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Flat selling advice

brogib
brogib Posts: 2,128
in Not Sports Related
Just need a bit of advice on an offer that's been put to me on my property that I'm stuck with in Kent

I've been trying to get rid of it for a while, but there's been little to no interest so I've been renting it out, but after maintenance and agent fees etc the rent barely covers the costs. During the time it's been rented out, the lease has gone below 70 years (68 left) so the option of selling through the usual ways is now probably not an option. A few months back I was contacted by a bloke (Company) who's proposing to buy the property off me over 5 years, paying the equity (profit) over three payments in the first three years, then two years after I sign the property over to them and they then settle the mortgage and the property is theirs. During this 5 year period when they're "baby sitting the mortgage" they will take the rent, pay the mortgage and take care of maintenance issues etc.

Hope that all makes sense, my grammer ain't the best.

Any advice on this would be greatly appreciated. Cheers

Comments

  • HardyAddick
    HardyAddick Posts: 1,638
    Unusual. See a solicitor. What if the Company takes the rent but does not pay the mortgage, pay your "profit share" etc.?
  • Absurdistan
    Absurdistan Posts: 8,024
    So someone is trying to buy your flat on HP.
    Need to talk to a solicitor.
  • brogib
    brogib Posts: 2,128
    HardyAddick said:

    Unusual. See a solicitor. What if the Company takes the rent but does not pay the mortgage, pay your "profit share" etc.?

    Yeah, I forgot to mention that they insist I use an independant solicitor (which I'd do anyway).

    The payment that they're contracted to pay will be made at the beginning of each year. Then if they break the terms of the agreement (ie fail to pay the mortgage at any point), I keep the dough that has already been paid and the property is remains mine.

    Cheers Hardy
  • Talal
    Talal Posts: 11,523
    Out of interest why can't you sell it the normal way with a shorter lease? Can't you just lower the price to reflect it?
  • brogib
    brogib Posts: 2,128
    Absurdistan said:

    So someone is trying to buy your flat on HP.
    Need to talk to a solicitor.

    Only the equity
  • brogib
    brogib Posts: 2,128
    Talal said:

    Out of interest why can't you sell it the normal way with a shorter lease? Can't you just lower the price to reflect it?

    I think I'm right in saying that people won't get a mortgage for a lease under 70 years so I'll only be able to sell to a cash buyer who'll no doubt want it for peanuts
  • Talal
    Talal Posts: 11,523
    brogib said:

    Talal said:

    Out of interest why can't you sell it the normal way with a shorter lease? Can't you just lower the price to reflect it?

    I think I'm right in saying that people won't get a mortgage for a lease under 70 years so I'll only be able to sell to a cash buyer who'll no doubt want it for peanuts
    Oh right. Is it worth looking into getting the lease extended yourself then or would that be too costly?
  • brogib
    brogib Posts: 2,128
    Talal said:

    brogib said:

    Talal said:

    Out of interest why can't you sell it the normal way with a shorter lease? Can't you just lower the price to reflect it?

    I think I'm right in saying that people won't get a mortgage for a lease under 70 years so I'll only be able to sell to a cash buyer who'll no doubt want it for peanuts
    Oh right. Is it worth looking into getting the lease extended yourself then or would that be too costly?
    Between 8 and 10K mate, which is about 8 to 10k more than I got ; )
  • Robbo on the wing
    Robbo on the wing Posts: 4,135
    Borrow it off your brother, he's loaded.
  • MrOneLung
    MrOneLung Posts: 26,926
    Could you sell a kidney?

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  • Talal
    Talal Posts: 11,523
    brogib said:

    Talal said:

    brogib said:

    Talal said:

    Out of interest why can't you sell it the normal way with a shorter lease? Can't you just lower the price to reflect it?

    I think I'm right in saying that people won't get a mortgage for a lease under 70 years so I'll only be able to sell to a cash buyer who'll no doubt want it for peanuts
    Oh right. Is it worth looking into getting the lease extended yourself then or would that be too costly?
    Between 8 and 10K mate, which is about 8 to 10k more than I got ; )
    Ouch. Got a leasehold flat myself that thankfully has about 90 years left, but will be selling it when their tenancy ends. Look for something freehold, fed up with paying the service charge.
  • brogib
    brogib Posts: 2,128
    Talal said:

    brogib said:

    Talal said:

    brogib said:

    Talal said:

    Out of interest why can't you sell it the normal way with a shorter lease? Can't you just lower the price to reflect it?

    I think I'm right in saying that people won't get a mortgage for a lease under 70 years so I'll only be able to sell to a cash buyer who'll no doubt want it for peanuts
    Oh right. Is it worth looking into getting the lease extended yourself then or would that be too costly?
    Between 8 and 10K mate, which is about 8 to 10k more than I got ; )
    Ouch. Got a leasehold flat myself that thankfully has about 90 years left, but will be selling it when their tenancy ends. Look for something freehold, fed up with paying the service charge.
    With you there mate, I'll never get involved with leases again.
  • brogib
    brogib Posts: 2,128
    ...for me to get the exact figure to renew the lease, the leaseholder wants 400 quid.
  • LenGlover
    LenGlover Posts: 31,682
    edited February 2015
    There must be other flats in the block (house) with the same problem.

    If enough of you agree (50% plus I believe it is) you have the right to buy the freehold, hold it communally and keep the place maintained yourselves.

    A lot cheaper than getting ripped off by the freeholder and his management company and you might find that the added value pays for the short term legal grief.

    http://www.lease-advice.org/information/faqs/faq.asp?item=9

  • Talal
    Talal Posts: 11,523
    brogib said:

    ...for me to get the exact figure to renew the lease, the leaseholder wants 400 quid.

    Can they legally do that?
  • brogib
    brogib Posts: 2,128
    LenGlover said:

    There must be other flats in the block (house) with the same problem.

    If enough of you agree (50% plus I believe it is) you have the right to buy the freehold, hold it communally and keep the place maintained yourselves.

    There's only two of us Len mate (It's house conversion), I asked the other geezer if he wanted to buy the freehold a few years back, but he weren't keen.
  • brogib
    brogib Posts: 2,128
    Talal said:

    brogib said:

    ...for me to get the exact figure to renew the lease, the leaseholder wants 400 quid.

    Can they legally do that?
    That's how they make their dough apparently mate. If it is ilegal, I'd love to know
  • harveys_gardener
    harveys_gardener Posts: 7,038
    edited February 2015
    Len's/Talal's advice is sound. There is an (un)official sliding scale of extension costs based on remaining lease. Not dictated by seller. I had a lease extension and the seller timed his purchase of extra years with the funds on my purchase. Takes a while to filter to land registry but I trust my solicitor. As a 2 flat l/h I'd be tempted to get a bridging loan for both with your neighbour's agreement and become the freeholder, with a carrot for neighbour of cheaper extension in future or share of f/h for a reasonable sum. You can sell l/h but still own f/h but cost about 20x ground rent for f/h as opposed to £20k plus for extension (google for matrix) plus lawyer fees for either. Big saving if you are brave. Longer lease essential for mortgagees. Google specialists. Please pm me with progress if you go down this route as I have a similar set-up.
  • brogib
    brogib Posts: 2,128
    Cheers mate, will do
  • HardyAddick
    HardyAddick Posts: 1,638
    brogib said:

    HardyAddick said:

    Unusual. See a solicitor. What if the Company takes the rent but does not pay the mortgage, pay your "profit share" etc.?

    Yeah, I forgot to mention that they insist I use an independant solicitor (which I'd do anyway).

    The payment that they're contracted to pay will be made at the beginning of each year. Then if they break the terms of the agreement (ie fail to pay the mortgage at any point), I keep the dough that has already been paid and the property is remains mine.

    Cheers Hardy
    As i say, see a solicitor. Depends who the company approaching you are - do a Duelil search on them to see if they are a large reputable company with cash assets.

    There are good tenants and bad tenants - who they put in is i assume up to them. Also you need to be careful with your insurance as buy to let insurance stipulates what type of tenants are in the flat. If you have a problem with tenants you can be sure the insurers will try to avoid paying out.

    There are lenders who will lend on a 68 year lease. Not as many but they exist.

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  • Curb_It
    Curb_It Posts: 21,240
    As you know me and your brother brought out our freehold with the other flat. I wouldnt even recommend the solicitor we used she took forever but I dont remember being charged to find out the figure it would cost. Having said that I think we had instructed the solcitor by that stage. People say it puts more value on a property by buying the freehold but i dont think thats true. A nice long lease is good enough.

    I know if i bought a flat again it would have a very long one so i wouldnt have the blimming worry.

  • LenGlover
    LenGlover Posts: 31,682
    Curb_It said:

    As you know me and your brother brought out our freehold with the other flat. I wouldnt even recommend the solicitor we used she took forever but I dont remember being charged to find out the figure it would cost. Having said that I think we had instructed the solcitor by that stage. People say it puts more value on a property by buying the freehold but i dont think thats true. A nice long lease is good enough.

    I know if i bought a flat again it would have a very long one so i wouldnt have the blimming worry.

    That's absolutely right in principle.

    However if you don't have a "nice long lease" my understanding from people I've spoken to in the past is that it can cost just as much to get a lease extension as to buy the freehold so buying the freehold can make sense particularly if it also saves you exorbitant service /maintenance charges or whatever you want to call them.
  • Curb_It
    Curb_It Posts: 21,240
    It cost me a fair few grand to buy it and i think it was the same just to extend. But maybe just extending would have been a lot quicker than the 3 years it took us to buy. but then i do think that was down to the solicitor i used.
  • brogib
    brogib Posts: 2,128
    Cheers B, yeah when I was looking at buying mine before I spoke to me brother about it. Tbh though, I just want shot of it now, it's been like a chain round me kneck sonce I moved here. Thanks for all the advice though everyone, seems like it isn't a complete no no, so I'll wait and see where it goes from here

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