71 Year Lease, renew or sell as is?

[mansfa]

I have an investment property that has been let for a number of years, I would now like to sell it. The lease has 71 years to run, in you collective opinion would I be better renewing it to say 100 yrs then selling it or getting rid of it as is?

[minnsy]

Renew lease. I presume it is residential - any purchasers solicitor worth their salt would advise their client not to buy a leasehold property with only 71 years left on lease.

Happened to me a few year back. Friendly with landlord, so only cost a few grand to take it from 85 years back up to 100.

Cheers

[jamesuk28]

Yeah, Renew anything under 100 years can cause problems with finance

[Davel]

Can you buy the freehold and then sell it?

[BigAndy69]

71 years should be more than enough! Most lenders insist on 50 years being left, some 60 but very few more than 60 years. Unless you have a Buyer that insists on the Lease being extended its not worth even looking into.

Andy

[mansfa]

Many thanks all. I am going to pop it onto the market as is, and at the same time request a lease extension figure from the freeholder, so if the buyer enquires, I can work the cost into the negociations.

Now, off to find a fast car with some of the proceeds....

[bga]

mansfa said:

Many thanks all. I am going to pop it onto the market as is, and at the same time request a lease extension figure from the freeholder, so if the buyer enquires, I can work the cost into the negociations. Now, off to find a fast car with some of the proceeds....

I brought a place with <70 years on the lease. Not a problem at all, the vendor had a written agreement from the management company stating the cost and terms of renewal and we factored it into the price. None of the lenders we spoke to had a problem with length of the lease & the ones we went with were happy as long as lease was minimum of mortgage term + 7 years IIRC.

Surprised to hear that it can be hard to get finance on places with less than 100 years as it seems common practice for leases to be extended to this time (mine was to 125 though).

[xiphias]

This might sound like a stupid question, but whats the issue of 71 years? That's a hell of a long time! Surely you'd only get worried about 5-10 ?

[bor]

Is there a standard calculation for the cost of extending a lease, or can the landlord pluck a figure out of the air ?

Also, how is the cost to buy the freehold calculated ?

Are these costs negotiable ?
Thanx

[BigAndy69]

Unfortunately that Landlord can charge whatever they like. Some are more fair than others and will do a calculation taking into account the value of the property and the length of the extension. Others will try and rip you off, especially if the Lease has less than 50 years to run.

Andy

[bor]

Thanks, Andy.

[Billsnemesis]

There is a statutory right to a lease extension and the basic formula is laid down by the relevant act so there is only so much the landlord can do to crank up the price. There is argument over the precise calculation but that is essentially a valuation exercise.

It's not my direct area but if you wanted to check it out it is in one of the Housing Acts I think.

Landlord's may try to stiff you but their opportunities are limited and ultimately it goes to the Lands Tribunal (I think)

[madazrx7]

Apologies for going slightly O/T here, just curious; from the thread it sounds like you are leasing from an owner, then sub-letting? Just sounds a bit odd, maybe a difference between UK & Aust? I have owned investment properties (freehold) and rented to tenants myself; why wouldn't the owner do this and cut out the 'middle-man'?

So what you are 'selling' is the right to lease the property from the owner? I wouldn't have thought that my tenants could 'sell' their rental contract to someone else.

Tim

>> Edited by madazrx7 on Tuesday 2nd May 14:55

[insurance_jon]

a lot of properties, particularly in expensive urban developments are sold as a 99 year lease instead of freehold as the developers can still sell the rights to the property in the future.