ASK530: Is this short lease worth it? PLUS: How do I keep up with two sets of laws?

0:02Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Hey everyone, it's Ask Rob and Rob, the show where you get your questions in, predominantly property related. Sometimes you go a little off piece, but we don't mind that. And we do our very, very best to give you a good answer in return. We've done this over 500 times now, so we're well versed. But luckily, you always have a lot of questions and we'll guide you now to the place you can go to ask some more.

0:30Rob D:Yep, it's just one destination, propertyhub.net slash ask. If you go there, you can leave us a question in written form for our Sunday Times column, or you can get yourself on the show and be the envy of all your friends by leaving us a voice note.

0:43Rob B:Alrighty, so let's get going. Let's have our question in from Jessica. Hi, Rob and Rob. I'm very new to the property game, so I'm enjoying learning a lot from your podcast at the moment. So thank you for everything you do on that. My question is about purchasing a buy select property with a shortish lease remaining. And by shortish, I mean around under 130 years. I understand about the 80 year marriage value mark and also the potential hassle of renewing a lease. But I wonder if the upside of that and the reduced property price that you get makes that worth it. I'm also wondering how much you can find out about what that lease renewal process will look like with a leaseholder before you purchase a property or if you just have to take the risk.

1:31Thank you so much in advance.

1:33Rob B:Hey Jessica, thank you for your question. It's great that you have some awareness around this. Lots of people don't, so this is why I love this show because not only it helps you, but it helps other people listening to it as well. And 130 years I would be very comfortable with. So normally if this was a residential purchase, people may have it for 25 years, mortgage lengths of for 25, 30 years. By the time you go through that length of time, you would still be absolutely fine. I would have concerns if it was like 105 or less. And you know what? I've said concerns. I don't even think concerns. I would take it into consideration if it was 105 years or less.

2:15Rob B:But at the moment, I think you're absolutely fine. To give you an example before the laws around leaseholds changed the typical lease that new builds used to come with was about 125 years it was rare to see it more than that sometimes you saw 200 years sometimes you saw 150 but it was in the interests of the person creating the lease for it not to be too long because it added more value to that lease when they sold it on so at 130 years you're actually above what was the normal threshold. Now, new builds today, the standard is pretty much 999 years because there's no value in those leases anymore.

2:55Rob B:So they're not incentivized to operate that way. But you are clearly talking about a property that is not a new build, which is absolutely fine. Rest assured, 130 is absolutely okay. Above 105 is fine as well. And if you own it for longer than 25 years and it dips below that 105, 100 years, you don't even need to do anything then. It's like you said, it's when it gets closer to that 80 year number that you'll need to do something about it. But you'll just be able to extend that lease for a cost. And the cost should be reasonable because you can challenge it if it's not. But you can take some advice from your solicitor when you're buying it to say, hey, if I wanted to extend this lease today, what would I expect to pay, then the price would change as time goes on.

3:42Rob B:But at least you get an idea. And that number intimidates you then, fair enough. But like I said, Jessica, by the time you come to sell this property or pass it on to someone else, the amount of mortgage that is left will probably still be okay. I hope that helps.

3:57Rob D:Okay, let's have a listen to our next question now. This one is from Emma. Hi, Rob and Rob. It's Emma here. And I'm just wanting to ask you, on the back of your Decide episode the other day Rob so obviously you've now bought a house in Wales I don't know do you already own any in Wales because the rules do tend to be they're slightly different on each side of the border so I have three properties and I'm from Decide so properties are around Decide in Wales and we've literally just branched our wings and we're now going to own a house in Lincolnshire, which we've gone through the property hub. And I'm quite nervous jumping over the border because the rules are different slightly.

4:41Because in Wales, I've had to be part of Rent Smart Wales for over five years. Now I had to take training, had to pay for a license. We're already on a register. And now I'm going to have to do the same sort of in England with the new Renters' Right refund bill coming through. And just like little niggles that are slightly different. Like my husband does have a house in England, but he had to give notice or some sort of document to his tenant by the 31st of May the other week on the new Renters' Right Act. Now in Wales, I've got to give something, I've got to update my contracts. They're called something else in Wales, to be honest, but they're basically a tenancy contract.

5:20I've got to give them something by the 14th of June. And I'm just so worried of getting it wrong on each side of the border. So do any of you already own the odd one in Wales or have you just stuck to England? How do you feel about the rules being different in Wales? Even stamp duty in Wales, it's called land transaction tax, I think. The thresholds for that were different, which I wasn't aware of. They're actually a bit more generous in Wales. So yeah, let me know what you think. Thank you.

5:47Rob D:Emma, thank you for your question. And yeah, you're not wrong. The differences between England and Wales are not huge, but just enough to be annoying and catch you out on certain things. i think the positive is that if you're coming from wales to england you'll find that you'll have less to do because for example there is no equivalent of rent smart wales there is no national level licensing there's no training you have to do so the thing i often say about when i'm talking about letting and tenancies is none of it is that hard you just have to know about it and that's often the hardest thing so the approach you take to this very much depends on how hands-on you want to be so for example you could just put a letting agent in charge done now they have to be a good letting agent you have to remember that the legal responsibility is still on you if they mess up but essentially if you put someone competent in charge then you don't have to do a whole lot they should stay on top of everything for you everything around rental reform in england and the notices you have to serve agents are on top of that even in wales if you're using a letting agent you still need to have the license but you don't need to do the training part so you can just pass off the whole thing if you expect to be more hands-on though then it is your responsibility to keep up with everything that you need to do but there are resources that you can draw on so for example i've got a book how to be a landlord that's meant to give you the a to dead of everything that you have to do and then it's just a case of like all right now i know what the map looks like what my responsibilities are then i just need to plan to get all those things done but even a book is static and things do change so i'd recommend finding one credible source of advice that you can use so you don't have to drive yourself mad but it'll give you reassurance that you're not missing anything.

7:21Rob D:So for example you could join a landlord organisation. I really like the Guild of Residential Landlords because they put out really good information. They've got all kinds of templated documents for you and they've also got a chatbot on their website that's been trained on all their content and it exists for both England and Wales. You can go in and ask a question and you can be pretty confident that it's not going to just get an answer wrong because it doesn't know which jurisdiction you're talking about. We're not getting anything for promoting them but it's just something that I happen to like.

7:47Rob D:You could equally use the National Residential Landlord Association or anything else. But I would say that's your answer, Emma. I can see why it's a bit intimidating and you'd rather not have two sets of laws. But depending on how hands on, hands off you want to be, there's definitely a way of dealing with it.

8:02Rob B:So that's just done for another week. Thank you for listening. We'll be back with the main event, The Property Podcast, on Thursday. Until then, take care, have fun. Bye-bye.

8:10Rob D:Bye-bye.