The Lemon Fool

I have a flat in London that I bought in 1997 on a 100 year leasehold. It is rented out, and has 74 years left on the leasehold.
My question is, will I have difficulty selling it as the remaining lease decreases? I have read that as the lease gets smaller than 70 years it becomes trickier to find buyers.

Most mortgage lenders want at least 70 years remaining on the lease. So if you let the lease roll below that, you are likely limited to cash buyers only so yes, it will be harder to sell.

My suggestion would be to investigate the mechanism and cost of a lease extension. Search online for “Leasehold Advisory Service” for government information on this topic. Take legal advice on the extension. Don’t drag your feet on this as the closer you get to lease expiry the more it will cost (and freeholders know their position gets stronger and stronger)… as I’m sure you know, you haven’t bought a flat at all, just the right to use it for 100 years!

20thcenturyboy wrote:I have a flat in London that I bought in 1997 on a 100 year leasehold. It is rented out, and has 74 years left on the leasehold.
My question is, will I have difficulty selling it as the remaining lease decreases? I have read that as the lease gets smaller than 70 years it becomes trickier to find buyers.

Even if an interested potential buyer is found the sale may fall through if the buyer cannot get a mortgage on the property. An estate agent may recommend auction.

You can always sell at auction. The price may be lower and the fees higher.

It is generally best to complete the lease extension before it drops below 80 years. After this the shorter the remaining lease the more 'marriage value' you have to pay the freeholder. More information here:
https://hoa.org.uk/advice/guides-for-ho ... -my-lease/

Neutrino wrote:It is generally best to complete the lease extension before it drops below 80 years. After this the shorter the remaining lease the more 'marriage value' you have to pay the freeholder. More information here:
https://hoa.org.uk/advice/guides-for-ho ... -my-lease/

Or buy the freehold. In 1983 I bought a flat leasehold in London and there was an option to buy the freehold. Then you can set your lease to anything you want, plus collect ground rent from the other units.

Only problem is that you might want to sell the freehold when you sell the flat, and find no takers.

Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

If you decide to sell it, just (shop around for quotes and then) instruct an estate agent and solicitor and they will take it from there.

As the lease still has well over 50 years to run, that shouldn't be an issue. Lenders get a bit touchy where they are granting a mortgage where the mortgage term takes it into the last 35 years or so of the lease, in case they have to take possession and sell the property in possession. Mortgage terms tend to normally be up to a max of 25 years, depending on the age and status of the borrower. Though as mentioned leases can usually be extended.

Lootman wrote:

Neutrino wrote:It is generally best to complete the lease extension before it drops below 80 years. After this the shorter the remaining lease the more 'marriage value' you have to pay the freeholder. More information here:
https://hoa.org.uk/advice/guides-for-ho ... -my-lease/

Or buy the freehold. In 1983 I bought a flat leasehold in London and there was an option to buy the freehold. Then you can set your lease to anything you want, plus collect ground rent from the other units.

Only problem is that you might want to sell the freehold when you sell the flat, and find no takers.

Do the other owners of the leaseholds not also have a right collectively to buy their freehold?

English conveyancing is a mystery to me but I thought that if you bought it individually the others could maybe force you to sell it to them as a group. (Do they not set up companies for this that drive accountants to distraction re services and accounts disclosures)

https://www.leaseholdknowledge.com/righ ... -freehold/

richfool wrote:

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

If you decide to sell it, just (shop around for quotes and then) instruct an estate agent and solicitor and they will take it from there.

As the lease still has well over 50 years to run, that shouldn't be an issue. Lenders get a bit touchy where they are granting a mortgage where the mortgage term takes it into the last 35 years or so of the lease, in case they have to take possession and sell the property in possession. Mortgage terms tend to normally be up to a max of 25 years, depending on the age and status of the borrower. Though as mentioned leases can usually be extended.

Mortgage providers' views of remaining lease terms are going to be idiosyncratic. My neighbour bought his flat with 60 years to go on the lease and his lender added 1% to the mortgage rate until he got it extended, which he did a few months after purchase.

Charlottesquare wrote:

Lootman wrote:

Neutrino wrote:It is generally best to complete the lease extension before it drops below 80 years. After this the shorter the remaining lease the more 'marriage value' you have to pay the freeholder. More information here:
https://hoa.org.uk/advice/guides-for-ho ... -my-lease/

Or buy the freehold. In 1983 I bought a flat leasehold in London and there was an option to buy the freehold. Then you can set your lease to anything you want, plus collect ground rent from the other units.

Only problem is that you might want to sell the freehold when you sell the flat, and find no takers.

Do the other owners of the leaseholds not also have a right collectively to buy their freehold?

English conveyancing is a mystery to me but I thought that if you bought it individually the others could maybe force you to sell it to them as a group.
(Do they not set up companies for this that drive accountants to distraction re services and accounts disclosures)

Yup, it's called Collective Enfranchisement. See https://www.lease-advice.org/advice-guide/ce-getting-started/

On the accounts bit, I guess it depends on the size and complexity of the block. I do both the service charge accounts and company accounts for our 6 flat collectively enfranchised block and they're pretty simple and straightforward.

Charlottesquare wrote:

Lootman wrote:

Neutrino wrote:It is generally best to complete the lease extension before it drops below 80 years. After this the shorter the remaining lease the more 'marriage value' you have to pay the freeholder. More information here:
https://hoa.org.uk/advice/guides-for-ho ... -my-lease/

Or buy the freehold. In 1983 I bought a flat leasehold in London and there was an option to buy the freehold. Then you can set your lease to anything you want, plus collect ground rent from the other units.

Only problem is that you might want to sell the freehold when you sell the flat, and find no takers.

Do the other owners of the leaseholds not also have a right collectively to buy their freehold?

In this case the other leaseholders did not want the freehold. It comes with responsibilities and it can be awkward if you sell the flat but cannot sell the freehold.

But yes, I think the collective "condominium" approach is more common these days. I have owned only houses since 1990 so it has been moot.

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

Where abouts in London is it located? I’ve been looking for something in London so this might be of interest!

rthak wrote:

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

Where abouts in London is it located? I’ve been looking for something in London so this might be of interest!

If you're serious, I have one coming up with the best part of 1,000 years on the lease and a share of the freehold management company.
That was bought with a c.89 year lease, which was then extended. The cost was only about £10-£15k if I remember correctly, and seemed worth it, but that was probably 20 years ago.

rthak wrote:

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

Where abouts in London is it located? I’ve been looking for something in London so this might be of interest!

It's in New Cross

Actually I've been a bit of an idiot, I just checked the title leasehold and it's 125 years from 1989...so 91 years left. Not so bad then.

20thcenturyboy wrote:

rthak wrote:

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

Where abouts in London is it located? I’ve been looking for something in London so this might be of interest!

It's in New Cross

Actually I've been a bit of an idiot, I just checked the title leasehold and it's 125 years from 1989...so 91 years left. Not so bad then.

Aww - wrong side of London for me!

James wrote:

rthak wrote:

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

Where abouts in London is it located? I’ve been looking for something in London so this might be of interest!

If you're serious, I have one coming up with the best part of 1,000 years on the lease and a share of the freehold management company.
That was bought with a c.89 year lease, which was then extended. The cost was only about £10-£15k if I remember correctly, and seemed worth it, but that was probably 20 years ago.

Why did you have to pay for extending the lease if you own a share of the freehold?

CliffEdge wrote:

James wrote:

rthak wrote:

20thcenturyboy wrote:Thanks for the replies. I live in Australia now so it's all a bit more complicated. Not even sure how to go about selling a UK property from here.
It's rented out and the mortgage is almost paid off but it's worth more sold than the rental income provides. Assuming I can even sell it from abroad.

Where abouts in London is it located? I’ve been looking for something in London so this might be of interest!

If you're serious, I have one coming up with the best part of 1,000 years on the lease and a share of the freehold management company.
That was bought with a c.89 year lease, which was then extended. The cost was only about £10-£15k if I remember correctly, and seemed worth it, but that was probably 20 years ago.

Why did you have to pay for extending the lease if you own a share of the freehold?

It was just a leasehold originally. Acquiring a share in the freehold was part and parcel of the lease extension.

I've never owned a flat in the UK, so this Leasehold business is all a mystery. It sounds like one big con!

Is it true that Leasehold only exists in England and Wales , but not in Scotland? How do they do it there?


Steve

stevensfo wrote:I've never owned a flat in the UK, so this Leasehold business is all a mystery. It sounds like one big con!

Is it true that Leasehold only exists in England and Wales , but not in Scotland? How do they do it there?


Steve

Re residential correct, really no leasehold residential properties (There is a 1974 Scottish Land Act preventing residential leases over 20 years) You do see ground rents/long leaseholds sometimes with commercial but it is not that common. (I have only ever seen one in Edinburgh)

What we have is each owner having a right in common with each other owner re the solum (ground underneath property) and varying servitude rights re use and burdens (obligations), e.g support - first floor maybe obliged to hold up second floor).

Sorting common repairs can sometimes be messy, especially with a difficult neighbour, however council can operate common repair schemes (They give notice, instruct works, for larger schemes appoint managers, and bill owners with usually a 20% extra uplift as a good incentive for owners to do works without enforcement. We also have Land Tribunal Tenement Management Schemes being set up which forces works to be done with a majority. (Have one on the go at present, £135-£165k roof scheme, we pay 24%)

In effect each flat title is 100% of a horizontal slice out of the building and common ownership of the other bits like ground/ stairs/roofs etc, repairing obligations often following ownership but sometimes not (there are the odd Edinburgh top floor flats liable to maintain the roof all on their own, or some like my house (Split Victorian semi) where front and back elevations are each responsibility of respective owners upper and lower parts, end gable in entirety joint between the two of us, roof joint between the two of us, party wall with next door 50% the two of us 50% our neighbour.

Effectively all sorts of perms re rights/obligations are possible (though relatively recent feudal reform has allowed the removal of some of the title burdens, often things like feudal superior consents etc)

Hopefully a lawyer from Scotland will post on here in somewhat more precise terms, I only know some of above as I work in property.

Charlottesquare wrote:

stevensfo wrote:I've never owned a flat in the UK, so this Leasehold business is all a mystery. It sounds like one big con!

Is it true that Leasehold only exists in England and Wales , but not in Scotland? How do they do it there?


Steve

Re residential correct, really no leasehold residential properties (There is a 1974 Scottish Land Act preventing residential leases over 20 years) You do see ground rents/long leaseholds sometimes with commercial but it is not that common. (I have only ever seen one in Edinburgh)

What we have is each owner having a right in common with each other owner re the solum (ground underneath property) and varying servitude rights re use and burdens (obligations), e.g support - first floor maybe obliged to hold up second floor).

Sorting common repairs can sometimes be messy, especially with a difficult neighbour, however council can operate common repair schemes (They give notice, instruct works, for larger schemes appoint managers, and bill owners with usually a 20% extra uplift as a good incentive for owners to do works without enforcement. We also have Land Tribunal Tenement Management Schemes being set up which forces works to be done with a majority. (Have one on the go at present, £135-£165k roof scheme, we pay 24%)

In effect each flat title is 100% of a horizontal slice out of the building and common ownership of the other bits like ground/ stairs/roofs etc, repairing obligations often following ownership but sometimes not (there are the odd Edinburgh top floor flats liable to maintain the roof all on their own, or some like my house (Split Victorian semi) where front and back elevations are each responsibility of respective owners upper and lower parts, end gable in entirety joint between the two of us, roof joint between the two of us, party wall with next door 50% the two of us 50% our neighbour.

Effectively all sorts of perms re rights/obligations are possible (though relatively recent feudal reform has allowed the removal of some of the title burdens, often things like feudal superior consents etc)

Hopefully a lawyer from Scotland will post on here in somewhat more precise terms, I only know some of above as I work in property.

We live in a modern flat in Stirling, Scotland. It has a lift which is unusual here as it is not a "retirement" development or former council property. As a result, the flats are in high demand and sell quickly.

All flats are freehold and, as is normal here, typically have a factor, a regulated property manager in Scotland, who deals with common repairs and maintenance, landscaping etc. and all costs are shared. I don't have Charlottesquare's detailed knowledge of the legal status, I can only comment that the factor does a decent job at reasonable shared cost without the outrageous limitations and costs that I occasionally read about in English and Welsh leasehold arrangements. I feel that purchasers in the south would relish our fairer system.

TP2.

TahiPanasDua wrote:

Charlottesquare wrote:

stevensfo wrote:I've never owned a flat in the UK, so this Leasehold business is all a mystery. It sounds like one big con!

Is it true that Leasehold only exists in England and Wales , but not in Scotland? How do they do it there?


Steve

Re residential correct, really no leasehold residential properties (There is a 1974 Scottish Land Act preventing residential leases over 20 years) You do see ground rents/long leaseholds sometimes with commercial but it is not that common. (I have only ever seen one in Edinburgh)

What we have is each owner having a right in common with each other owner re the solum (ground underneath property) and varying servitude rights re use and burdens (obligations), e.g support - first floor maybe obliged to hold up second floor).

Sorting common repairs can sometimes be messy, especially with a difficult neighbour, however council can operate common repair schemes (They give notice, instruct works, for larger schemes appoint managers, and bill owners with usually a 20% extra uplift as a good incentive for owners to do works without enforcement. We also have Land Tribunal Tenement Management Schemes being set up which forces works to be done with a majority. (Have one on the go at present, £135-£165k roof scheme, we pay 24%)

In effect each flat title is 100% of a horizontal slice out of the building and common ownership of the other bits like ground/ stairs/roofs etc, repairing obligations often following ownership but sometimes not (there are the odd Edinburgh top floor flats liable to maintain the roof all on their own, or some like my house (Split Victorian semi) where front and back elevations are each responsibility of respective owners upper and lower parts, end gable in entirety joint between the two of us, roof joint between the two of us, party wall with next door 50% the two of us 50% our neighbour.

Effectively all sorts of perms re rights/obligations are possible (though relatively recent feudal reform has allowed the removal of some of the title burdens, often things like feudal superior consents etc)

Hopefully a lawyer from Scotland will post on here in somewhat more precise terms, I only know some of above as I work in property.

We live in a modern flat in Stirling, Scotland. It has a lift which is unusual here as it is not a "retirement" development or former council property. As a result, the flats are in high demand and sell quickly.

All flats are freehold and, as is normal here, typically have a factor, a regulated property manager in Scotland, who deals with common repairs and maintenance, landscaping etc. and all costs are shared. I don't have Charlottesquare's detailed knowledge of the legal status, I can only comment that the factor does a decent job at reasonable shared cost without the outrageous limitations and costs that I occasionally read about in English and Welsh leasehold arrangements. I feel that purchasers in the south would relish our fairer system.

TP2.

If built relatively recently (last 20 years or so) there likely will be a deed of condition (prepared by developer) that dictates how property managed, allows for paid manager- I have been involved with the drafting of three of these over the years (lawyer writes them we input re our experience managing property)

Notwithstanding the ownership of these common areas will likely still rest jointly among the owners, the managers generally do not own the common parts merely manage them.

interestingly years ago I lived in Learmonth Court in Edinburgh (Built 1930s/1940s), the property was managed by an Association created by the builders (ahead of their time) and I ended up as a member of the Committee (snared by the secretary). It actually owned one room , off entrance foyer used by the Committee to meet, and one flat (Caretaker' flat). The roof , corridors, boiler room, lifts, gardens etc were all owned jointly by the 84 flats in the block.