September 3rd 2024.
Are you dreaming of owning a property in London but worried about the high prices? Well, there might be a solution for you. A one-bedroom flat in East London has recently hit the market for just £10,000 – significantly lower than the average house price in the city, which is currently at £523,134 according to the UK Government's June 2024 house price index.
However, before you get too excited, there's a catch. The reason for the low price is because the lease is about to expire. The flat, located in Leyton, was granted a 60-year lease in 1964, which means it only has about 2.5 months left on it. But don't worry, there's still a chance to extend the lease to 90+ years. However, this will come at a cost as you will need to pay a premium to the freeholder.
The flat itself needs a bit of work, but for such a low price, it's definitely a bargain. And if you're feeling ambitious, there's even potential to convert it into a two-bedroom flat. The listing advises that in order to extend the lease, you need to serve a Section 42 notice to the freeholder, which includes a suggested price for the extension. However, the freeholder has the right to refuse the offer and propose their own price.
But wait, it gets even more complicated. In most cases, you need to have owned the property for at least two years before you can serve the Section 42 notice. So, if you do decide to buy this property, be prepared for a potential battle with the freeholder. They have the right to simply ignore the offer and let the lease expire, which doesn't sound like much fun.
Despite all the complicated logistics, there's no denying that this property is a steal. It's located on the ground floor of a mid-terrace house and features a reception room, kitchen, bathroom, bedroom, and a back garden. And is that a fireplace we see? How charming!
Naturally, this listing caught the attention of the notorious SpottedonRightmove Reddit thread, and many users were perplexed. Some even called it insane, while others were intrigued by the possibility of getting a "full house" for just £10,000.
If you're feeling up for the challenge, the property will be up for public auction on September 11 through Auction House London. And if you want to check it out for yourself, there are open house viewings scheduled for the first week of September.
But before you get too excited, let's talk about the potential cost of a short lease. According to recent research, a short-lease property can have a price difference of approximately £36,000 compared to surrounding properties – a reduction of 12%. In some regions, this difference can be even higher, reaching up to £52,000 in the South East of England.
Moreover, extending a lease can be a costly process, ranging from £5,000 to £38,000 depending on various factors such as the remaining time on the lease and the ground rent owed on the property. The CEO of Open Property Group, Jason Harris-Cohen, stated that having a short lease can be a nightmare for homeowners, as it can make their property almost impossible to sell. In some cases, it might also require them to lower their asking price.
So, while this £10,000 flat might seem like a great deal, it's essential to consider the potential costs and challenges that come with owning a property with a short lease. But if you're determined to take on the challenge, go ahead and make your bid on September 11. Who knows, you might just end up with a bargain in the heart of East London. Good luck!
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[Generative AI is experimental.]
