Is this worth buying?
Jul 10, 2018
I have made an offer on a flat which has a short lease of 71 years. I was told by the estate agent that it would only be £200 to buy a 100 year lease, because the current owner was looking at extending it. I have been looking online and the cost seems to be more around £10,000 or so.
I have emailed the solicitor and asked the estate agent again, but no one is answering my questions. It's so annoying, should my solicitor answer quicker or is this the norm? I don't want to waste my time if the lease extension is too pricey.
I wanted to buy cash to mortgage later, which would also release most of the money I spend on it. But if my money is stuck in one property when I could be buying more then it's not a good decision to buy.
71 years is mortgageable, but you are planning to buy in cash so that’s not an issue for you. Once you extend the lease it is certainly mortgageable.
The sensible strategy here is clear:
- Get current owner to kick off the lease extension process by using a specialist leasehold solicitor and you bear the full costs of the legal fees (I can point you in the right direction if you need help)
- Lock the seller into the deal early by exchanging contracts, conditional on a satisfactory outcome of the cost of extending the lease if it makes you feel safer
- Ensure the purchase price agreed factors in all buying and lease extending costs, plus refurb costs if required. Also add in the desired profit you want to make on the deal
- Ensure the lease extension is made assignable to a new buyer i.e. you
- Complete the purchase when you are ready to
- Having circumvented the need to wait 2 years by getting the lease extension assigned to you, get the lease extended
- Get a mortgage based on the uplifted value of the long leased property
- Pull out as close to 100% of the purchase price as possible because you bought a short lease flat and increased the value of it by extending the lease. The better the price you bought at the closer to 100% you will pull out.
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