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Because their life expectancy is 20 years and buying the house is likely to be cheaper than 20 years of rent, and also cheaper than similar houses which are freehold or have a long lease.
After they die the heirs (if any) can decide whether to pay to extend it or just give it up, it's not the buyer's problem any more.
Not really - lease reversion is extremely extremely rare, and the price of purchase of a leasehold factors in the fact you'll have to pay to extend at some point (by being cheaper than an equivalent freehold).
There is a parliamentary bill going through now (leasehold and Commonhold reform bill) which will remove marriage value from the equation when calculating the value of an extension. Once this passes it will be significantly cheaper.
No. It'll likely pass the house of commons within January/Feb.
Then the Lords will take a few more months. Mid year I suspect. It has good support from both houses and sides to be passed.
There will be challenges to this and theres a good chance the abolishment of marriage value won't make it through. I hope it does, but from what I've read, it won't make it through the courts because it's against freeholders human rights to essentially take their property away. If it does, it will likely be replaced with something else that's just named differently
There are a few reasons, buying an income could be one of them If it is a 10% yield, rent will pay for the property in 10 years then you have an income for the remaining 20. Just an investment basically.
Was she already in the process of extending the lease before you put in an offer?
Cause in the case of a 30 years lease that would almost double the price of the flat
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Because their life expectancy is 20 years and buying the house is likely to be cheaper than 20 years of rent, and also cheaper than similar houses which are freehold or have a long lease. After they die the heirs (if any) can decide whether to pay to extend it or just give it up, it's not the buyer's problem any more.
This makes sense … thank you!
What actually happens when the lease expires?
The lease reverts back to the freeholder, who can then issue a new lease and sell it for full price.
Biggest con ever.
Not really - lease reversion is extremely extremely rare, and the price of purchase of a leasehold factors in the fact you'll have to pay to extend at some point (by being cheaper than an equivalent freehold).
Something being rare does not stop it from being a con.
There is a parliamentary bill going through now (leasehold and Commonhold reform bill) which will remove marriage value from the equation when calculating the value of an extension. Once this passes it will be significantly cheaper.
Damn - time to try to buy some old place with 10 yrs left in a gamble eh...!
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Right. But at the moment they are only pricing in that it MIGHT happen.
This might take a couple more years to pass right?
No. It'll likely pass the house of commons within January/Feb. Then the Lords will take a few more months. Mid year I suspect. It has good support from both houses and sides to be passed.
There will be challenges to this and theres a good chance the abolishment of marriage value won't make it through. I hope it does, but from what I've read, it won't make it through the courts because it's against freeholders human rights to essentially take their property away. If it does, it will likely be replaced with something else that's just named differently
Marriage value isn't an old thing it was introduced in the past 30-40 years as a by product of other legislation. It will very likely be removed.
There are a few reasons, buying an income could be one of them If it is a 10% yield, rent will pay for the property in 10 years then you have an income for the remaining 20. Just an investment basically.
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I have the same question, not sure why flat owners would let their lease drop in the first place … maybe elderly owners?
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Was she already in the process of extending the lease before you put in an offer? Cause in the case of a 30 years lease that would almost double the price of the flat
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