Looking to get on the property ladder in London without breaking the bank?
A flat in East London has hit the market for just £10,000 – markedly cheaper than the average house price in the Big Smoke, which according to the UK Government’s June 2024 house price index, is now £523,134.
Naturally, there’s a reason the price is so low: and that’s because the lease is just about to expire.
The one-bedroom Leyton flat was issued with a 60-year lease on November 12, 1964, and so has approximately 2.5 months left on it.
However, Auction House London has warned that should potential buyers wish to extend the lease to 90+ years, they’ll need to ‘pay a premium to the freeholder.’
‘This is done by way of serving a Section 42 notice to the freeholder requesting a lease extension with a suggested price for the extension. The freeholder has the right to refuse the offer and submit a counter notice with their suggested price,’ the listing advises.
What’s more, in ‘most cases,’ the leaseholder needs to have owned the property for ‘at least two years’ to be able to serve the Section 42 notice – which is another complication. Confusing, right?
So, if you do end up collecting the keys to this property, it’ll be up to you to battle it out with the freeholder – who, as the auction house notes, ‘has the right to just ignore them and let the lease expire.’ Sounds fun!
Complicated logistics aside though, there’s no doubt that this property is an absolute steal. Sitting on the ground floor of a mid-terrace house, there’s a reception room, kitchen, bathroom and bedroom, as well as a back garden.
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And while it might need a little bit of work, if you’re in search of extra space, the listing suggests that there’s even potential to convert it into a two-bedroom flat.
Naturally, the listing made it to the notorious SpottedonRightmove Reddit thread – and many users were, understandably, perplexed.
‘Hmm 3 months left on [the] lease, no indication freeholder will extend, flat an utter s*** heap,’ @Phyllida_Poshtart wrote.
@Beautiful_Tip_8803 labelled the listing ‘insane,’ adding that they’d ‘never seen this before.’
There was some intrigue though, as @ringerrosy argued that being able to get a ‘full house for 10k’ was ‘cheap for London.’
Want to shoot your shot? If you’re up for the challenge, this bargain buy is scheduled for public auction at 9.30am on September 11 through Auction House London.
And if you’d like to view the place for yourself, there are some open house viewings taking place during the first week of September.
Will a short lease cost you when you sell your home?
So, just how much will a short lease cost you when it comes to selling up?
Recent research from Open Property Group found that, on average, a short-lease home commands a price difference of approximately £36,000 when compared to surrounding properties – a -12% reduction.
These numbers can differ regionally, increasing to £52,000 in the South East of England, £46,000 in the East, and £44,000 across the West Midlands.
What’s more, the research further concluded that the process of extending a lease can cost between £5,000 and £38,000 depending on numerous factors, including the time left on the original lease and the ground rent owed on the property.
‘A short lease can be the stuff of nightmares for leasehold homeowners and allowing your lease to slip below a certain threshold can effectively render your property impossible to sell,’ CEO of Open Property Group, Jason Harris-Cohen said of the research.
‘At best, a short lease is going to require you to cut your asking price expectations in order to secure a buyer due to the additional costs incurred with the process of extending it.’
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