Leasehold sweetener?

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    Leasehold sweetener?

    So the flat I'm considering will apparently come with a new leasehold of 99 years. If I pay full asking price (10k more than I think it's worth) then the flat will come with a 125 year lease. I'm new to leasehold. Is there any benefit to getting the 125 and paying extra? The flat is around 100k to buy
    thanks!

    #2
    In your case, I would suggest it would not be worth paying + £10K for the additional term. You would likely be better off renewing the lease via the statutory route once you are the leaseholder. This will add 90 years to the term of 99 years, reduce ground rent to a peppercorn (£0) and enable you to pay a premium which will be less than £10K from the information you provided. You will be liable for the landlord's legal/surveyor's fees. You will find more information on this forum and on the LEASE website.

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      #3
      As vmart says, and consider whether you really want to buy a leasehold flat at all (or purchase property at all in a City where you might be forced to do so within your price range). May be cheaper to rent.

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        #4
        Hi guys.

        Sorry I may have misled getting some of my terminology wrong.

        So I'm a BTL landlord with one semi in my portfolio. This is my first flat that I wish to buy as a BTL and the first time I've come across leasehold.
        the seller of the flat is arranging a new 99y lease to be in place at the time of sale.
        He has said if he achieves asking price then he will increase the leasehold to 125 years.

        My question is what are the benefits to paying an extra 10k at lease for him to extend the lease by 25 years? I have no plans to sell the flat for many years.

        Or would I be better to give him the 90 (at most) and take the 99years? What would you do?

        Thanks again for your replies.

        Chris

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          #5
          what is the proposed ground rent and its review pattern

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            #6
            250 per year. Get to see the review either today or tomorrow

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              #7
              Swings & roundabouts really, if you have the money now then haggle for the 125 years but once you've owned it 2 years you can add 90 years to the lease for probably similar cost but maybe the better long term option.
              More important might be negotiating the ground rent down or fixing it.

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                #8
                (showing my naivity but...) The ground rent is negotiable? I though it was cast in stone, is it not?

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                  #9
                  Please refer to my post above. Buy at £90K and in the future extend the lease using the statutory route.

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                    #10
                    Have you checked the lease allows sub-letting?

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                      #11
                      I'm viewing the flat and checking that this afternoon

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                        #12
                        A consequence of the near hysteria over ground rents is that a rent of some 80p per day (. A quarter of a cup of coffee in Starbucks a day ) may be viewed as onerous and cause issues in sale being > 0.1% of the value of the property

                        With the market probably cooling ~ particularly for flats , I would have thought offer more than you have previously - say £5k ~ £7.5k more in return for a ground rent of £100 per annum and a 125 year lease

                        a 99 year lease is rather like a flat roof on a freehold house - you see it and know that within 20 years a capital sum has to be paid to renew it - and again the whole negative debate over leasehold has not helped many lessees in leasehold property and many struggle to sell if their rent is outside very narrow criteria or there is any cladding - however small and however low the building is - the whole subject matter needs measured risk assessed discussion - many campaigners have been given a mega phone in the form of the internet and their views get heard when with the greatest respect to them it would be best if they weren’t heard

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                          #13
                          Unreasonable service charges are more of an issue than ground rent but no-one seems to be willing to deal with the issue. I suggest that you build into your calculations escalating service charges which could exceed the rate at which rent may increase.

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                            #14
                            Service charge is 500 per year. It's a town centre flat above a shop. No idea how reasonable that is?

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                              #15
                              Originally posted by Bonehead33 View Post
                              Service charge is 500 per year. It's a town centre flat above a shop. No idea how reasonable that is?
                              The service charge could be absolutely anything - may be £500 this year, but £20,000 next year, or even more when you find yourself one of the 1% of properties with cladding issues (or whatever comes next).

                              As eagle2 says, service charges (and service charge fraud) are where all the bodies are buried.

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