Extending lease of flat with 60 years left

saneman12

Hi

Just wanted some advice if possible on my predicament.

Situation is there is 60 years left on my leasehold flat. The yearly ground rent is currently 37.50 (18.75 paid every 6 months), until 26th March 2037 when it increases to £50 a year until the end of the lease. There is a £20 annual service charge as well for collecting this.

I purchased the flat 5 years ago at £70,000 and have just accepted an offer on the property of £70,000 – it was on the market at £73,950. I assume that the value reflects the lease issue as I did mention it to the estate agent (although they have since said that an extended lease will only make the property sellable, not increase its value - the free holding company dont agree with this).

I have paid the freeholder £135 to give a detailed quote for extending the terms of the lease. They have quoted in total approx £8,500, of which approx £1200 is in associated fees (legal fees, bank fee, etc). The figure was based on the market value I told them of £73,950. I've used the lease calculater available on line and with some estimates on the other figures got a slightly lower cost. The ground rent will go up to £100 per annum and the extension is for 39 years (i.e. to take it back up to 99 years which was the original term)

The concern is that the cost is high and is going to jepordise the sale. The estate agent has asked me to try and negotiate a lower figure on grounds of affordability. I know I'm going to have to pay something on this but the cheaper the better.

Anyone got any advice on what is best to do and how to approach this?

Thanks in advance

Fire_Fox

And is the market value of the flat £74K - have you researched land registry sold prices for your block, street and area with and without the lease extension? As it stands your property is unmortgageable, therefore it is not worth full market value it is worth what a cash buyer is willing and able to pay. Extending the lease doesn't make the property more valuable, what is does is prevent the value falling. I would expect the value of your flat to have reduced in real terms over the last five years so I suspect your estate agent has overvalued. At only sixty years remaining the cost of extending the lease will be very high due to marriage value, were you not warned of this when you bought the flat?

Why are you seeking a lease extension to 99 years?? You should be getting an extension OF 90 years (i.e. 160 years total) as is your right under the Leasehold Reform Act 1993 and what the online calculators will be assuming. Your ground rent should go DOWN to a peppercorn rent not up!! Is your conveyancing solicitor not experienced in the field of lease extension and advising you appropriately? Have you read the two articles on lease extension on the LEASE website? http://www.lease-advice.org/publications/

saneman12

Well we thought it might have been overvalued when we put it on the market but when all estate agents quote similar figures there is not much you can do.

I must admit I have been confused about this peppercorn rent issue so thanks for the advice. Needless to say the Freeholder didn't put this forward in the quote I received from them.