Lease Extention Quotation - How Much?

Dan29

I think the freeholder is definitely in the stronger position, especially with less than 80 years left, as Mus mentioned. At least with a written offer from the freeholder you have something to show purchasers, and you know what the cost would be unlike an LVT which might cost thousands but not come up with a price thousands below what the freeholder's willing to negotiate privately.

I guess the price would be valid for no more than a year before the calculations had to be re-done, but I must admit I'm only worried about it lasting long enough for the sale of the flat to go through..!

I think the pricing of the property is one to speak to estate agents about - compare with other flats that have sold in your building or area and how long their leases were. I'd be worried about taking the valuation and knocking £11k off as that leaves little room for negotiation; better IMO to set the price and be prepared for £11k to be knocked off by a buyer. Then again, if it's a desirable flat you could well find a buyer who for whatever reason isn't bothered about the length of the lease.

If I were you I'd get something in writing from the freeholder to show prospective buyers, even if that means paying the £350+VAT. Even if they don't ask when making an offer, their solicitor is bound to during conveyancing. Bear in mind that you may be able to negotiate with the freeholder, and that the more time passes, the more it would cost you to renew the lease as it's getting shorter.

Supernova

Dan29 wrote:

No other charges so far.

Presumably you would have legal costs to rewrite the lease for both sides. I was quoted £4K on top of the valuations for this.

Supernova

PJD wrote:

That is a huge amount of money. What are you going to do - try & sell your property 'as is' ?

I'd love to if I could afford to move. I'm not sure what I want to do. My downstairs neighbours are selling, but they live elsewhere anyhow and have no mortgage. Me I've got a £20K endowment shortfall to deal with as well. Depressing.

PJD

I'm worried that getting a lease evaluation quote could also put off potential buyers. If I sold my flat at a bargain price (to get shot of it & the lease complications) would a clueless FTB rather hear "it'll cost £9,500 to renew the lease" or "don't know, never enquired, although I know others who have renewed leases on flats & they paid about £2,000 or something" ???


Dan - do you mind telling me how much is your property worth now? & how much it's worth once the lease is renewed?

11.5k is pretty steep - especially from looking at the example here http://www.lease-advice.org/levaframe.htm


I'm thinking that my best option now is to just market my property at a low price & hopefully get shot of the damn thing. Would that work? Or do you reckon people will STILL be put off by the lease term, even if the property is going for 5-10k under market rate???


Also, is it a certainty that the buyers surveyor &/or solicitor will advice them that the lease could pose a potential problem further down the line?

Thanks & best regards to all those offering help - it's much appreciated.

EdInvestor

Perhaps the freeholder will be willing to sell you fewer years than 90 for a lower price?Ask the estate agent how much impact the <80 year lease will have on the price, they should know.Sometimes it doesn;t have an impact.

AFAIK the price of the extension is affected by two things - the number of years (the shorter the more expensive) and house prices ( the higher the more expensive.) So it won't necessarily go up every year.

PJD

Cheers - yeah that's not a bad idea, i'll ask that question.

Under 80 years the price of extention is also affected by a third thing - marriage value

Dan29

PJD wrote:

Dan - do you mind telling me how much is your property worth now? & how much it's worth once the lease is renewed?

The valuers figures are £302400 and £315000 but I've accepted an offer of £345000 without renewing so I guess he was estimating a bit on the low side.

PJD wrote:

I'm thinking that my best option now is to just market my property at a low price & hopefully get shot of the damn thing. Would that work? Or do you reckon people will STILL be put off by the lease term, even if the property is going for 5-10k under market rate???

If it were me I think I'd rather set a price and be prepared for £10k to be knocked off, rather than setting the price at £10k below other similar flats and THEN have people trying to knock another £10k off. That's just my opinion though; depends how much of a hurry you're in to sell I guess.

PJD wrote:

Also, is it a certainty that the buyers surveyor &/or solicitor will advice them that the lease could pose a potential problem further down the line?

I think it's quite likely as solicitors will want to cover their own backs.

EdInvestor

PJD wrote:

Under 80 years the price of extention is also affected by a third thing - marriage value

Sorry I wasn't clear: my comments related to what issues might affect the marriage value.

10_to_3

Can't remember the exact figures but we ended up getting charged something like this for our 83 year (I think) outstanding lease:

£350 + VAT for valuation carried out by a third paty to determine the likely cost of the lease extension. Our freeholders chose the third party. Although we were free to use whoever we wanted we would have to pay for their valuation anyway. The third party people were incompetent and we had to query their estimate of the cost of the lease extension. We did not go to a tribunal or anything as formal as that, just pointed out that they were way off the mark.They reduced the valuation by a huge ammount.

£400 + VAT for our freeholders administration fees.

£800 + VAT for our freeholders legal fees.

£500 + VAT for our legal and associated fees.

£150 for the lease extension itself. There may have been a reduction due to the shocking incompetence of the third party valuers.

Therefore ,up front, we would have had to pay at least £350 + VAT to get an estimate.

However we didn't do it that way. We did our sums in advance using the Lease Advisory Service (http://www.lease-advice.org/levaframe.htm and other bits of the website) and then, knowing at least a little about the subject, spoke to the freeholder. I wouldn't trust the honesty or competence of some freeholders, so do your own homework first. We also engaged a lwayer for advice before dealing with the freeholders. We were impressed by the level of service the solicitor offered.

Also we contacted the Lease Advisory Service for an estimate of how much the lease extension should cost. It took a few weeks but they provided an estimated cost and a breakdown of that cost. They say they can provide "informal advice on possible costs" of lease extensions.

The process took about a year. It could have been quicker if people had got their act together along the way but, to be honest, I think it could have been even longer.

prometida

Have just taken mine off market in order to 'resolve' situation. I had three offers in first week, one at asking price which we accepted. They pulled out two days later - 74 yr lease (and absent freeholder!) scares off most first time buyers. So if your market is ftb's don't assume they'll be happy with just getting a good/reduced price. Continued to have loads of viewings, everyone loved it, but all ran away when lease issue came up. Now looking into lease extention, or purchase of freehold.

Anyone got any experience/knowledge of what happens when freeholder is absent?