bassguitar 10 #1 Posted September 19, 2020 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 .... Share this post Link to post Share on other sites Share this content via...
spider1 11 #2 Posted September 19, 2020 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 Share this post Link to post Share on other sites Share this content via...
ttparsons 10 #3 Posted September 20, 2020 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. Share this post Link to post Share on other sites Share this content via...
geared 302 #4 Posted September 20, 2020 (edited) 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 Share this post Link to post Share on other sites Share this content via...
bassguitar 10 #5 Posted September 21, 2020 Thank you so much for your comments . They are all very helpful Share this post Link to post Share on other sites Share this content via...
Jeffrey Shaw 89 #6 Posted September 21, 2020 (edited) 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 Share this post Link to post Share on other sites Share this content via...
bassguitar 10 #7 Posted September 21, 2020 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 Share this post Link to post Share on other sites Share this content via...
Jeffrey Shaw 89 #8 Posted September 22, 2020 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. Share this post Link to post Share on other sites Share this content via...
topflat29 10 #9 Posted October 22, 2020 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. Share this post Link to post Share on other sites Share this content via...
Jeffrey Shaw 89 #10 Posted October 27, 2020 I doubt that a 63yr leasehold would be saleable, however. Share this post Link to post Share on other sites Share this content via...
topflat29 10 #11 Posted October 29, 2020 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 . Share this post Link to post Share on other sites Share this content via...