididitagainn]

Does anyone know about lease renewals?

We recently viewed a flat that we absolutely fell in love with but the lease is 84 years.

Would this put you off putting an offer in? We've been looking for ages and this is the only property within our budget that ticks nearly all of our boxes.

Can someone talk me through the process of renewing a lease? I've had a look online and I understand that it can cost upwards of £10k to renew and that you have to be in the property for 2 years before you can apply - I don't feel like these are huge dealbreakers but the tone in the articles make it sound like it should be?

Am I missing something?

TIA

Labour were talking about leasehold reform and making it much cheaper to renew short leases.
However Labour are just Tories with another name, so you can’t trust them either.
I wouldn’t put an offer in.

It's not a major setback but I don't know the area you are looking in. Is it cheaper than other flats with a longer lease? You have to pay yours and the freeholders legal fees so if its 10k for the extension most likely looking at 14-15k after legal fees and survey costs.

You could try for an informal lease extension earlier but that has risks as the freeholder can put other clauses in the lease like ground rent etc.... or wait the 2 years to start the statutory lease extention. You could also ask the vendors to start the process on your behalf now and then it can transfer to you on sale.

Personally I would ask the vendors to start the statutory process themselves and you take over. They will come up against this with other buyers anyway so they may as well.

Hi OP,

It's been 10 years since I extended the lease on a leasehold property, so my information may be out of date.

I believe that if the current owner starts the process of extending the lease (not sure of exact terminology), they can pass that right to you as the new owner without you then having to wait a further two years.

I think if the remaining lease is over 80 years, there is some kind of accepted calculation used to determine how much it will cost you, but fewer than 80 years and it's plucking numbers from thin air.

My extension was an absolute nightmare and I almost had a breakdown due to the stress of it all, but my lease was about 74 years and the freeholder was particularly difficult (greedy), so that may not be a typical example. I had to go to a tribunal to fight my corner because the freeholder (a large company) was trying to charge me way over the odds and wouldn't negotiate.

I spent about £20k to add 90 years to my lease, including paying the freeholder's costs.

I wouldn't buy leasehold ever again for this reason, but I understand that it's not really a choice for many people, as it wasn't for me at the time.

There used to be an organisation called the Leasehold Advisory Service that provided free specialist advice, but I'm not sure if it still exists.

Good luck, OP. I hope someone else will be along with a different point of view.

That is probably why you can afford it. If it had a longer lease it would/should be more expensive. I wouldn’t just go by mumsnet responses, I would be asking people who are qualified in this area and not just estate agent who has a vested interest. I thought the conservatives got the leasehold review bill past on the last day of this parliament before it dissolved for the general election. Family member sold a 2 years ago flat with a remaining leasehold of approx 92 years without any problems. No-one who viewed it questioned the leasehold or at least if they did the estate agent didn’t tell them. It was very reasonably priced and an amazing flat.

No the tories scrapped that bill so it didn't get passed in time.

There has very recently been leasehold reform passed into law (by the Tories no less!) which will help all these things, but not totally clear how it will work yet.

https://www.gov.uk/government/news/leasehold-reforms-become-law

I believe you need to extend before 80 years is up as that's when higher costs to extend come into effect, and some mortgage companies won't lend if less than 80 years remaining. With 84 left you have plenty of time

Incorrect - see link above it is now law.

Thanks. Feel vindicated now. It did get passed on the 24 May 2024. It should really help you now. Maybe your solicitor can advise you.

I stand corrected. I had read that they wouldn't get it done in time.

This is some good news for leaseholders! Let's see of it is carried on after the general election!

Absolutely! I have skin in the game and also didn’t think it would get through until so was pleased when I saw it had.

I'm an ex freeholder (sole freeholder of the building) and it would have been a nightmare for that aspect of it, but I was also a leaseholder in the building so I had a vested interest to keep things at a reasonable price.

I'm still glad we sold when we did, and made our money back (and a 12k profit) from lease extensions and selling the freehold in the end.

How do you feel about the lease now knowing that a leasehold bill reform went through?

Thanks for the valuable insight everyone!

I definitely feel reassured knowing the bill reform has gone through, so I think we'll be calling to put an offer in first thing.

Obviously we'll get everything checked over by a solicitor and do our due diligence if our offer is accepted - but for now I don't really have any concerns.

Thanks all, very helpful!