Unfair Lease Extension Offer

tomryan89 · 13 March 2017 at 10:03PM

Hi All - just looking for some feedback from others experiences, guidance or sympathy!

We feel a bit hard done by at the moment, we bought our flat a few years ago when it had an 86 year lease. Being young and naive we took the estate agents word that this wasn't a big deal and our Solicitor was a bit crap. We should have done our own research though.

We really want to sell out flat so that we can move forward with a house we love and have an offer accepted on. Our flat is on the market, and again being young a naive, assumed extending the lease would be easy. We've told out estate agent that we will sell it with a newly extended lease and it is being marketed as such.

I approached the company managing the freehold (pier management) to enquire about the lease extension. They've sent me back an email offering to extend the lease for £13,900 and to increase the ground to £350 a year increasing with RPI every 5 years.

Firstly, that is an obscene amount of money and secondly our Solicitor (instructed after I realised this whole process is very complicated) says that the ground rent offer would be a big problem for any potential mortgage provider.

How is this even fair? Make the ground rent so rediculous that we couldn't even sell the flat?!

Now I'm stressed out a little - how am I going to be able to sell the flat when our Solicitor says if we want to reduce we will need to use the appeal process which can take a year?

Any thoughts ?

Hoploz · 13 March 2017 at 10:11PM

My understanding is that ground rent rising with RPI is acceptable. It's clauses that make it double every 10 years which are problematic.

Has your solicitor suggested going down the statutory lease extension route instead? That way the lease gets extended by 90 years on top of existing and the ground rent falls to nothing.

There are many threads about lease extension so have a search on here, but also google statutory lease extensions. Info I've given is not gospel - I haven't done it myself - but this is my understanding from reading the regular posts. Someone knowledgable will confirm in a moment I'm sure.

Is your solicitor experienced in these matters??

By the way I should add, you don't really have to do this. If the lease is below 80 then it can raise eyebrows, as the extension gets more expensive when that becomes the case .... It should still be mortgageable though and your buyer can consider it when negotiating. How long is the lease actually?

anselld · 13 March 2017 at 10:31PM

There is no such thing as an unfair offer. It is a negotiation.
If negotiation fails serve s42 and go to first Tribunal.

tomryan89 · 13 March 2017 at 11:13PM

Thanks for your thoughts.

There is 82.5 left on the lease. The problem with the statutory route is that it takes too long (as far as I can tell).

Yeah our solicitor is basically a specialist in lease extension. We instructed him over the weekend based on some very good feedback from a few sources.

He is out of the office tomorrow and I will be speaking with him on Wednesday. What would you ask him if you were in my position?

economic · 13 March 2017 at 11:20PM

You can just market the flat as is and sell it cheaper and have the buyer pay to extend it. You will need to serve notice to extend lease as you had it for two years so that buyer can continue the process.

tomryan89 · 13 March 2017 at 11:31PM

Do you think this is likely to put people off buying the flat?

AnotherJoe · 14 March 2017 at 12:24AM

tomryan89 wrote: »

Do you think this is likely to put people off buying the flat?

It will certainly put some people off.
It may encourage some others to put in low ball offers. So don't discount the price too much yourself on account of the lease or you'll get a double whammy.

cashbackproblems · 14 March 2017 at 12:33AM

It makes the property very unattractive and you would need to reduce the price by the cost of the lease then some more, especially if they insist on this higher ground rent

In reality you ahould have started this much sooner not when u have had an offer accepted

zagubov · 14 March 2017 at 12:34AM

As economic and anselid say you might want to start statutory lease extension. You can then offer to pass it on to any future buyers.

The main forum has a page about it
http://www.moneysavingexpert.com/mortgages/extend-your-lease

tomryan89 · 14 March 2017 at 7:17AM

Thanks everyone for your thoughts. I'll keep updating this thread as we move forward so that anyone else in a similar situation in the future can reference something.

In a perfect world yes, one year ago I would have served notice for a lease extension and be in a good decision now. Unfortunately my world looks like this :

1. See house
2. Love house
4. Offer on house
5. Put flat on market
6. Enquire about lease extension
7. Instruct experienced Solicitor
8. Oh !!!!

So from where I'm standing, and based on the advice in this thread, my best option is to have my solicitor negotiate informally with the management company which would hopefully reduce the ground rent to make it more attractive to buyers but probably result in me having to pay over the odds on the lump sum.

Sound right?

Hoploz · 14 March 2017 at 8:41AM

I would just market the flat at a standard price, then when it comes down to negotiations be prepared for someone to knock a little off if it's brought up.

You are over-worrying I believe. 82.5 years is not a problem. The lease will become the next owner ... Or indeed the owner after that's problem.

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Unfair Lease Extension Offer

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