Buyer querying leasehold extension - advice?

elise83_2

Hi all

I'm in a potentially depressing situation and was hoping anyone had any advice or has been in a similar situation.

After wasting 3 months last year with an EA we found, in short, lazy (one viewing in 3 months on a relatively nice flat) we got an offer on our place the first week our new agents were appointed. As an offer of good faith we agreed not to show the property to other prospective buyers for 6 weeks as our buyer is a FTB and was worried about an outlay of funds for solicitors/mortgage valuation etc. only to be gazumped (the sale price is the maximum he can afford and also the minimum we would have accepted, it's a v competitive price for the property).

It has since been 8 weeks since the process started, all boxes have been ticked and both us and our buyer are keen to exchange and my solicitor advised that the buyer's solicitor had everything they needed. They have since come back with a query about how much the freeholder requires to extend the lease - the lease has about 83 years 10 months remaining. Bear in mind that this information was disclosed in the HIP their solicitor surely would have had a copy of 2 months ago. My solicitor has mentioned this is an unusual query to come at this time for a lease of our length.

I'm worried about how long this is going to take as it takes time to get any info from the freeholder but also, our block is small and I strongly doubt anyone else has raised this issue yet, surely meaning that the process for obtaining a figure could take a while. Regardless of what the outcome is, we are not offering the flat with an extended lease as we believe the buyer already has a good deal on the place (similar properties are on the market for 10-15k more) and even after the buyer has lived in the property for 2 years, the lease will remain above 80 years should they wish to extend at that point.

I'm not sure whether the buyer has come up with this query or whether it is the solicitor being thorough. If it's the latter I feel sorry for our buyer as they appear to be as keen to move in as I am to move on.

To make matters worse I made a competitive (but fair) offer for an apartment last week in a new development after a reservation fell through (I'd already missed out on it once waiting for this sale to go through). I haven't heard back from the developers yet however they are under no incentive to hurry as why commit themselves to sell to me when they can hold out for a potentially higher offer while I'm waiting for exchange. I am confident however that once I've exchanged they will accept my offer.

I guess I want to know if anyone else has been in this situation and what their stories or advice may be. Also should it take a while to get the lease extension figure, I'm considering putting the property back on the market and seeing if we can get a higher offer for it (after all, there is still a risk that our buyer can pull out of the sale).

Thanks, El

Fire_Fox

How long it takes to get a lease extension figure depends on how hard you press your freeholder/ management company as you are the one who has the formal relationship with them. I suspect the reason behind wanting a figure a new leaseholder does not have the automatic right to extend the lease until he has been in place for two years which makes things tight for avoiding marriage value which kicks in at eighty years. Often young people don't want to stay in a flat long, so your buyer may be thinking of selling before the two years has elapsed. Have you now served notice on your freeholder regarding the lease extension or are you making informal enquiries? A rough figure for extension can be acquired from the LEASE website.

elise83_2

Thanks for the reply Fire Fox. If we exchange now the buyer will still have 22 months (after owning the place for two years) to extend the lease and avoid marriage value - not that tight really as I understand the process takes up to 6 months.

I think it's just informal enquiries as the buyer has not requested that we serve notice to the freeholder to extend the lease. The LEASE website came up with a rough figure of between 1-4k for the extension so we're not looking at huge amounts here. Just makes it all the more frustrating as if it was so important to the buyer this process could have been put in motion weeks ago.

Fire_Fox

The LEASE website is an 'official' resource, see if that figure suits your buyer - I don't *think* you will get a legally binding figure until you serve notice. Your twenty two month window of opportunity assumes the buyer doesn't forget to extend at the two year point, is not considering selling in the interim and has the money available at the critical moment. There is no point in being frustrated at an FTB, they are 'learning on the job' and probably only just found out about the implications of extending the lease and marriage value.

elise83_2

Thanks again - I'm going to clarify with my solicitor whether we can put forward the LEASE website's result as a guideline if what we are requesting from the landlord mightn't be a legally binding figure anyway. I just wanted to clarify I'm not frustrated at the FTB, I'm frustrated at their solicitor who should have brought this up ages ago. I think my buyer is as frustrated as I am and has been told by his solicitor that we should be exchanging this coming week however I don't see how they can make that claim...