Length of Lease

[Kaz]

Hi

I'm considering buying a flat which has 73 years left on the lease.

As I intend refurbishing it and then selling it straight on again (hopefully), I wondered whether the length of the lease might make it less saleable.

Can anyone give me the benefit of their experience/thoughts on this please

Kaz

[IFA]

Hi Kaz,

Check out this beginner's guide to leases on FindaProperty.com, it seems pretty comprehensive and should help you with everything you need to know.

I would guess that the main points for your situation are probably.......

- A short lease can affect value and saleability, and also make it tricky to raise a mortgage for the property.

- A lease can be extended, but only after you have owned the property for a minimum of 2 years, so you will not be able to do this if you wish to buy, renovate and sell on in a short period of time. You could possibly ask the current owners to extend the lease before you purchase (paying their fees for them if necessary).

- If a lease has less than 80 years remaining when you extend it then the freeholder can demand a "marriage value" which is basically a payment relating to the value added to the property due to the longer lease. Beware of this, the lease is already less than 80 years.

I'm not a trained solicitor / conveyancer. It might be worth discussing this with somebody who is.

[Kaz]

Thank you very much for that IFA, very helpful

It is the reply I was sort of expecting and could possibly explain why it failed to reach the reserve at auction yesterday.

As it's a repossession, I don't think the lender will wish to get involved in extending the lease so think I'll look for something else.

Kaz

[Richard Webster]

Thank you very much for that IFA, very helpful

It is the reply I was sort of expecting and could possibly explain why it failed to reach the reserve at auction yesterday.

As it's a repossession, I don't think the lender will wish to get involved in extending the lease so think I'll look for something else.

Kaz

That's why you have to be careful at auctions - the sellers hope someone won't have done their homework!

[Kaz]

I quite agree Richard. Auctions are a minefield for the unwary.

The length of the lease was the reason I didn't go to the auction and bid on it. It was only when it didn't sell that I started to wonder whether it might've been worth sorting the lease out as it's available at a good price.

It never ceases to amaze me how many people buy at auction without even viewing the property let alone read the legal pack etc.

[twitter@salispropnews]

73 years is fine for lending, and some cash buyers will take a view too, but you move into 60 years area and it just puts people off as an extension will be needed, and that can costs thousands.

[Richard Webster]

73 years is fine for lending, and some cash buyers will take a view too, but you move into 60 years area and it just puts people off as an extension will be needed, and that can costs thousands.

Yes but as Halifax, Lloyds/C&G and Bank of Ireland all require 70 years now as their minimum term most buyers with some grey matter will work out that they could have a job selling in a few yaers time and would therefore prefer that the sellers extended the lease now, rather than the buyer having to find a four or five figure sum in a few yaers time.