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Bovril

Buying Rental Flat And Lease Issues

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Hi all,

We are FTB and I wanted to ask your expert advice as I don't want us to make a mistake due to naivety.

Our LL is selling up and we would like to buy the flat. It has been valued by an EA at £280-285k. Problem is it only has a 71 year lease (the flat was valued as with the lower lease). The lease extension has been valued at £12,500 to add 54 years to the lease to take it up to 125 years.

We are now a little confused as to where we stand. With a lease renewal you are expected to pay the freeholders costs, however, would a seller not pay these at the beginning of the extension process before putting the property on the market? I am a little concerned that as sitting tennants we are going to be railroaded into paying costs that would have been met by the seller if we were going through regular channels.

Does anyone have any experience or insight into how to proceed in this circumstance?

Thanks.

B

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Have you got a mortgage agreed? It might be that a condition of the mortgage is that the lease is > 75 years. I've heard anecdotal stories to that effect at least but I'm no expert.

If that's the case then it's the LL's problem because if you can't get a mortgage, you can't buy the flat. Simples.

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It's common practice for the seller to extend the lease before you buy it.

If he doesn't, then make sure you get quite a discount on the price, but as the chap above said, mortgage companies like nice long leases, but I think anything over 50 years is ok.

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Hi all,

We are FTB and I wanted to ask your expert advice as I don't want us to make a mistake due to naivety.

Our LL is selling up and we would like to buy the flat. It has been valued by an EA at £280-285k.

Don't use an EA valuation without looking at the difference between the Rightmove index (asking prices - EA valuations) and the Nationwide/Halifax/Land Registry indices (actual sale prices). Then you have a ballpark figure for how the EA price should be adjusted.

Problem is it only has a 71 year lease (the flat was valued as with the lower lease). The lease extension has been valued at £12,500 to add 54 years to the lease to take it up to 125 years.

Does it include a share of the freehold? If not, be very wary, lest your freeholder turn out to be the mafia. Get a solicitor who knows the local market well!

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Thanks everyone for the advice so far.

We have agreed a purchase price for the property and our solicitor is going to look over the lease extension docs to make sure it is all looking OK.

However, now our LL is saying he wants to keep a large chunk of our rental deposit for 'fixtures and fittings'. He has even threatened to come and take the cooker out of the fitted kitchen if we are not prepared to pay for them. I dont want the hassle of an arguement or replacing the appliances straight away, but to be honest we are the 3rd tenants, the appliances he is talking about (fridge/freezer, dishwasher, oven, washing machine, sofa and dining table and chairs) are pretty aging and we would have replaced them in a year or so anyway, especially the sofa which is certainly at the end of its natural life. I dont mind pay a small token amount for them, but dont want to be ripped off, which I feel like he is trying to do. It is a difficult situation. Has anyone been through anything like this? Any tips?

B

Edited by Bovril

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Hi all,

We are FTB and I wanted to ask your expert advice as I don't want us to make a mistake due to naivety.

Our LL is selling up and we would like to buy the flat. It has been valued by an EA at £280-285k. Problem is it only has a 71 year lease (the flat was valued as with the lower lease). The lease extension has been valued at £12,500 to add 54 years to the lease to take it up to 125 years.

We are now a little confused as to where we stand. With a lease renewal you are expected to pay the freeholders costs, however, would a seller not pay these at the beginning of the extension process before putting the property on the market? I am a little concerned that as sitting tennants we are going to be railroaded into paying costs that would have been met by the seller if we were going through regular channels.

Does anyone have any experience or insight into how to proceed in this circumstance?

Thanks.

B

I hvae looked at getting a lease extension on my flat, it's at 82 years. However, had a chat to a friend who is a mortgage advisor (pretty good one). The banks generally look for 30 years on top of the mortgage length (e.g. 25 year mortagage, 55 year lease minimum).

Having said that, I would negotiate to get him to pay, or at least START the process (as you have to live there for 2 years before doing it yourself otherwise)

EDIT: Plus obviosuly you don't have ground rent to pay, which is a bit of a bonus

Edited by digoutabook

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I hvae looked at getting a lease extension on my flat, it's at 82 years. However, had a chat to a friend who is a mortgage advisor (pretty good one). The banks generally look for 30 years on top of the mortgage length (e.g. 25 year mortagage, 55 year lease minimum).

The cost of buying a lease increases as the term reduces, as the buyer has to pay half the "marriage" cost.

The marriage cost for a lease with more than 80 years to run is assumed (by status) to be zero, but one with 79 years to run could be 5% of the value of the property.

Extending a lease with slightly more than 80 years to run is a damned good idea, regardless of its effect on the mortagability, as it will increase the future value.

tim

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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