Extending our lease - evil council!

never_too_late_2

Hi All,

Thanks for your comments and suggestions.

We bought the flat just over 3.5 yrs ago and at the time, we were quoted just under 5,000 GBP to extend it but being first time buyers in a (then) competitive market, we couldn't get a decent mortgage deal if we included this extra amount so instead we effectively reduced the agreed price by the 5 grand.

It was never explained by anyone (council, sellers, solicitors etc) that the price would rise so exponentially. After all, the quoted price for extending the lease has nearly tripled in 3.5 years - that just seems incredible!

The problem as I see it with the lease extension is that we have already agreed a price in principle with a buyer which once we take into consideration all the costs etc, means that our hoped for "profit" is nil, possibly even negative.

And we have not been told what the "flat value" or in fact any of the calculations this figure have been based on. Are we at least entitled to that information?

Can we ask for 2 valuations as suggested by Robert Sterling?

Also - does anyone know how much it might be to buy the freehold? Perhaps it's worth considering this if the difference is insignificant. Richard Webster, your calculations are fairly spot on. The sale price we've agreed is 144K (we bought at 141K in effect) and we pay 25 per annum in ground rent now and this will be "peppercorn" nil rent from the new lease.

In answer to some of your other Q's - the property is effectively being sold with a longer lease as we have promised that we'll extend it at the point of sale. We were advised to do this and it seemed ok as I don't think many (if any) mortgage companies would supply a mortgage on a property with a lease of less than 60 years.

barnaby-bear

never_too_late wrote: »

Hi All,

Thanks for your comments and suggestions.

We bought the flat just over 3.5 yrs ago and at the time, we were quoted just under 5,000 GBP to extend it but being first time buyers in a (then) competitive market, we couldn't get a decent mortgage deal if we included this extra amount so instead we effectively reduced the agreed price by the 5 grand.

It was never explained by anyone (council, sellers, solicitors etc) that the price would rise so exponentially. After all, the quoted price for extending the lease has nearly tripled in 3.5 years - that just seems incredible!

The problem as I see it with the lease extension is that we have already agreed a price in principle with a buyer which once we take into consideration all the costs etc, means that our hoped for "profit" is nil, possibly even negative.

And we have not been told what the "flat value" or in fact any of the calculations this figure have been based on. Are we at least entitled to that information?

Can we ask for 2 valuations as suggested by Robert Sterling?

Also - does anyone know how much it might be to buy the freehold? Perhaps it's worth considering this if the difference is insignificant. Richard Webster, your calculations are fairly spot on. The sale price we've agreed is 144K (we bought at 141K in effect) and we pay 25 per annum in ground rent now and this will be "peppercorn" nil rent from the new lease.

In answer to some of your other Q's - the property is effectively being sold with a longer lease as we have promised that we'll extend it at the point of sale. We were advised to do this and it seemed ok as I don't think many (if any) mortgage companies would supply a mortgage on a property with a lease of less than 60 years.

Has it crossed a mortgage cut-off during the 3.5 years a lease on a 61yr property will be a LOT cheaper than 59 year one because if it goes through that unmortgageable threshold the property instantly loses a lot of it's vlaue as most people can't get a mortgage.

Richard_Webster

Has it crossed a mortgage cut-off during the 3.5 years a lease on a 61yr property will be a LOT cheaper than 59 year one because if it goes through that unmortgageable threshold the property instantly loses a lot of it's vlaue as most people can't get a mortgage.

The weird thing is that although in practice this post may be right i.e. there could be a significant difference in actual sale prices because of this factor, the calculations for lease extensions seem to take into account mysterious hypothetical figures rather than actual modern evidence of the different prices. This is because prices would in turn by scewed by the statutory extension rights.

I certainly think Op should ask the Council how it arrives at its figurews. If OP instructed a surveyor to negotiate he wouldn't take any nonsense and would want to see their breakdown so there is no reason why OP shouldn't be told.

Who quoted the £5,000 3.5 years ago? Was it the Council or the seller's estate agent?

My ball park figures give nearly £9,000 for an extension of a 64 year lease @ £25 pa worth £141K. If the Council said £5,000 then you certainly have good reason to ask the question about the discrepancy.

By the way I am assuming the proeprty is NOT in Greater London because for some weird reason the marriage value is worth more there and all the figures would be higher.

You should only buy the freehold of the owhole building in conjunction with the lessees of the other flat(s). Buying the freehold of just your flat makes your flat unmortgageagble!