63 Year Lease On My Flat

[bassguitar 10]

I have just discovered that the lease for one of my flats  has only 63 and a half years left to run.

I purchased this property in 1996 for 18k and have taken equity from it, so now owe 56k.

I understand a little about lease extensions, that I've missed the 80 - 82 year window to extend under the conditions applicable and now would be subject to a marriage of its current value of around 100k

My question is what's the best course of action? I'm disappointed of course that I didn't notice this earlier and am reluctant  to pay a large sum to extend considering its purchase price.

So would it be better to extend the lease, sell as it is. ( possibly at auction which is usually my choice) or pay off the loan and keep the property indefinitely.

I'm looking towards a retirement plan now, which is how it came to light, deciding what to dispose of, and what to keep as a pension income

I would appreciate comments, whether they be professional advice or simply what you would do in my situation 

Thanks for reading this ....

[spider1 11]

7 hours ago, bassguitar said:

I have just discovered that the lease for one of my flats  has only 63 and a half years left to run.

I purchased this property in 1996 for 18k and have taken equity from it, so now owe 56k.

I understand a little about lease extensions, that I've missed the 80 - 82 year window to extend under the conditions applicable and now would be subject to a marriage of its current value of around 100k

My question is what's the best course of action? I'm disappointed of course that I didn't notice this earlier and am reluctant  to pay a large sum to extend considering its purchase price.

So would it be better to extend the lease, sell as it is. ( possibly at auction which is usually my choice) or pay off the loan and keep the property indefinitely.

I'm looking towards a retirement plan now, which is how it came to light, deciding what to dispose of, and what to keep as a pension income

I would appreciate comments, whether they be professional advice or simply what you would do in my situation 

Thanks for reading this ....

Depends on your cercumstances if you want to leave it to children or if you aint bothered what happens to it then dont bother 

[ttparsons 10]

Assuming I have the cash available I would pay off the loan and continue to rent it out for the income.  You are not going to outlive the lease so let your beneficiaries decide what to do when the time comes.

[geared 317]

It's a pity your conveyancing solicitor didn't make you aware of this issue back in 1996 when you bought the place.

 

I do wonder though, what are the chances this flat is even still around 63 years time when the lease expires?

Probably abit slim?

Edited September 20, 2020 by geared

[bassguitar 10]

Thank you so much for your comments . They are all very helpful

[Jeffrey Shaw 90]

On 20/09/2020 at 14:18, geared said:

It's a pity your conveyancing solicitor didn't make you aware of this issue back in 1996 when you bought the place.

 

I do wonder though, what are the chances this flat is even still around 63 years time when the lease expires?

Probably abit slim?

Yes, length of lease is always a factor at the time of purchase. Even in 1996, the unexpired term was only 87yrs.

Whether the flat is still standing in 63yrs is not relevant to OP's question, however. Post #1 asks this:

 

I understand a little about lease extensions, that I've missed the 80 - 82 year window to extend under the conditions applicable and now would be subject to a marriage of its current value of around 100k

My question is what's the best course of action? I'm disappointed of course that I didn't notice this earlier and am reluctant  to pay a large sum to extend considering its purchase price.

So would it be better to extend the lease, sell as it is. ( possibly at auction which is usually my choice) or pay off the loan and keep the property indefinitely.

 

The answer is surely that even a statutory lease extension (adding 90yrs to the term; reducing the ground rent to a peppercorn) would be worthwhile considering. The premium would involve paying only half of the marriage value element. The longer that OP leaves it before acting, the less the flat will be worth. It's already just about unsaleable and unmortgageable.

Edited September 21, 2020 by Jeffrey Shaw

[bassguitar 10]

Thanks Jeffrey,

the ground rent is actually peppercorn at the moment 

I thought I had lost the opportunity of adding 90 years now the lease has gone lower than 80years

I assume from your reply that I'm wrong 

[Jeffrey Shaw 90]

20 hours ago, bassguitar said:

Thanks Jeffrey,

the ground rent is actually peppercorn at the moment 

I thought I had lost the opportunity of adding 90 years now the lease has gone lower than 80years

I assume from your reply that I'm wrong 

Yes- you are wrong. All that happens when the lease's unexpired drops below 80yrs is that you have to include in your sums an extra item: 50% of the marriage value.

[topflat29 10]

Bassguitar ,

 

There is a free guide and sample  calculation of cost for statutory  90 years  lease extension  at 68 years and 50 years  on the LEASE website . So statutory lease extension would add 90 years on  the remiaining  63 years making  153 years lease  at Nil ground rent. 

 

https://www.lease-advice.org/advice-guide/lease-extension-valuation/

 

The calculated cost for lease extension at 68 years is  £10,700  for a  property valued at  £150K  ( roughly  7.2%) .  So for  statutory lease extension  at  63 years remaining , the cost may be another 5%  coming to  around 12%.       You would need to check the  current  market value of nearby  houses  to decide whether or not to extend or sell. 

[Jeffrey Shaw 90]

I doubt that a 63yr leasehold would be saleable, however.

[topflat29 10]

Yes , with less than 70 years  remaining on the lease,  it is difficult  for a  prospective buyer  to get a mortgage. 

 

So  Bassguitar  will have to look at extending  the lease .  So make an informal   offer at £10K  and watch if  freeholder shows  any interest .