Originally posted by messiah
Originally posted by messiah
tim
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Yep that's exactly right. You are simply paying money from yourself into a pot that you own. It would be pointless doing this, so all you have to pay are the legal fees involved.
You are right. The owners of these properties think that it's a right rip off that the tenants can forcibly have their lease extended for such a small amount of money.
tim -
I sold my flat back in June this year and that had 75 years to run and shifting it was a nightmare.
Things start to get very expensive once you have less than 80 years on the lease to run, once you hit this point the freeholder is deemed to be entitled to something called 'Marriage Value'. This basically means that if you have less than 80years to run to increase the lease the freeholder is entitled to 50% of the value of what the property would increase by if it were to be sold with the lease extension, plus you have to buy out your ground rent. If you have greater than 80years lease you just have to buy out the ground rent.
My flat sold int end for £165k, the freeholder wanted £18k (£17k marriage val plus £1K ground rent buyout) plus all his legal fees paid. If I had 81years on this lease I could of just done it for the £1k plus fees. You can challenge the freeholders valuation by going to the Lease Holders Valuation Tribunal but problem is even if thier decision is in your favour you still have to take him to court to enforce it. Pretty sure the same cost applies to buying the freeholder though to that you need a lot of the other recidences to also want to buy theres, can remeber the minimum you need, but again it isnt cheap with less than 80 years.
My solicitor when I bought the place didnt advice me well as the month I completed on the purchase was the month the new 80year law came in, I wouldnt have proceeded if I known.
I managed to sell the flat in the end, but even that was a mare as the freeholder wanted £500 for a license, and if the sale fell through and I got a new buyer I had to pay the £500 again. I lost 2 buyers in total when they found out the cost of the lease extension
In the end though some body did buy it but to this day though I dont why she did though. She paid a price that didnt really reflect how much it would cost to extend the lease, may be her solicitor didnt ask about the lease... I dont care though Im so glad to be out of it.
In the end over 4 yrs I did make some money on the flat, no were near what I would have made though had I put the same cash into a flat with a long lease or a freehold.
Bottom line a flat or house with less than 80yrs lease becomes a fast depreciating asset and could turn out to be a real pain in the ass. You better off going for a smaller place with a bigger lease than a large place with a short lease. If I were honest I wouldnt touch leasehold again unless you have some wapping 999 year lease.
Last edited by MobileCheese; 8 October 2006, 22:21.Comment
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In summary, I refer to my earlier post:
Personally, I would never buy leasehold.
If leasehold, you are not really 'buying', you are 'long term renting' - and speculating that you can sell for a reasonable value later to offset your costs.
Doesn't seem a very good idea at the moment, frankly.Last edited by mcquiggd; 8 October 2006, 22:21.Vieze Oude Man
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