Lease Extension - Does this sound a bit hefty?.

slowdive

Just had a valuation of my flat for a proposed purchase of a lease extension and asked the surveyor for a rough idea of costs which was a very sobering moment.

I'll just give all the details first:-

Flat est 'worth' - £105k - £110k
Present lease - 73 years left from original 99 years
Ground Rent - £50 pa rising to £100pa after 33 years
Desired 'Lease Extension' - 90 years


The surveyor said that he would estimate a cost of £10-12k + solicitors costs.
This did come as a bit of a shock as I put my details into the calculator on 'lease-advice.org' and it came up with between £5-6k.
I wonder why the calculator would be so wide of the mark.

I'm thinking of calling 'lease-advice.org' but do they have any idea on estimated costs of a lease extension or do they just talk about procedure?.


I welcome your thoughts!.

HRV

Think its sounds about right to me
My flat was valued about 75k with 65 years left and in total it cost me 10k to extend lease- this included sol fees of about 1k but this was after negotiation as they were trying to rip me off.:mad:

Think you should be getter 90 years on top of your remaining lease- so approx 160 something on your new lease plus a peppercorn ground rent (not a rising one).

What your being offered is similar to what I was and I got a lease negotiator in (seperate to solicitor- I think the comopany was Fraser wood in the west mids) who worked on commision so he took a percentage (i think 25%) of what he saved me!

I think the key is as it's under 80years you have to pay something called marriage value which ups the cost alot

Hope that helps

DVardysShadow

The calculation is very sensitive to the number of years remaining on the lease. If he did not know how many years left, he could have just assumed around 65 [the calculator yields £10-12k for this]. Also, I am not sure about appointing a surveyor - if he was appointed by the freeholder rather than by you, he would not want to prejudice his clients position.

nrsql

Sounds a bit high.
My flat was worth about £150k and I extended from about 65 years.
Thingk that cost about £12K - might have have a faster escalating ground rent though. I can remember that without the escalating ground rent the offer was a lot higher.
The solicitors were useless and expensive though - the people working on this changed 3 times and they denied conversations I had previously with them. I ended up doing most of the work myself.

slowdive

DVardysShadow wrote: »

The calculation is very sensitive to the number of years remaining on the lease. If he did not know how many years left, he could have just assumed around 65 [the calculator yields £10-12k for this]. Also, I am not sure about appointing a surveyor - if he was appointed by the freeholder rather than by you, he would not want to prejudice his clients position.

I booked the surveyor myself and showed him a copy of the lease.

slowdive

nrsql wrote: »

Sounds a bit high.
My flat was worth about £150k and I extended from about 65 years.
Thingk that cost about £12K - might have have a faster escalating ground rent though. I can remember that without the escalating ground rent the offer was a lot higher.
The solicitors were useless and expensive though - the people working on this changed 3 times and they denied conversations I had previously with them. I ended up doing most of the work myself.

Just to confirm the escalating ground rent
1-33 years - £50 pa
34-66 years - £100 pa
67-99 years - £150 pa

I must confess your last paragraph was a bit worrying.
I've been to see a local firm of solicitors who've recommended one of their colleagues who's an expert in this department apparently.

I'd interested to know how you were able to do any of the work yourself as they only seem to think one of their guys can do it.

slowdive

HRV wrote: »

Think its sounds about right to me
My flat was valued about 75k with 65 years left and in total it cost me 10k to extend lease- this included sol fees of about 1k but this was after negotiation as they were trying to rip me off.:mad:

Think you should be getter 90 years on top of your remaining lease- so approx 160 something on your new lease plus a peppercorn ground rent (not a rising one).

What your being offered is similar to what I was and I got a lease negotiator in (seperate to solicitor- I think the comopany was Fraser wood in the west mids) who worked on commision so he took a percentage (i think 25%) of what he saved me!

I think the key is as it's under 80years you have to pay something called marriage value which ups the cost alot

Hope that helps

Hi,
Was it your solicitors who were trying to rip you off or the freeholders?.
Your second paragraph is correct and I am having to pay 'marriage value'.

I've never heard anyone mention a lease negotiator before. Could you tell me why you employed him and was it for private or retail?.

mart.vader

Hmmm,

This is an area that is a minefield.
Lease-advice.org were a help to me, some ten years ago or so, Takes ages to get through but, I'd advise you to speak to them, but they won't work out costs for you.

The law has probably changed since then, so you need to check that this still applies.

My freeholder was a crook and an idiot. He kept pretending not to have received recorded delivery letters. I had to go through the solicitors process (you could do it yourself but, there was no guide book)

1st, you send FH an initial notice (on specific law form) making an offer for the lease extension in order to find out what to offer you can get a surveyor to handle it - mine was useless.)

Within two months the Freeholder MUST send back a notice in reply (on specific legal form) saying what he wants for the lease extension. (in order to find out how much he wants for it, he can have a survey done, at your cost, provided its done in the two months period. edit: in other words, the survey must precede the notice in reply. - logically, the survey provides his valuation figure to put on the notice.

If the parties cannot close the gap between their two figures it goes to the LVT.

My freeholder gave a rough estimate in his notice, then arrived five months later and did a survey, for which he wanted to charge me £450 for 20 mins work. I did not pay and he then took me to the small claims court, who would not touch it and referred it back to the Leasehold Valuation Tribunal.

In his submission to the LVT he claimed I had been unreasonable and hew wanted the £500 penalty. but they didn't give it to him. He kept up with his pretending not to have received recorded delivery letters and forms and changed the date on one of his invoices to accord with his story. He tried to claim for his taxi costs of getting to the LVT. He even tried to claim a premium for the possibility of me having a loft extension done in the future !

The LVT ruled that he could not charge me for what he had taken me to court for, but they allowed him to claim £200 for estimating the amount. They could "fine" people up to £500 for unreasonable behaviour, but they didn't fine him.

My house was worth £340,000, there was 62 years left to run, and the ground rent was £22 per annum. I decided not to extend the lease but to buy the FH. The LVT ruled that to buy the Freehold off this crook, would cost £16,000, which I did just to get away from him.

Good Luck!

mart.vader

Now more is coming back to me.

The FH demanded I show him certificates for the electrical work I had done - at the time there was no qualification required to do domestic electrical work, so there were no certificates.

His "expert report" said the property was single glazed but it is double-glazed.

When I wouldn't pay the Freeholders inflated survey fee, he contacted my mortgage company and tried to get them to add the amount to the mortgage. They wouldn't, but they told me to pay him.

I complained to the RICS about him - they did an investigation and came to the conclusion that it was my fault, that he had taken me to court (for a matter that couldn't have been heard in court), because if I had paid him what he was demanding, he wouldn't have taken me to court ! !

The RICS will support one of their fee-paying members over you every time.