Chalet - 85 years lease - bad news?

[HPD]

Hi, looking at chalets with only 85 year lease. Don't think this can be renewed. They are approx. £35,000. Should I be worried about the lease or do you think I will be able to re-sell after 10 years or so? Thank you.

[Nemo]

If it's something people want to buy, then you should be able to sell it regardless of the length of lease. People buy chalets with 25 years on them if they only want a holiday home for their family for a few years and of course lease extensions can be offered by the park owners.

https://www.gov.uk/leasehold-property/e ... ng-a-lease

[Joanna]

if you look at it from a business point of view (not as a property investment) how much will it cost you each year to run and how much profit are you likely to make? If the figures show an overall profit then does it matter if it depreciates or is difficult to sell? You could still be better off. As long as you aren't going to need to access any money that's tied up in it in a hurry.

I remember seeing one of those property TV shows years ago where someone bought a tiny central London flat with a short lease on it. She'd worked out that she'd make so much on it as a holiday rental that she could just hand the keys back when the lease expired and in the meantime she'd have earned her original investment back plus a great return. It all comes down to the numbers.

[HPD]

if you look at it from a business point of view (not as a property investment) how much will it cost you each year to run and how much profit are you likely to make? If the figures show an overall profit then does it matter if it depreciates or is difficult to sell? You could still be better off. As long as you aren't going to need to access any money that's tied up in it in a hurry.

I remember seeing one of those property TV shows years ago where someone bought a tiny central London flat with a short lease on it. She'd worked out that she'd make so much on it as a holiday rental that she could just hand the keys back when the lease expired and in the meantime she'd have earned her original investment back plus a great return. It all comes down to the numbers.

Hi Jo,

Many thanks for your comment and yes I agree with you...however (!) the chalet is £30,000. The site fees are £1500/ year. I have worked out after all outgoings, I will only make a couple of thousand profit each year (that is worked out on 2 weeks occupancy in May and June, 3 weeks July and August and 2 weeks in September and two other short breaks outside of these times - could be more than that could be less?!).

So would take me a long time to get back the 30, well 15 years, but then that would be with no interest so I may as well have put my money into a savings account!!

I know Nemo said perhaps people will buy these chalets even with shorter leases. I know some people do, a risk I suppose.

[Joanna]

Having read your other thread I'd say that this doesn't sound like a good fit for you. You'll be unlikely to get your money back when you sell and the low profit could easily be eaten up with unexpected maintenance. The future change of site ownership would make me vary wary - I'm sure that new owners will find ways to raise money from the chalet leaseholders if they decide to to upgrade the park facilities.

The fact that it's on the IOW will also make it harder for you to manage.

If you'd said that you were in love with the area, are keen to keep going back there every chance you get and have found a cute chalet you can't wait to work your magic on then it would be different. You'd have the pleasure of working on it and staying there yourself so it wouldn't just be about the money. But I'm getting the sense this is purely an investment and I think there are easier ways to get a better return on your money.

[HPD]

Having read your other thread I'd say that this doesn't sound like a good fit for you. You'll be unlikely to get your money back when you sell and the low profit could easily be eaten up with unexpected maintenance. The future change of site ownership would make me vary wary - I'm sure that new owners will find ways to raise money from the chalet leaseholders if they decide to to upgrade the park facilities.

The fact that it's on the IOW will also make it harder for you to manage.

If you'd said that you were in love with the area, are keen to keep going back there every chance you get and have found a cute chalet you can't wait to work your magic on then it would be different. You'd have the pleasure of working on it and staying there yourself so it wouldn't just be about the money. But I'm getting the sense this is purely an investment and I think there are easier ways to get a better return on your money.

Hi,

Thank you very much for that. I do love the IOW and I am excited to 'do up' a chalet in my style BUT yes I might use it a few times a year to holiday in but realistically not very often because of the distance. The money I have I do not want to risk losing. I am not sure how else to invest it - saving accounts rate are pretty dire at the moment which is a shame!

[HPD]

Having read your other thread I'd say that this doesn't sound like a good fit for you. You'll be unlikely to get your money back when you sell and the low profit could easily be eaten up with unexpected maintenance. The future change of site ownership would make me vary wary - I'm sure that new owners will find ways to raise money from the chalet leaseholders if they decide to to upgrade the park facilities.

The fact that it's on the IOW will also make it harder for you to manage.

If you'd said that you were in love with the area, are keen to keep going back there every chance you get and have found a cute chalet you can't wait to work your magic on then it would be different. You'd have the pleasure of working on it and staying there yourself so it wouldn't just be about the money. But I'm getting the sense this is purely an investment and I think there are easier ways to get a better return on your money.

Hi,

Thank you very much for that. I do love the IOW and I am excited to 'do up' a chalet in my style BUT yes I might use it a few times a year to holiday in but realistically not very often because of the distance. The money I have I do not want to risk losing. I am not sure how else to invest it - saving accounts rate are pretty dire at the moment which is a shame!

I have had a thought though..it may not be easy to sell or worth as much in the future because of the lease, but when I do come to sell it, if the site is functioning again (i.e. the clubhouse etc), then that might the chalets worth more?!!

[Fleur]

That's a big IF for an investment. Ferry fares to the island are not cheap.

[greenbarn]

What's the construction of the chalets? Conventional?
I understand that many timber lodge/cabin type buildings have a life expectancy of about 40 years so are depreciating - definitely not a property investment but an expense of running the business.