Found a dream Flat, but lease putting me off, please help

chikoo77 · 27 June 2006 at 7:29PM

Hi Everyone,

As a FTB, I have found a dream flat (2 bedroom) which is on market for £115K. It has been recently refurbished and to be honest it has been very well maintained. I just loved the flat in the first viewing itself and i still want to buy this flat. But the lease on the flat has only 69 years left on it. This is getting me worried, as i have heard that the lease extension can cost a lot.

The lady owner has only been in the flat for 9 months, and for some personal reasons has to sell the flat off. She had got the flat refurbished thinking that she will be living in it for quite a few years, but due to the circumstances she has to sell. I did ask her if she can get the lease extended, i can pay the full asking price, but as she has only been in the flat for 9 months, she cant get the lease extended. The other worry is, she is still wants to sell it for full asking price without extending the lease and doesnt want to negotiate the price.

So can anyone please suggest me what should i do, and how much would a lease extension cost me after 2 yrs as i do want to buy the flat, but just worried about the cost of lease?

p.s The property is based in Dunstable, bedfordshire. Any replies would be much appreciated.

natwill_3 · 27 June 2006 at 7:37PM

1) go on to nethouseprices or similar and find what she paid for it

2) she could extend the lease if the freeholder was willing, after 2 years is when the freeholder has to sell it to her, has he refused? ask her

3) ask her if she has approached the freeholder for a price to extend, sounds like she has, what was the price?

Sounds like she may have a problem selling unless the asking price reflects the cost to extend the lease, she should ask the freeholder for a quote to do this and give it to you

Be prepared to walk away by the sounds of it

natwill_3 · 27 June 2006 at 7:57PM

ps my neighbour has a lease this length, flat valued at 200k...freeholder wants 20k

she can't sell till she extends as buyers put off and not easy to get a mortgage on a 69 year old lease with some lenders

She is taking freeholder to Leasehold Valuation Tribunel, has spent a couple of thousand on legal fees etc and it is a huge nightmare as they are stuck there as it could take up to a year to extend

Find market price, deduct amount for extension and amount for your time and stress then maybe maybe make an offer!!!!!!!!!!!

chikoo77 · 27 June 2006 at 8:06PM

Thanks for a quick reply natwill. Much appreciated.

1) she had bought the flat in £106k in sept 05 and from what i saw in the flat..it looked like she has almost spend £6k in refurbishing..from floor to ceiling...even had a loft conversion done to create an extra storage room.

2) i did ask her if she can find out the the lease extension cost...but seems that she is a bit new to the housing market and is not aware of how things work.

3) i dont think she has approached the freeholder..as she said that the management company are not giving her a lease extension quote as she had lived in the flat for less than two years.

Can you suggest me if i will be able to get a lease extension done if i buy the flat off her, or do i have to be in the flat for 2 yrs before i can actually speak to the freeholder ? How much approx. do you think would be the cost of lease extension ? i really want to find something feasable on the basis of which i can still buy the flat.Please suggest. Thanks a lot.

Joe_Bloggs · 27 June 2006 at 8:20PM

If the management company won't speak to the vendor then why should they speak to you. It takes two years of ownership to qualify for the right to ask for a lease extention. Once the lease is below 78 years then things get complicated by marriage value. This appears to be future predictions on how the new lease length affects the future value of the property. It can cost several thousands and often tens of thousands. If you take the freeholder to lease tribunal you get to pay their legal costs as well as your own.
What did we do to deserve a system and laws like these ?

I think the original purchasers conveyancing solicitor may have not explained the potenial expense and legal quagmire of obtaining a lease extension sufficiently.

J_B.

natwill_3 · 27 June 2006 at 8:23PM

Hi

Its usually the freeholder not the managing agents who deal with extensions.

Regardless of how long she has been there she can still ask for a quote to extend the lease, and this is what you want.

Price depends on how greedy the freeholder is, and as under 80 years, marriage value kicks in...ie the freeholder entitled to a % of increased value with long lease.

If she bought at a big discount in sept as the lease was short then price may be fair as she has done a lot to it.

You can't do anything until you get her to get a quote from her freeholder to give you an idea of costs.

I would try and find out but be prepared to keep looking

If she wasn't allowed to extend lease as not there long enough...hum..not a good sign

Most flats with leases this length either get extended by vendor as part of sale or go for a huge discount on market price.

Can you find out what similar flats go for? Then estimate roughly 10k to extend...but thats only ballpark

natwill_3 · 27 June 2006 at 8:31PM

Just an idea...(I've been thro this and pulled out!)

Find out who freeholders are, she will know that, as she pays them ground rent and it will have been on her paperwork when she bought

Then ask OTHER estate agents in the area if they know the freeholder and what he has asked for in the past....they often are a wealth of knowledge...

jackieblue · 27 June 2006 at 9:46PM

Hi,
I was in the same position very recently - slightly longer on lease 74 I think. My vendor wasn't interested in finding out. I asked my solicitor to request the figure from the Management Company. The query cost me £40 plus I paid an extra £30 for an immediate response (otherwise there was an up to 10 day delay). So for £70 I was given the cost of the lease extension. I still purchased although I can't extend it yet myself. I was quoted £6,250 on a £116k flat.

Hope this helps. It could be easier to obtain the figure than you think.

PJD · 27 June 2006 at 9:54PM

Jackieblue,

who did you pay for this service? Your solicitor, or the management agent? If it was the solicitor, would you be able to supply me with the company name etc?

jackieblue · 27 June 2006 at 10:16PM

Hiya PJD,

We have spoken before on this subject. Apart from the fact that I was furious at discovering it was £6,250 and not the £2 to £3k the agent told me I didn't realise how easily I got this information.

Among some papers forwarded to my solicitor was a list of charges by the Freeholder's Property Management Company. They have a list of charges for just about everything they could do - providing Notice of Assignment, etc, etc.

Anyway one of their charges was called Lease Extension Quote Fee (£41.13). I pointed this out to my solicitor, she asked the question and we got the answer. I have to say that I know they are the lessor, but I'm not sure they are the Freeholder. Their name was initially given to me by the Management Company (ie the little group of people all in the block of flats I'm buying).

I assume they are a company which holds the leases of thousands of properties, as they certainly didn't need to go off and get a valuation or anything done as they replied in an hour.

If you already know which solicitor you would use when you sell, even if you haven't actually sold yet, why don't you speak to your solicitor and ask where you can find that information out from. You don't need a valuation surveyor at this stage as the figure may be provided to you and you could find it acceptable - you never know.

I know it's frustrating trying to find out information and I must just have been
lucky with this one.

Cheers

chikoo77 · 27 June 2006 at 10:25PM

Thanks everyone for your replies. Much appreciated.

Jackieblue, the price quoted to you would be current, wont it increase when you go for the actual lease extension in two years time ? i.e when your lease goes down to 72 years.

Also if you dont mind, can i also ask what part of UK is your flat located in, as it might be a bit cheaper down here in bedfordshire.

Found a dream Flat, but lease putting me off, please help

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