Lease Extension - Please help

csrivats999

Hello all

I own a flat and I share the freehold with the other owners of the flats in the building.
I noticed that the lease for the freehold was issued from 1975 for 99 years.

My question is should I now extend the lease as I am due to re-mortgage my flat end of this year.
I was told that banks dont lend money if the lease is less than 60 years etc.

Is there any truth in this?

Please help

Doozergirl

Below 70 years and the number of lenders willing to lend reduces the value of the flat is affected as the cost of the extension is high.

You should be able to remortgage but you may need the help of a broker.

It's aroind this length of lease that buying the freehold could de cheaper. You should investigate both - speak to your fellow leaseholders re buying the freehold.

daveb975

If your lease started in1975, doesn't that mean that you have more than 60 years remaining?

Either way, most banks will lend on a lease of this length, but could severely downgrade the value, so it may casue you problems if you need a high LTV.

I'd be tempted to make enquiries about buying the freehold or extending the lease anyway. It can be an expensive process, but it will make the flat much easier to sell when the time comes.

Richard_Webster

If you share the freehold with the other flat owners, you together can extend all your leases for no more than the legal costs of doing it. Why not talk to the others and suggest that you do it as a combined exercise?

The legal costs of doing more than one won't be as much together as having different solicitors do extensions on each flat at different times.

A 1975 lease may well have some wording which isn't really up to standard and might involve future buyer's solcitors asking for indemnity policies. You can also take the opportunity to modernise the wording etc.

(You need all flat owners' signatures for an extension if you share the freehold, unless this is through a company in which case you normally need 2 directors or director and secretary). If someone won't sign for some reason or the other, you have a problem and then have to go all through the lengthy procedure via the LVT. Hopefully that shouldn't be an issue, but very occasionally shared freeholders are difficult!

Richard_Webster

To clarify:

It's aroind this length of lease that buying the freehold could de cheaper.

I'd be tempted to make enquiries about buying the freehold

OP already owns a share in the freehold - he doesn't have to "buy" the freehold:

I own a flat and I share the freehold with the other owners of the flats in the building.

beaujolais-nouveau

Doozergirl wrote: »

It's aroind this length of lease that buying the freehold could de cheaper.

Sorry, this is completely wrong - if your lease has 67/66 years left to run, then you have to pay a "marriage value" which is calculated to a formula (see the Leasehold Advisory Service web site) and makes buying the freehold far more expensive (more than double the price) than if there were, say, 85 years left to run.

Anyway, as others have pointed out the OP says he already owns a share of the freehold. From what I have learned elsewhere, no one will lend for the purchase of a flat with so few years left on the lease; if the OP were selling he would have to hope for a cash sale. As for remortgaging: I have done this with my flat, two years ago with 68 years left on the lease, but for only about a quarter of the value of the property.

Greenr

the set up at our flats is the same - it will cost each flat owner about £500 to extend their lease... The £500 is the solicitor fee. That's all we have to pay.

Doozergirl

beaujolais-nouveau wrote: »

Sorry, this is completely wrong - if your lease has 67/66 years left to run, then you have to pay a "marriage value" which is calculated to a formula (see the Leasehold Advisory Service web site) and makes buying the freehold far more expensive (more than double the price) than if there were, say, 85 years left to run.

Reading back over the thread I did just realise that they already own the share of freehold so much of my advise was irrelevant in their case, however I have no idea what you are talking about telling me I'm 'completely wrong'. I know exactly what marriage value is. The cost of a lease extension increases and therefore the value of the freehold increases. You can't increase the overall value of the combined freehold and the leasehold - the values just transfer between each other as lease lengths decrease and subsequently increase.

If the lease extension at 66 years is double that at 85 years then all that happens is that the value of the freehold increases in line with the decrease of the value of the lease. The value of a proportional share of freehold can't be twice that of the lease extension at 66 years - it's just worth what it was based on the income from ground rents plus the share of the marriage value that transfers to it. It makes no sense for a lease extension at 66 years to be worth eg. 15k and the share of freehold c30k - not allowing for any HPI fluctuations from the date of the original lease, you've just added an extra 15k to the total value where the freehold may have only initially have been worth 1k.

With short leases it can be slightly cheaper to buy the freehold - in a block where we owned, everyone had short leases and it would have been cheaper for us to buy collectively based on what we were offered. Presumably the freeholder fancies a big fat lump sum and the possibility of some buying other's shares instead of waiting and waiting for individual extensions.

BGJG238

If a lease currently has 81 years on it but runs out in Dec this year, would a 'marriage value' still be applicable? Also, I can't seem to find anything on the internet to give me a ball park figure of how much it will cost and whether I can choose the extended period or does it have to be renewd for an extra 90 years?

cattie

Your post isn't quite clear, you say the lease has 81 years left, but then you go on to say that it runs out this year. You need to confirm what the actual length remaining on the lease is.

This site is the one you need for info on anything to do with residential leasehold property. https://www.lease-advice.org