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!

It will be near on impossible to sell with that lease, as mortgage lenders won’t touch it. It may go at auction to a cash buyer.

our last property was a leasehold and we had similar issues. It cost us ££££ to extend the lease in order we could sell it. I will never buy a leasehold again unless it’s one with a 999 year lease (which do exist.)

Start by contacting your housing association to explain what would happen if you staircase to the full amount. I think you extend the lease via a conveyancing solicitor but someone will be along to confirm that. That should be your first priority, then the repairs. The good news is, that once that is done, it’ll be easier to sell a Shared ownership house on rather than a flat.

Or you might find that once you staircase eventually to the full amount, that you can apply to become the freeholder but you’d need to check that with the housing association.

@likelysuspect thank you so much. That's very helpful.

Speak to your HA about your options, then get legal advice. There are so many variables- you might be able to staircase out to own the freehold but some HAs have to titles structured so there's another lease in between.

@Spidey66 thank you for that information

@MinnieMountain thank you. Will get in touch with HA

@Fooledaroundandfellinlove thank you for your help

@cestlavielife thank you for this

@Spidey66 was your property a house or a flat? Until what year was the lease extension? With the extended lease was it easy to sell your property?

With these sorts of leases it is somewhat different to say a Flat Lease. If you are happy to stay and do repairs I would set a budget for doing that, get work done and sorted, whilst exploring options with the lease and buying more of the property if you can but bear in mind that trickling capital in isn't generally cost effective. When you say repairs needed what are we talking about?

It was a flat. The extension originally had ?72 ish years left and we extended it by another 100. Once it goes past80 it is more expensive to extend. It cost us £54000 to extend plus legal fees. We were only able to afford it because we owned a holiday let which we sold to fund it. It still took about a year to finally sell but that was to do with the market at the time. I think if the lease hadn't been extended we'd still be trying to sell it 3 years later!

@Spidey66 oh wow. Did they give you the breakdown of that amount? Would you mind sharing please? I just want to have an idea how they arrive to that amount.

Hi @MBelen I'm so sorry to hear of your situation, leasehold is an absolute scam, I had a similar situation in that I had no real idea how it all worked when I bought my South London flat in 2011, that had 86 years left at that point. My conveyancer did mention that it would be best to extend before 80 years, and I thought I'd be able to do so a couple of years later, but I was made redundant in 2013 and it took me ages to find another job. I eventually managed to extend when it hit 76 years, thank goodness, and am very glad I didn't wait any longer because it was extremely expensive

Anyway, I definitely advise you to extend your lease and strongly advise you do so via the statutory process, which will add 90 years and remove any ground rent charges. If you do an informal extension, the freeholder can add all sorts of nasty clauses if they want and, given they've set a house up as a leasehold (which is so outrageous, it should be illegal), I wouldn't trust them!

You can find out a lot more about this from the Leasehold Advisory Service (https://www.lease-advice.org/) but I recommend you start this process asap as every day you wait, the lease reduces further and an extension gets more expensive.

Good luck with it!

@ZiaMcnab thank you for your message. I've read about the marriage value being abolished but may take long to effect. Do you advise we wait for the marriage value to be abolished to reduce the amount to pay or settle the extension now? Just thinking if the marriage value is the part making the amount higher. Also, Ive also eead somewhere that extension will be up to 999 years of im not mistaken.

With the ground rent, is that different from the monthly rent and service charge?

You're right, there is a bill going through parliament at the moment, which currently includes the provision to remove marriage value, but that doesn't mean there won't be anything to pay, as the government has to introduce secondary legislation to define the new valuation method (which won't necessarily reduce the cost a great deal) and, more importantly we have no idea when this will be enacted, it could be years still. If you're happy living where you live and are comfortable not making any changes for a few years, you might well save money by waiting. But if you want to staircase soon, you'll need to extend your lease.

You're right, sorry, that was a typo above, statutory lease extension used to give just 90 years but the law has changed it to 990 now, so if you extended now your lease would go to 1066 years (the countdown clock stops as soon as you start the process). You really should have a look at Lease advice | Home as you'll get so much more information there.

Yes, ground rent is different to monthly rent (which you pay because you only own part of your property. Full leaseholders like me don't have any monthly rent to pay) and service charges. You can find out all about it at Ground Rent Explained - HomeOwners Alliance

@ZiaMcnab also, do I get leasehold extension quote from the HA or from a solicitor or from someone with that specialty? Not sure what they are called.

@Spidey66 and who do I go to first if i want to extend lease and could ask for quotes? The HA, solicitors, surveryors?

I can't remember all the financial details but the final bill before legal fees was 54k and then about 5k legal. I did it via a surveyor and solicitor.

Our flat (although old) was originally bought through shared ownership but at the stage we were extending the lease we'd bought the HA share.

You can get further free advice from the Leasehold Advisory Service.

Sorry I can't be more help, it was about 5 years ago and I find all that stuff I so dull I only remember as much as I need for as long as I need! But definitely talk to the Leasehold Advisory Service, they're excellent

www.lease-advice.org/

@Spidey66 thank you so much for all your help!

It might be a different situation from other leasehold properties as its housing association and shared ownership. A lot of the recent info about leasehold property might not be relevant to you. You might not be able to staircase to 100% if they want to keep the property as social housing in the long run (my mum had max 75% but we still sold her flat quickly).

Shelter (charity) might have useful info about shared ownership. Have you checked your contract about who is responsible for what repairs and maintenance. Is it definitely all on you? You have a secure tenancy in a house and area you like. Sounds like some things need sorting but it’s not all bad. I’d contact the housing association and ask your questions before paying for a solicitor.

@Diorama2 in the contract it says we can staircase up to 100% but doesnt state if the remaining leasehold will affect the staircasing. Ive emailed them but wil tale 5 working days to respond. Asked for contact number but customer service said they only have email address to contact which is frustrating as I want my queries answered for us to make a decision.

I suppose at least you'll have responses in writing which is useful to refer back to.

@PragmaticIsh yes you are right. Thank you.