The Great ‘lease buying or extending' Hunt

Richard_Webster

If you have a "shared freehold" flat you will still have to have the lease extended in order to sell it.

Some people think that "shared freehold" is some wonderful panacea that solves all problems....."We don't have a lease so there's nothing to be extended..."....Oh yes you do have a lease and oh yes it will need extending....

Usually the other co-freeholders will be happy to co-operate in doing this for no more than the legal costs involved, but it doesn't always follow that they will, and they do not have to do so. You can only make them by going through the statutory procedures and paying the going rate for a lease extension.

So the moral for anyone looking to buy a shared freehold is to check with the other co-freeholders that they will co-operate in a lease extension......

Go and talk to them and make sure they understand what will be needed. It isn't good enough for the seller's solicitors to give some vague assurance about the other co-freeholders willingness - that is all second hand hearsay stuff - you want to find out directly from the individuals concerned.

mystic_trev

cazza44 wrote: »

We extended a lease on a flat at the end of april 2010.

• Its a long process.
• Don't be suprised at the apathy or ignorance of other owners in the block.
• It costs a lot of money to extend a lease...and I am not just talking about the premium I am talking about the associated 'professional' fees
• As far as I am aware you get no choice of valuer or solicitor that the freeholder uses...this is important because they have no incentive not to use the most expensive in both fields...all of which you have to pay for :mad:

Very good post - thanks.

I own a few Flats, and some of the owners decided to extend the leases as they were heading towards the 70's i.e. when we started the negotiations they had 81 years left on the lease. Our original discussions with our Legal bods set a timetable of six months, or nine if we needed to use the LVT, which we haven't. Now, eighteen months down the line we still haven't completed the transaction, and the leases have dropped to 79 years! There must be a quicker (and cheaper) way of handling Lease extensions. I don't mind paying the Premium, it's (as you've said) all the other bloody charges you get stuck with!

Theyarv1

I was faced with this situation a year ago when i bought my flat, let me tell you it was a huge hassle.

The lease was running at 80 years and 4 months. When the lease falls below 80 years, the cost of extending it jumps dramatically due to a 'marriage value' where the leaseholder also gets 50% of the INCREASE in value that having the longer lease adds to the property. The unfortunate thing is that you have to have lived in the property for 2 years in order to extend the lease. There is a loophole whereby if the current owners apply for the extension, they can sign over the process to you between exchange and completion and the 2 years is bypassed. Both sets of lawyers have to be really on top of things with timing (I believe).

I had a very inconvenient problem however where my conveying solicitor 'didn't do lease extensions' which meant i had to get another one that did and work the 3 side by side, not easy and not cheap.

So after completion of the flat, the lease extension took another 3 months or so, and was in danger of heading for a tribunal. We made a fair offer (adding 10% to what I worked out was the correct cost) hoping to have a speedy resolution but their lawyers (the housing association who held our lease) had other ideas. Eventually they got back to us and my solicitor informed me that their solicitor fees were 3.5 times the normal amount.

Please know that you have no control over what their fees are AND you have to pay them unless you want to take it to a tribunal which will cost you more. Anyway, my lawyer managed to push down their fees by £1000 (still far too much in his opinion) but had charged me £520 for the 2 hours work in the meantime and advised to just pay it.

All in all it was a huge hassle. I would never again buy a flat with less than 85 years on the lease, and if you go for one with less than 82 years (but more than 80) make sure your solicitor knows exactly what they are doing.

I don't remember the exact costs involved but i think i paid something like

£5300 extension
£4000 their solicitor fees and something else they charged for (which was normally priced)
over £2500 my solicitor fees
+ lots of stress
and that was on a £235k

scurvey

I've just tried to sell my flat with 62 years remaining on the lease, I wasn't informed when I bought it 9 years ago that that was a short lease. The property has been valued at £109,000 if I extend the lease. My landlord is asking for £30,000 plus costs totaling £1000. Is nothing going to be done to stop this ridiculous situation:(

Promod

New member so not sure if this should be a new post or fits the theme of this thread.

Over the last 20 years I have managed to buy all three flats in a terraced property converted to three leasehold flats in 1985. Bottom one is buy-to let. Top two are still discrete flats (and leasehold with the Land Registry) but there is a connecting door as the middle flat is due to host a granny soon.

Just to make sure I was in complete control of the whole show, I bought the freehold 10 years ago for £5000. The total worth of the three flats is probably around £750,000.

I'm now trying to get a remortgage on just one of the flats to get a better deal and the lenders are running a mile because I own the freehold! I thought it would actually lower the risk to the lenders (One person to deal with....etc) Not so.

My excellent accounting friend tells me that he can help set up a separate management company to act as formal custodian and manager of the freehold, even if it just means I am sending myself bills for insurance, ground rent, management fees etc. I already have a one-man company and am happy to do this if that's what it takes.

However one lender even baulked at that idea saying they would still "find out" that I was the owner of the management company and that would represent an unacceptable risk to them because "I could do anything I want" (I thought that was the point!)

Isn't there some way of giving them some kind of call over the freehold as well as the leasehold on the one flat I want a mortgage on, so that I have to get their permission before acting (as freeholder) to change the terms of the leasehold they have an interest on.

I am happy to get more accounting/legal advice although I don't want to open an expensive can of worms.

The bottom buy-to-let flat is the only rental property I own but I guess this still makes me a landlord. Are there other threads or communities I should look at for advice?

Thanks