Lease valuation

Worried

Hello,

I've approach the vendor of the flat I'm buying about extending the 80 year lease for me before we complete, to avoid marriage value. Not sure if they are agreeable to this yet, however, they have approached the freeholder about the price for the extension. Either the freeholder, or the management company who act on behalf of the freeholder, have said that they require £350 before they can give a price for the extension. Does anyone know why this is? Is this usual? Is this the cost of the lease valuation, or is this them being cheeky with an expensive admin charge or something? The EA doesn't seem to know!

RiskAdverse100

They will want to have the extension properly valued before deciding on how much they intend to charge. For 'negotiated' extensions such as this the price will be higher than market value - the price to pay for it all being done quickly and simply. If the landlords know that the flat is being sold then the price they ask could be quite a bit higher than market value!

RiskAdverse100

jackieblue

I've just paid £49 for the same enquiry and this was with a management company which is apparently known for its high charges.

I am glad I paid the money though as the Estate Agent had given me an indication of £3k to extend the lease. Although he hadn't got the info from the current vendor as they apparently had not enquired, he "knew" the figure from previous recent sales in the block.

I now know the cost is £6,250 plus £450 costs - which is a lot more than the EA had suggested and I am currently rethinking whether to proceed as I know I'll have to extend the lease before I can sell on (albeit I'm not planning to sell now). They did seem to have the figure to hand as the reply was faxed back immediately (I paid £21 extra for immediate reply !).

Are you sure the £350 is the cost of providing the figure as opposed to the cost of doing the work ? It's just a thought and you could double check.

PS what do you mean when you refer to "marriage value" - sorry if it's obvious.

Cheers

Worried

I think the £350 is for the valuation, but not 100%. Seems a lot to me. Hope it's not a sign of a greedy freeholder that is going to ask above the odds for the extension!

Marriage value is the increase in the value of the property following the completion of the lease extension, reflecting the additional market value of the longer lease. In that this potential "profit" only arises from the landlord's obligation to grant the new lease, the legislation requires that it be shared equally between the parties. You only have to pay it when the lease is less then 80 years. It's a lot cheaper without it, hence why i'm keen to get the vendor to renew the lease before it falls to under 80.

PJD

£49 ?

When I asked the management company who looks after the leasehold for the same, they quoted me £350+VAT to do a survey etc, plus any other costs which may arise, - just to establish how much it'll cost to renew the lease.

You don't have to use their management company, anyone can do this work for you.

No-one can give you a rough estimate on how much it'll cost to renew a lease. EA should know all of this!!

jackieblue

I've just double checked who gave me this info for £49. It was the Property Management Company (I'm the potential buyer at the moment). Given that they have a charge for absolutely everything I'm amazed that I got this info for so little. Having said that I do believe it's the only place we could get the info on the cost from.

They say ...." our clients have taken professional valuation advice and we wish to inform you that they are willing to offer a 90 year extension to the existing lease for the sum of £6,250 plus costs".

I think I need to look into the implications of leases again, because with 90 years, the problem will keep arising. I also need to look at marriage value too, but thanks to Worried for the info.

Supernova

jackieblue wrote:

I now know the cost is £6,250 plus £450 costs

Does that include your solicitor+evaluation AND the landlords legal+disbursements?

jackieblue

No I suppose it only includes the amount the management company want. I will then incur some soliictor costs I guess. It's all fun isn't it.

I think they have already done their own evaluation because they say "... our clients have taken professional valuation advice .... ".

Bear in mind that they provided that information by return fax (ie within less than half an hour).

missk_ensington

Management companies are a Pain in the !!!!!!, and so are Freeholders so I personally would never buy a leashold house. If its Freehold you get ripped off cos the Freeholder beautifies his garden etc and bills you your quota, if a management company does it they give the job to their mates who they're affiliated with, charge you twice as much and you get billed your quota for that also.

Supernova

Interesting. I have been told to budget 5-10K for the extension, 1.5K for my costs and 2-3K for the landlords costs. 77 year lease. I'm not sure why the landlords costs are so high.