I have seen a property that has 60 years remaining on the lease with great potential to develop and sell, but the price is at market value and the length of the lease makes it a risky proposition. If we could get a lease extension prior to purchase that would work, but agent claims it will cost £107,000.00 on a property valued at 600,000.00. I need expert advice on the best way to tackle this.
First of all, get realistic about the value of the property pre and post lease extension. Get clarity around the costs of buying, refurbing, extending the lease and selling; factor in the profit you need to make. This will give you the realistic price you need to buy at or below.
Negotiate the purchase price you pay based on the fact that this is cash buyer only territory. This means that those who have the ability to buy it will want a healthy discount to reflect the scarcity of people with the ability to complete the purchase.
You can complete the purchase using cash (if you have it) or bridging (if you don’t) based on how quickly the vendor needs the money:
The earlier the seller needs access to the money to complete, the lower purchase price they need to accept to reflect the buyers increased costs.
Bridgers will be happy to finance at any of the above stages, but there will be fewer choice the earlier you need to complete. They will also fund the cost of the lease extension, as long as the uplift in value is significant enough.
Once the purchase is completed, the lease extended, the property refurbed and full market value achieved; sell or refinance.