Question: My boyfriend and I are trying to buy a flat with a share of the freehold and our offer of the asking price — £390,000 — has been accepted. One of our mortgage broker’s first questions to the estate agent was how many years are left on the lease.
The agent had no idea, nor did the vendor, apparently. We have no reason to believe that they are keeping anything from us, as they have been so helpful with everything else. But why wouldn’t a vendor know how many years are left on a lease?
The home buyer survey didn’t reveal anything either and the surveyor put down an assumed minimum of 80 years. Our solicitor is saying “wait and see” but should we be worried?
Answer: You will be buying a leasehold interest in the flat — ie, buying the lease for the sum of £390,000. The length of the lease is important because it can affect the value of the flat.
A short lease is less valuable and a lender is unlikely to accept one as security for the loan, which is why your mortgage broker is concerned to know how many years are left.
Lots of people do not know the length of the term of their lease. However, it is surprising that the seller’s estate agent did not obtain that information to assist in establishing the market value of the apartment.
The fact that you will acquire a share in the freehold suggests that there is a management company which owns the freehold, so when you complete the purchase of the leasehold interest in the flat you will become a shareholder in the management company.
Ask the estate agent to obtain information relating to the management of the building and to obtain a copy of the lease. If that is not forthcoming, you will have to wait until your solicitor receives the contract pack.
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Fiona McNulty is a legal director in the private wealth group of Foot Anstey.