News0 min ago
The Lease Game
Neighbours, 'owned' their flat (maisonette) for 30+ years, have a problem. Their lease, long when they bought the flat, is now looking short, and in estate agent's terms, too short to be able to sell the flat.
They approached their 'landlord' (I use inverted commas because like all landlords of this estate of maisonettes, the landlord does in fact do nothing - no involvement at all - all they do is own the lease) to extend their lease. 99 years? Of course, madam, that'll be £35,000.
Plus the chisellers costs, of about £5000.
Absolutely stuck, of course. Can't sell (except for a hugely deflated price due to the short lease), can't afford £40K-plus.
Capitalism at work; the market rules. Long live freedom.
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OG the problem is the Leaseholders are often landed gentry families or the Church that have owned the land for centuries. Often, they are unable to sell Freehold for whatever reasons, so produce Leasehold properties. It would be impossible to 'do away' with Leasehold properties. It really is not a big deal to extend leases these days if the landlords are willing. It costs money to extend a lease because the Landlord is giving permission for the Leaseholder to extend the Lease, thus adding significantly to the value of the property. The Landlord does not benefit directly from this up value, so of course wants some form of reward for doing it -usually a percentage of the current market value of the property.
Tora3. Round here (NW London) 99 seems to have been the norm in the 1930s when this lot went up, meaning that over the years many original buyers fell foul of the short term.We were very lucky that (a) we had the six grand necessary (in the early 90s) and that (b) our upstairs neighbour ALSO had the wherewithal. Many didn't.
It only adds significant value to the property because it's value has been unfairly eroded due to the shortening lease. One only has to look at the issues caused to know that the system is wrong. If one buys a residence there should be no chance of one's purchase or investment becoming worthless because one doesn't also own the place it's in, and either have to pay again or lose everything. If one can't sell the freehold, one ought not use it to get folk into an unfair system.