76 years on Lease. Should solicitor have mentioned it ?

jackieblue

I am (was) just about to exchange on a flat with 76 years left on the lease. I knew nothing about anything to do with leases until today except I had read years ago it would be hard to get a mortage on anything with less than 60 years. So I knew I would have to extend one day. THe EA had indicated £3k. I asked my solicitor if there was any way at all of getting confirmation of the figure from the horse's mouth. Anyway it's more than double what the EA said at £6,250 plus costs.

My bigger concern was that my solicitor passed this figure onto me but from reading this forum, I understand I won't be able to even consider extending the lease for at least 2 years, so the figure is worthless info to me. Can I assume this figure would include "marriage value" which I've now just been reading about for the first time today. Could it change much by the time I would want to do it and there would then be less than 74 years on the lease.

I really did think it was a simple matter of paying for an extension to the lease either as soon as I buy or if/when I wanted to sell. I had no idea about marriage values, not being able to extend for two years. I also had no idea that in theory from reading other posts, the flat is actually worth less than its apparent market value with such a short lease.

I read in another post that a solicitor suggested to his client that she should insist the vendor extend the lease prior to exchange. My solicitor has never mentioned the lease issue at all. Am I right to feel disappointed. I know it's a case of do your own research, but wouldn't I expect the solicitor to make sure I understand what it is I am buying when buying leasehold ?

I really cannot think what to do.

Ian_W

Hi Jackie,
AFAIK there is nothing to stop you getting an extension to the lease as soon as you buy PROVIDED the freeholder is agreeable to extending it. The 2 years ownership is for you to aquire the RIGHT to force an extension if the f/her isn't agreeable or if it's an absentee freeholder.
I would imagine, but obviously can't be certain, that the figure from "the horses mouth" [does that mean the freeholder?] will include the marriage value. Even if you have to wait 2yrs I don't think it should cost a great deal more for it.
I would really have thought your solicitor when you bought would have issued some kind of "health warning" even if only along the lines that - it may cost you a few thousand in the future to extend the l/h and if you don't could affect the value.
Have you had a look at https://www.lease-advice.org? It's the govt funded leasehold advisory service, you may be better contacting them for guidance.

jackieblue

Ian,

Hi. I did go to that site having read some of the posts. It's very clear but still hard to work out the actual real cost because you need the table of years purchase, etc.

I will be in touch with my solicitor tomorrow as it was actually her who said from the outset that she knew this particular management company and that they could be expensive.

I did ask her to check the lease extension figure, but only because it had been given to me by the EA and I wanted it confirmed.

I think I'd rather buy a tiny house than go leasehold - if possible.

Thanks for coming back to me if only to confirm that I could at least have expected the "health warning" as you put it.

They did say in their quote "we assume your clients qualify under the Leasehold Reform Housing and Urban Development Act 1993 and require a 90 year extension to their existing lease with no further ground rent payable".

Not sure if I qualify and wasn't asking for no further ground rent payable. So I guess I need to speak to her.

Worried

Jackie. I would think the price quoted would def. include the marriage value. I also wouldn't think that the marriage value in two years time would be signifcantly greater, just a little bit which would reflect the increase in market value aswell as the 2 further years expired from the lease term. I really don't think it would be significant.

From what I've read on these sites and from speaking tho LEASE, each property really is a very individual case and there are lots of factors that can affect whether a lease of under 80 years will effect your ability to resell etc. If you are planning to stay in the property for a while you probably will have to face the renewal, or potential buyers may bring the question up. I have to say that the price quoted to you doesn't sound too extortionate, as it should include the marriage value, but I am no expert and it depends on the price of the property, ground rent etc.

I rang up LEASE (contact details on https://www.lease-advice.org) and they were very good and spent some time with me talking through my options and explaining how things work etc. Maybe you should talk to them?

If you went ahead with the purchase and then wanted to renew the lease when you have the legal right to force it (in 2 years), you can always get your own valuation done if you don't like the price you get in two years time from the freeholder. You can then enter negoitations with them and if you can't settle on a figure you can go to the Leasehold valuation tribunal and you will prob get a fairer price, but it will then take longer and your legal fees will prob be a bit more.

I feel for you, as I am in a similar situation and still can't decide whether to pursue the purchase. Just going to have to wait and see what the freeholder values the lease at, but like you have also forked out for the survey and am stacking up legal fees.

I agree perhaps your solicitor should have given you a 'health warning', but not sure if mine would have either. It was me who brought it up, as I'd been reading into it, but like you, also it came to light a little too late! It's difficult because a lot of people don't see leases of this length as a problem because they are mortgagable, it's just the fear of the approaching unmortgageability can set in much earlier with buyers.