Shortish lease - costs to extend

[B17NNS]

Looking at buying a 1 bed flat in need of refurbishment.

I've only ever bought freehold before.

Currently on the market at £80k which is kind of what it would be worth in good order so it needs to be £70k to be worthwhile.

That aside the property has a 99 year lease that started in 1984. So 65 years there or thereabouts left.

I'm a cash buyer so it's not an issue at the moment. But if I sell as I understand it a 65 year lease is pretty much unmortgageable.

Anyone have any idea of what an extension would cost?

[Flibble]

B17NNS said:

Anyone have any idea of what an extension would cost?

It's a bit of a how long is a piece of string question. Could be a couple of grand, could be ten times that (though unlikely on a property valued at under £100k).

Another issue is you'd need to own it for two years before they have to give you an extension.

You mention £80k is what it's worth in good order or £70k as it stands, but that would also include with a proper lease. You should look to pay substantially less than £70k, or get the current owner to extend the lease before purchase. You have them over a barrel as only cash buyers will be able to purchase the property anyway.

[Dg504]

Doing the same at the minute so have made a model looking at the various components of the cost.

What's your annual ground rent?

Based on £25 PA ground rent, £70k value without and £80k with (3% yield, 5% deferment - both up for discussion/argument) it's suggesting £7,034.

Plus legal fees for both parties - then you won't be far off the £10k benefit - so maybe a reason to go in lower than £70k?

As with all things solicitor based, this is very, very subject to calculation by an expert.



DG

[alfie2244]

Would be best to get the current owner would need to extend before you buy it IMO....otherwise, IIRC, you will need to own it for 3 yrs...there are many lease extension calculators about.

https://www.lease-advice.org/calculator/

[B17NNS]

Flibble said:

Another issue is you'd need to own it for two years before they have to give you an extension.

You mention £80k is what it's worth in good order or £70k as it stands, but that would also include with a proper lease. You should look to pay substantially less than £70k, or get the current owner to extend the lease before purchase. You have them over a barrel as only cash buyers will be able to purchase the property anyway.

That's the general idea. I'm hoping to pinch it.

Although presumably it's better to get them to do it at it's current value than me have to do it in two years (refurbished, higher value, even shorter lease).

Dg504 said:

Doing the same at the minute so have made a model looking at the various components of the cost.

Cheers, ground rent is £10 PA.

Yes, on that basis it's worth £60k.

[B17NNS]

alfie2244 said:

https://www.lease-advice.org/calculator/

The price of your lease extension is likely to be around £7000 plus costs.

You have 65 years unexpired. Because your lease has less than 80 years left, marriage value has been included in the price.

Cheers, so £60k as is, £70k with a full lease.