81 years on lease left - to buy or not to buy?

[James 2009]

The housing association has told me that initially I can only buy a share of 62%. I would be able to acquire more through 'staircasing'. This means I cannot ask the vendor to transfer the benefit of sec 42 Notice of Claim.
I would have two wait 2 years, and that's when there is only 79 years remaining, which means extra costs for me.
The current valuation is 140K (100%) not sure if this includes the aspect of the lease. Would I be possible for me to obtain this valuation (from the vendor)? Or do I have to find a surveyor myself?

Surely the point of shared ownership is to help people like you get on the housing ladder, it is not to make a fat profit. Why on earth should the housing association not do the following (assuming that you can afford it) -

Agree to the staircasing to 100% as part of your purchase arrangements?

Make a legally binding commitment to grant you a non-statutory lease extension based on the principles of the act immediately without forcing you to wait the two years?

If they are not prepared to do these two things (as I suspect) is it because they are a useless bureaucracy or is it just because they do not care about their leaseholders / tenants?

Finally, you need professional valuation advice from someone paid by you to represent your interests. It may be that the valuation advice is that 100% of the flat is worth £140k with the current lease or a very long lease - but in a rational world the flat is currently worth its very long lease value, less cost of statutory extension, less professional fees, less hassle factor, less contingency.

[bramstoker]

Good gosh no! No one believes a vendor’s self-valuation. Pay for your own survey.

Make sure you fully understand the implications of this particular shared ownership deal.

Do you meet some sort of qualification criteria to be able to buy this flat in the first place? Are you happy with 62%? Do you have the money to staircase to 100%?

Yes, I'm eligible as I earn less than 60k and it's under the Housing Options scheme. I am happy to buy the 62% and to staircase, however I am not sure how to deal with this lease extension.

I have had my mortgage agreed, an offer letter received from the housing association. I still need to find a suitable solicitor. Is this the moment to get a surveyor involved to valuate the property?

[bramstoker]

Surely the point of shared ownership is to help people like you get on the housing ladder, it is not to make a fat profit. Why on earth should the housing association not do the following (assuming that you can afford it) -

Agree to the staircasing to 100% as part of your purchase arrangements?

Make a legally binding commitment to grant you a non-statutory lease extension based on the principles of the act immediately without forcing you to wait the two years?

If they are not prepared to do these two things (as I suspect) is it because they are a useless bureaucracy or is it just because they do not care about their leaseholders / tenants?

Finally, you need professional valuation advice from someone paid by you to represent your interests. It may be that the valuation advice is that 100% of the flat is worth £140k with the current lease or a very long lease - but in a rational world the flat is currently worth its very long lease value, less cost of statutory extension, less professional fees, less hassle factor, less contingency.

To get that commitment for a non-statutory lease extension from the housing association I suppose I would have to use a solicitor to propose that to them? The housing association has already informed me that they wouldn't share the costs of lease extension with me. So I am expecting all this will cost me at least 6K....

[bramstoker]

I would like to thank everyone for there advice, it has been really helpful. I am now planning to buy 100% of the leasehold and extend the lease after 2 years. According to the housing association this will cost me around 6k, which I hope will be worth it at that time.

[quarterday]

mortgagees in possession s42 claims for lease extension

Originally Posted by quarterday
The only time you cant, I have found, is where the seller is a mortgagee in possession.


Jeffrey :-
Please cite statutory authority for this.
__________________


Its just how it is, in real life lenders' repossession departments do not make claims for lease extensions; they dont want to open themselves up to a liability for a deposit, and possible costs if the purchaser does not following the sale go ahead and buy the lease extension. Deemed withdrawal from the claim could be months or even years later if the claim ends up going all the way to the lands tribunal and then the new buyer doesnt cough up to go ahead with the matter. I Have much experience in buying from repossession departments; you can give them every reason why they should make a claim and money on account or an indemnity but they will not do it; mortgagees in possession in practice just sell what they have as security.

As to the strict legal position I am not aware of the matter ever having come before the court : the legislation is that the lessee must sign the claim personally; obviously executors and personal representatives can; and quite possibly a trustee in bankruptcy could; but a mortgagees status is different as - correct me if I am wrong - the lease is not transferred to the lessee's chargees in possession, but they act by virtue of the powers under their charge

[James 2009]

Originally Posted by quarterday
The only time you cant, I have found, is where the seller is a mortgagee in possession.


Jeffrey :-
Please cite statutory authority for this.
__________________


Its just how it is, in real life lenders' repossession departments do not make claims for lease extensions; they dont want to open themselves up to a liability for a deposit, and possible costs if the purchaser does not following the sale go ahead and buy the lease extension. Deemed withdrawal from the claim could be months or even years later if the claim ends up going all the way to the lands tribunal and then the new buyer doesnt cough up to go ahead with the matter. I Have much experience in buying from repossession departments; you can give them every reason why they should make a claim and money on account or an indemnity but they will not do it; mortgagees in possession in practice just sell what they have as security.

As to the strict legal position I am not aware of the matter ever having come before the court : the legislation is that the lessee must sign the claim personally; obviously executors and personal representatives can; and quite possibly a trustee in bankruptcy could; but a mortgagees status is different as - correct me if I am wrong - the lease is not transferred to the lessee's chargees in possession, but they act by virtue of the powers under their charge

I bow to your experience, but let me put a scenario to you...

You are buying a repossessed flat with an 81 year lease. You estimate that doing the lease extension in 2 years will cost you an extra £4,000.

You put an offer in writing to the bank of £x, but say that you will pay the costs of serving notice in advance and offer £x plus £2,000 if they serve notice prior to completion. You copy in the defaulting borrower.

You write to the defaulting borrower reminding him of his rights to sue the bank if they fail to get the best price for the property. You copy in the bank.

Any chance of that working? Probably not, bureaucracy isn't too good at coping with simple variations to the norm.

[jeffrey]

A mortgagee in possession is not the leaseholder so it cannot serve a s.42 Notice.
The defaulting borrower remains the leaseholder. Please cite authority for saying that he/she can no longer serve.