Shared ownership flat with 76-year lease: extend, staircase or sell?

[MBelen]

Hi all, looking for some advise. 2019, we bought a 50% SO for £200k, but the remaining lease is currently at 76 years. Given the implications of marriage value, I want to understand the most cost-effective way forward - voluntary lease extension, further staircasing (100%), or a potential sale? Thank you!

I'm not sure if the law is the same for part-ownership but a standard lease of 76 years would be a big problem to sell. Mortgage companies won't touch it. Did you buy the 50% with a mortgage? If so, I'm surprised that the previous owner extending it wasn't a condition of purchase.

Do you know how much it will be to extend? It may well cost more now you've let it go under 80 years.

The main priority is extending the lease
without doing that
stair casing with a mortgage isn’t an option
selling. You’d struggle

@PragmaticIsh we did buy the 50% with a mortgage. We yet have to contact the HA about the extension fee. I've read about this being difficult to sell and expensive to extend. Was not informed of the dilema of having lease below 80 years 😔

@rwalker thank you, will contact HA for details of extension.

Was it new when you bought it? How did you buy something with an 82 year lease if so?

@likelysuspect it was an old house with 84 years left on lease.

Yeah my maths is rubbish!!!

So I dont understand the shared ownership? I thought they tended to be for modern properties or new builds, recent new builds?

Really surprised you got a mortage for that

@likelysuspect its an old terraced house. We were actually surprised to find an old terraced house under shared ownership as you are right they mostly are new builds and flat. It was what we can afford at that time so we went for it. Not sure now if we made the right decision. 😔

First step cost up extending lease. Do that.
Then look at options.
Do you like the property and area?

@cestlavielife will look into that, thank you. We love the area as its close to school and transport to work but the property being old needs repairs now.

Hmm well you cant beat an old terraced house, I love them

However is it a house and in which case why is there a lease? Or is it a conversion flat from a house?

Is it a lease on the house (if a house) because you pay rent on the bit you dont own yet?

confused.com

Why do you want to sell?

I posted without reading this, is this why you want to sell?

You dont sell a house just because it needs repairs (well you can, but its not practical), its not like a car thats run out of life

Houses need constant repair, thats home ownership for you, nothing is ever finished.

@likelysuspect at the moment because of the lowered lease we were thinking of maybe selling is the proper way but without that we wouldn't sell.

Im confused, do you actually want to move, because if not, dont sell

You can work out what you want to do leasewise in your own time (although the longer you leave it the more costly it would be to extend, and that will impact you when you really do need to sell if you dont extend it)

@likelysuspect if it wasnt for the remaining lease we wouldnt sell but as you said about the higher cost of extending lease the longer I leave it, I'm looking at what options I have.

Would it be wise to just stay with the remaining lease and staircase in the future and hopefully get the full ownership? Not sure if staircasing with extending lease can go hand in hand?

Whether you stay or go you should extend the kease otherwise in 76 years there is nothing
So cost up lease extension and repairs

Well if you choose to buy more equity, presumably you need a mortgage inrease? Then the mortgage company may be concerned about the short lease

If you dont need a mortgage and have savings to pay the staircasing, then its up to you to live with a short lease, it has no impact on you but one day presumably you will want to sell and then its a problem

You can apply to increase the lease now, but bearing in mind that may cost money that will then mean you cant stair case (as you have no money left)

It doesnt seem logical to want to sell just because you have a low lease

I still dont understand how its leasehold

@cestlavielife thank you

Buying and selling are costly. If you like the house and location you’d be better spending the money on repairs and lease extension, then staircase later. I’d prioritise repairs that affect structure of building and might be more costly if left undone. Somethings can wait, others best done sooner.

@likelysuspect yes we were thinking of higher mortgage to cover extension and staircase if thats possible. What is the reason why lenders will be concerned of a short lease?

Our plan is to eventually have a full ownership - either with this property or a new property. My question is, if we are able to staircase this property to full ownership does it mean it will be a freehold and we dont have to worry about the lease?

But then if we do want to increase the mortgage to be able to pay for the staircasing, the lenders as you say may not grant the increase of mortgage because of the short lease. At the moment if we do staircase, we will need the help of the lender as we dont have enough money saved yet to afford the staircase. Hope this makes sense.

Not sure how to exlain why this property is leasehold. Should it be not?

Also, if I dont want to sell and want to stay at this property until I die, so eventually the lease will be 0 after 76 years, does it impact my ownership to the property?

OP, Im a bit concerned that you dont seem to know (and no one here can tell you) under what legal context you own your home.

You dont seem to know why you are a leaseholder, this should be something that was explained to you when buying.

You dont seem to know what the implications of leasehold are, very bluntly (and its not necessarily that it pans out this way) technically, at the end of the lease, if the lease ends, the property reverts to the ownership of the freeholder. So you are a leaseholder, which means youve leased the land the property is on. You own the property, but not the land it sits on. Very common for flats. Less common for houses

Im not aware enough of SO and whether there has to be a lease in order to create a rental arrangement for the portion you dont own, perhaps thats why there is a lease. It may be like you say that once you own the entire property, the lease ceases

Lenders of course dont like short leases because of that technicality above, that as time approaches the end of the lease, the more likelihood of the property reverting to the landlord's ownership. It might be 76 years away now but as time goes on, then its 50 years away, then 20, etc, and if you bought it with 20 years left on the lease and then died with mortgage outstanding or couldnt pay the mortgate, the lender wants to get a property re possessed that they can sell on. They wouldnt be able to with a 20 year lease, or even 50 year (easily anyway)

I think you need to do some investigations next week, get all your paperwork out from when you bought it.

@Diorama2 yes you're right. We do love the location. Its probably wiser to protect our investment by sorting out the lease and big repairs than starting elesewhere. Thank you

@likelysuspect how and where do I start looking into these things? Who do I approach to ask about these details?

Some of it you can do today, hopefully you have the documents from when you bought the property

Then go into the Land Registry and download the deeds for your property, it will show who freeholder and leaseholder and mortgage charge is

Next week I would speak to the HA and clarify with them what would happen if you extend the lease, what would happen if you just stair case without extending the lease and own the full property (for sake of argument ignore the mortgage issue for now). You need to establish whether the lease is because of the SO or whether it would be a leasehold property whether you owned it fully or not.

I havent heard of many leasehold houses, its not common but I know they do exist.

You need to get all the paperwork together yourself from land registry freeholder etcetc pay £40 for full details and then spend few £100 with a leasehold expert /property lawyer to get an idea of costs etc to extend lease