There is a flat in London that has 57 years left on the lease and the seller/owner has to sell it within 6 months because banks don't give mortgage due to financial circumstances and age which is shame because we don't want people loosing their homes. However the fact is, it has to be sold now otherwise the seller will not get much from the bank. The market value of this flat is around £550K-ish but the seller is asking for £275K in total (£135 to pay off the bank and £140K for their pocket). They have no other option. This is a classic semi-detached house (Edwardian) and I am thinking to buy the first floor.

Given I am a first-time cash buyer and happy to pay £275K, I am have some questions before approaching to a solicitor for formal steps because I don't want to waste money.


  1. Freeholder is asking for £75K for lease extension and I am not sure if this is for just extension or freehold. Not even sure for how many years if it is lease extension. Given this:
  • Leasehold and Freehold Reform Bill is projected to be finalised summer of 2024 which is good news for leaseholders. Should I wait/risk to avoid paying £75K and deal with after the bill passes? Potentially pay less and even extend it up to 999 years.
  • Assume I wanted to wait, could the freeholder prevent me from buying this flat even though the seller is happy to sell it to me? Because freeholder might not even get anything near £75K after the bill so on.
  1. Do the seller and buyer have to deal with the freeholder? I mean do we have to obtain a consent or something? I think the freeholder wants to suck as much money as possible hence there may be intentions for blocking/delaying this transaction and we both loose out at the end.

  2. Is extension calculation based on the market value of property (£550) or how much you actually paid (£275) to buy it?

  • Do you mean you are a "cash buyer" (i.e. you have the funds to pay for the house outright, you don't need a mortgage)?
    – Vicky
    Commented Mar 14 at 12:44
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    Also, something about this whole scenario doesn't quite make sense. Why would the seller need a mortgage, and why would they be so desperate to sell that they would accept HALF the market value? Are you 100% certain this is a real legit opportunity and not a scam of some sort?
    – Vicky
    Commented Mar 14 at 12:47
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    The £550K-ish may be after a lease extension which narrows the gap a bit, but it still doesn't sound like a good situation. Why doesn't the seller market it openly to get closer to a fair price for it? Commented Mar 14 at 14:30
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    For one thing, it not being an arms-length transaction at market value may complicate the tax situation. Overall I find it hard to make sense of the scenario in the question which makes it harder to figure out what general principles would apply to it. Commented Mar 14 at 21:31
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    Everyone apart from @nsandersen. The seller told me an estate agent is ready to pay £275K and when I heard it I said I'll match it. Because we are friends the seller WANTS to sell it to me instead. A property developer offered £235K. It is all up to the seller to accept or explore different options. It is not my job to judge the decision. I don't even care if I don't get it. There is an opportunity and I want to try my luck. I don't understand why a simple question had to be turned into a drama session.
    – BentCoder
    Commented Mar 16 at 16:20

1 Answer 1

  1. It makes sense to wait until the Bill becomes an Act. It may be a lot more generous that the current rules for renewing a lease. The leaseholder does not require the permission of the freeholder to sell the lease on to someone else.
  2. As above, the freeholder has no say in the matter.
  3. At the moment, it's a complicated formula that takes into account the amount you will gain when you obtain a longer lease - the "marriage value".
  • Agree - if you can wait - wait. Although chances of Conservatives postponing leasehold reform is high. If you cannot wait, I would get several reliable valuations taking into account the short lease.
    – nsandersen
    Commented Mar 15 at 11:22
  • Thank you for focusing on the question and providing an answer. Much appreciated. @nsandersen also thank you too.
    – BentCoder
    Commented Mar 16 at 15:58
  • @nsandersen "Although chances of Conservatives postponing leasehold reform is high." - Did you hear anything on news? As far as I hear, most of the stories suggest it will be used to gain more vote in elections so it sounds like it is opposite. Please enlighten me. Thank you.
    – BentCoder
    Commented Mar 16 at 16:02
  • No. I just expect them to be comfortable with freeholders being due large sums for extension. But there is also a high chance of a different government soon. I see the bill appears to be progressing at least/last.
    – nsandersen
    Commented Mar 18 at 8:40

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