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Can someone advise if its worth looking at a 3 bedroom house that has come up local to me for £65k that has only got a 48 year lease left on this. The house itself looks really nice and would be good addition to portfolio but never ever purchased a house with a lease on it. The ground rent is £25 per annum.
Read online never to look at anything below 70 years since it could end up costing thousands. Will be buying cash so no mortgage needed but how much would it cost to increase the lease?Steve
this tool will approximate. You need to add in costs for legal advice, yours and leaseholders
Short leases are a great angle, we buy lots of them.You ideally need the vendor to start the negotiation to either extend the lease or purchase the freehold before the sale and if at all possible complete the transaction at the same time as completion, this is often not possible as some freeholders move very slowly but you can then (as long as the parties) settle this after completing the purchase.If you dont get the vendor to start the ball rolling you will have to wait 2yrs unless you really want to be fleeced, obviously in 2yrs time it will be more expensive.
Stewardson Developments Ltd.
Burson Land Ltd. & Jennings & Gilchreaste Ltd.
Follow me on twitter - @philstewardson
Bear in mind when a lease is renewed the ground rent often goes up. We bought a flat (now sold) that our vendors had just renewed, the original ground rent was about £25 a year, when they renewed it was £500 a year and as it wouldn't affect them they didn't really negotiate hard but that £500 was due to go up in 2027 to £1000 a year and then 25 years later to £2000 a year so do be careful! All the properties we own now are freehold and so much less hassle.
Only buy this if it is at least £20k cheaper than similar freehold properties. Your lease extension cost will depend on many factors, also on who the freeholder is. If it’s a big institutional freeholder you will be royally fleeced, while you may be able to strike a good deal with a private person who wants out. UK leasehold system is like the Wild West, nobody knows what you will end up with, there are only ranges, plus you pay for the freeholders survey and legals, where you will be fleeced again.
Thanks all for coming back to me. I think i might just give this one a miss since seems like more hassle than its worth
Sorry Reddevil, I didn’t want to scare you away, it could still be a good deal, but as I say NOBODY can tell you how much the lease extension is going to cost, everyone will only say things like ‘10k to 20k’ plus all surveyors and legals and surprise surprise the freeholders legals sre ALWAYS 3x those of mine. But could still be a good deal if you get it with a big discount ( at least 20k). Surveyors +legals only cost at least £5k.
I recently looked at a flat with an 18-year lease which was going auction with a guide of £90k.
To renew the lease would have been £175-200k. After a £25k refurb.it would have been worth ~£400k.
I thought about it due to the large SDLT saving. In the end, I decided not to bid on it.
It sold for £190k!
Well yes, auctions are strange places, often properties will go for so much more than they are worth, in London anyway. I can imagine the winners absolutely kicking themselves sometimes.
But there is a point when very short lease flats are worth it for the savings in stamp duty.