Lease 63years & 999years added

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    Lease 63years & 999years added

    Hello hope someone can advise any help most appreciated.
    we are in the process trying to buy a flat .
    There is what seems now a management company set up and taken over the freehold from the original developer and the directors seem to be people who live in the flats or other that live elsewhere but all close by presume either landlords or previous owners .
    There is currently a 63year lease in place and when that lease runs out there’s Reversionary 999 year lease in place .
    our lender HALIFAX isn’t happy that when the 63lease remaining runs out that the 999 year lease doesn’t state that it’s automatically starts .
    also there is no maintenance charge on flats just a ground rent that seems to double every 30yrs started in 1975 at 50 it’s currently £100 per year and will double to £200 in 2035 and
    £400 in 2065 then when new lease kicks in 2084 it starts at £500 per year but only goes up £50 per 30years
    however our solicitors say
    When the ground rent exceed £250 for a property outside of London, this converts a long lease into a tenance agreement (AST) for the purposes of the Housing Act, meaning the Lease can be determined by the Landlord serving 2 months notice. This of course is undesirable for lender,
    Is the above a problem ?

    #2
    Yes, avoid this flat like Covid 19.
    These issues need to be sorted by vendor before sale, lease extension clarified, ground rent expunged and maintenance contributions clarified ( this will need the agreement of each lessee so needs doing by the management co / RTM co now. )
    Otherwise you have no idea what your contributions might be.
    Sounds way too dodgy

    Comment


      #3
      Reading the freehold on land registry it does say the Ground rent covers maintenance of the shared areas .
      Forgot to point out these are maisonettes ie 1 flat downstairs 1 upstairs all have their own entrance .
      .

      Comment


        #4
        Keep looking. There will be plenty of properties on the market when sales agreed to beat the stamp duty deadline go off. Lenders are a little ridiculous. They will say to potential borrowers that they cant afford a mortgage of £800 per month although they are paying rent of £1250/month

        Comment


          #5
          Lending isn’t the issue , the only other 1 bed flats where I live are £265k and 12sqm smaller and only 125 lease and £1300 maintenance.
          HELP TO BUY we’ve looked at and decided it’s just a con as whilst gov lends you 20% developers have just added 20% to the house price and at the end of the day 20% has to be paid eventually. Do the flat we are looking at is bigger no maintenance charge and 1062yr lease and 65k cheaper .
          we also have a 20% deposit.
          real problem is finding a property 1bed as they are rare
          and 300k for a 2bed is out of my price range and mortgage capabilities even on 40k a year with 50k deposit ,

          Comment


            #6
            Who owns the freehold? Is it a company owned by the leaseholders?

            ​​​

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              #7
              Yes we think it’s a company now , as originally was a developer and changed in 2015 owned by the leaseholders as a lot of the directors all seem to either live in the flats or very much locally .

              Comment


                #8
                Speak to the directors it may be the original lease term is not relevant if you are going to be a shareholder of the freehold.

                Comment


                  #9
                  There are 2 lease’s current one 63yrs and Reversionary lease 999 years starts 2084.
                  The lender is querying does the 999 lease start automatically and at no cost , as the new lease doesn’t say anything about it .Also ground rent in 2084 starts at £500 but anything over £250 outside London is at risk of -

                  When the ground rent exceed £250 for a property outside of London, this converts a long lease into a tenance agreement (AST) for the purposes of the Housing Act, meaning the Lease can be determined by the Landlord serving 2 months notice. This of course is undesirable for lender,

                  Comment

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