Lease Length

IME the main issue is whether the mortgage lender is prepared to lend the money given the lease length. You may well be OK at 79 years, IIRC they start getting squiffy around the 70 year mark.

That said, I once sold a place with 60-odd years left.

How long you are planning to stay there, because as the lease length decreases so do your chances of selling it.

Of course he won't. Almost all of the cost of extending the lease is calculated from the increase in value that extending the lease generates.

This price is regulated. If you think that it is too high you can get a tribunal to assess it.

Historically, No, though lenders do seem to be getting more worried about this (for no good reason)

In order to be able to force the freeholder to extend the lease you have to have owned the property for

2 years. If the previous owner has qualified in this way you can get hm to apply for the extended lease and then assign this right to you. You pay the cost but you don't have to wait 2 years.

tim

1. Is that true for all leases, or only residential, domestic, etc?
2. Is that true in Scotland?

I'd be grateful for any opinion on those.

______________ best wishes, Ron

Long ones (greater than 15 years IIRC) with a ground rent less than a some number that I also forget, but which is far more than I've ever had to pay.

Um, don't know.

tim

I was in a similar position when I went to buy my flat. It had about 69 years left on the leasehold and we insisted on a new 99 year lease. This added 5000 to our purchase price, but guaranteed us, I believe, an easier ride.

Our mortgage lender said they don't accept leasehold mortgages under 65 years remaining. The reason we were told is that being in our twenties, we would have 25 years to pay off our mortgage, hopefully at least another 65 years left to live in the flat from when we took the mortgage and by which time, we'd be 80-odd, and assuming we still lived in the flat, we'd need to buy a new lease. This is the scenario a lot of lenders seem to be keen to avoid. Most peculiar.

wrote

Why is the lender worried about what will happen in 65 years' time, when the mortgage will have been paid off already 40 years before that?!

The question does not arise in Scotland, as we don't have this curious freehold/leasehold dichotomy. All residential property is held under a tenure which is equivalent to freehold. Even flats. That is to say it is always sold outright, never "leased", though of course it can also be rented.

The system is (or was) known as feudal tenure (until abolished recently, I think, not sure what if anything took its place), and was broadly similar to a perpetual lease, so it never expired. There was a form of ground rent, called feu duty, but that went out of fashion a decade or two ago when they all got "redeemed". Until recently, then, the only rights a feudal superior had was to enforce the covenants (restrictions) imposed on the original feu charter, such as not being allowed to keep pigs, and that sort of thing.

Ronald, thank you for that. We (in Scotland) were tentatively offered a 'lease' of an adjacent property to use for domestic purposes. Presumably, it was just another word for an annual fee for a licence to use it domestically, but without any long term rights, or rights to pass the arrangement on to our own successors in title?

______________ best wishes, Ron

As I said, most peculiar!

Well, this type of arrangement is usually governed by a "tenancy agreement", though they are often informally referred to as leases.

The way you put it ("to use for domestic purposes") suggests it might be a property normally used for some other purpose, in which case it could well be a commercial lease adapted for temporary residential use, but that would be pretty unusual I think.

It wouldn't be anything to do with Crofting Law, would it?

It sounds as though that was what they meant, then.

No. I can imagine that would be a minefield, and likely, I would guess, to be vulnerable to (benefit from?) more changes in the future.

______________ best wishes, Ron

The rule that they used to follow was they they required

25 years of the lease left after the mortgage was paid off.

I think that the theory was that if you wanted to sell in year 24, there would be a full 25 years left for the next purchasor's mortgage.

But, then this purchasor wouldn't actually be able to get a mortgage as there wouldn't be 25 plus 25 years left, so they seem to be asking for 75 years left: 25 for you, and

25 plus 25 for your purchasor.

But this arguement is circular and doesn't work.

(It also ignores the fact that the average tenure in a leasehold flat seems to be 2 or 3 years!)

tim

So this is where you hide when someone proves that you are talking rubbish!

"Peter Saxton" wrote

Eh?

Who is hiding? What rubbish are you talking about? What "proof"? ...

We had a long discussion about you saying that abbreviated accounts had to be submitted to Companies House but the full accounts didn't need to be produced for the shareholders. I said that the full accounts had to be produced and then abbreviated accounts prepare from the full accounts.

You said: " It doesn't say that "full" statutory accounts have to be prepared as well, if a small company decides to abbreviate its statutory accounts."

When I gave you many arguments and examples you said: "That's because you haven't produced a reference which un-ambiguously shows this to be untrue..."

I then quoted: "Preparing Company Accounts 2006/2007" by CCH p3: "All companies are required to prepare full statutory accounts for shareholders but those for small companies may contain less detailed information. Small and medium-sized companies may also prepare "abbreviated accounts" for filing."

You must have realised that all the rubbish you had been saying had caught up with you because you didn't respond! You acted how a coward would and ran away and hid.

How does this rule work with interest only mortgages?

If the length of the lease was not made clear when an offer was made I would tell the vendor to reduce the price or shove it.