Buying Leasehold apartment

Guest2 · 11 Apr 2018 at 21:36

I have a simple question

What happens (or usually happens) when a leasehold properly comes to the end of it's lease?

E.g. I buy an apartment for 100k that has a 50 year lease. I live in it for 50 years, is that properly (not the overall building) still mine? Can I sell it on / to the building freehold owner or are the lease terms re-negotiated?

dowie · 11 Apr 2018 at 21:39

If you let the lease run out then the freeholder owns it, you don't own anything once the lease has expired so you have nothing of value to sell on to anyone.

Generally you pay to extend the lease before it runs out, there is actually some value to be had sometimes in buying leasehold property with not long left on its lease, at a big discount, and then paying to extend the lease.

You really ought to do it before 80 years is up, you pay a lot more on top for the new lease otherwise... however for this reason you might find some properties that have been heavily discounted - it is harder to get a mortgage for example... with your example of 50 year lease you might well not find anyone willing to lend to you.

Glaucus · 11 Apr 2018 at 21:40

it returns to the landlord and is no longer yours,
with 50 years left you will not get a mortgage on it at all.
after 2 years of ownership you have a legal right to extend lease by 90 years, but once you start getting to 80 years and below the price really starts going up.

this is why such leaseholds are super cheap and cash only

https://www.moneysavingexpert.com/mortgages/extend-your-lease

Guest2 · 11 Apr 2018 at 21:45

Glaucus said:
this is why such leaseholds are super cheap and cash only

Generally all apartments in City centers I have seen are leasehold only and some are certainly not cheap. Some are 100 year, some 150, some 1000

Glaucus · 11 Apr 2018 at 21:47

Guest2 said:
Generally all apartments in City centers I have seen are leasehold only and some are certainly not cheap. Some are 100 year, some 150, some 1000

but those aren't 50 years like in your op and are fine for mortgages etc.

anything under 80 years will be hard to mortgage and at 50 years there's zero chance of a mortgage and obviously you have to shell a lot of money out to extend pretty much straight away. imo about 90 years minimum and looking to extend by 85 at the latest.

Guest2 · 12 Apr 2018 at 00:21

ok, sorry I was using 50 years as an example. Some are 100 year leases from 2005-2010

So the chart generally means all leases can be extended - all be it for cost.

Is there not another type of freehold/leasehold where you basically pay for the freehold of your share of the building with the other people who have apartments in the same building?

Glaucus · 12 Apr 2018 at 00:23

Guest2 said:
ok, sorry I was using 50 years as an example. Some are 100 year leases from 2005-2010

So the chart generally means all leases can be extended - all be it for cost.

Is there not another type of freehold/leasehold where you basically pay for the freehold of your share of the building with the other people who have apartments in the same building?

There are but are very rare in england. But it's also something you can explore after buying, if you can get the other leasehold people on board you can buy the freehold. But again it's a cost. Read the link I posted.

Essentially in England you have no option other than accepting it or upping money to buy a house. Unless you get very lucky. You just to factor in and make sure you can save enough to extend and/or remortgage to buy extension.

Lots of older leasehold properties have 999year leases which means you will never have to worry about extending.

a1ex2001 · 12 Apr 2018 at 00:39

Lease extensions particularly in London have become a hideous scam the sums of money involved are ridiculous for the tiny amount of effort involved and the rent charged on top!

BS Dave · 12 Apr 2018 at 23:31

a1ex2001 said:
Lease extensions particularly in London have become a hideous scam the sums of money involved are ridiculous for the tiny amount of effort involved and the rent charged on top!

This. the freeholder will try to screw as much money out of you as possible. buy a freehold if at all possible

LeeUK · 13 Apr 2018 at 01:06

Some leases are just so insane. There is a new built estate on edge of my town built in the 1980s/90s which all came with 999 year leases and the yearly ground rent is still at a very reasonable £35 a year.

a1ex2001 · 13 Apr 2018 at 01:39

LeeUK said:
Some leases are just so insane. There is a new built estate on edge of my town built in the 1980s/90s which all came with 999 year leases and the yearly ground rent is still at a very reasonable £35 a year.

That's very unusual! Modern leases tend to be short, full of nasty rent increases and sold to speculative investors a year after completion! I'd ban them on new builds!

Glaucus · 13 Apr 2018 at 01:42

a1ex2001 said:
That's very unusual! Modern leases tend to be short, full of nasty rent increases and sold to speculative investors a year after completion! I'd ban them on new builds!

Goverment is looking into new laws, there's allready a lot of rights to extend forfaor price as well as self management and right to buy freehold if you can be bothered and get majority of building on board. But is it going to be like the removal of agency fees which so far hasn't materialised.
Unfortunately not everyone can afford freehold and it's still better being on the property ladder than renting.

a1ex2001 · 13 Apr 2018 at 01:56

Freehold flats and freehold new build houses are two different things no new house should be sold leasehold it's a scam happening across the country as we speak.

Jokester · 13 Apr 2018 at 04:10

a1ex2001 said:
Freehold flats and freehold new build houses are two different things no new house should be sold leasehold it's a scam happening across the country as we speak.

Aye, leasehold houses should be avoided like the plague and seemed to have only really come about in the last few years. Same with factoring fees for housing developments.

Chris344 · 13 Apr 2018 at 08:37

We’ve just sold and moved from a leasehold flat in central London to a freehold house.

Our management company was ok but with lease hold, technically, you never own the place- you own the right to reside there under conditions for the duration of the lease.

Also, there are some lenders that are now requiring at least 125 remaining before they’ll offer lend on them.

LeeUK · 13 Apr 2018 at 11:45

a1ex2001 said:
That's very unusual! Modern leases tend to be short, full of nasty rent increases and sold to speculative investors a year after completion! I'd ban them on new builds!

It was mostly built in the 80s and added onto in the early 90s so not new new. Apparently the freehold is owned by the family that originally owned the farm land it's built on rather than some management company/speculative investment company.

a1ex2001 · 14 Apr 2018 at 09:26

Chris344 said:
Also, there are some lenders that are now requiring at least 125 remaining before they’ll offer lend on them.

This is why strong legislation is required we've somehow managed to setup an entire industry that consumes huge amounts of money for nothing the cost or lease extensions particularly in London is bonkers and totally disproportionate to what you receive!