Leasehold - in a mess

tigger987

Hi first post on here but I have been reading for a while.

I brought my maisonette with my partner nearly 3 years ago. when we brought it we were advised there was 64 years remaining on the lease and that we should beware as mortgage lenders would not lend below 55-58 years. being naive first time buyers we didn't think much about it and vertainly weren't advised to ask the seller to extend the lease.

I have since brought my partner out, to enable him to purchace a porperty, we are still together and the change went through last week. my solicitor asked to look at the lease but didn't comment on the remaining term.

I have today found out that lenders are not lending on the 61 years remaining and the leasehold maisonettes (some brought the freehold in 1993) are struggling and being forced to extend the leases at a cost of £12000!

Having read some of the figures on the leasehold advisory service this figure seems believeable although I havent got the first clue where I would raise this sort of cash from. This figure would massively eat in to my equity, especially that I have just given my savings up and borrowed addittional to buy out my partners half.

I asked the landlord if they would consider selling the freehold as was done in 1993 but they just laughed at me. Interestingly the flats who brought the freehold are also having problems selling as they also have 61 years remaining but it is only costing them £300 to extend.

I don't want to move at present but realise I'm sitting on an expensive time bomb. I have been told that someone else in the street was quoted £12000 to extend but got an independent valuer who said it should be between £3000 and £4000.

I would appreciate any advice anyone has, although i'm realising i've made some very expensive mistakes and would have not paid out so much in equity if i knew it was going to cost that much.

Thanks

Doozergirl

tigger987 wrote:

I have today found out that lenders are not lending on the 61 years remaining and the leasehold maisonettes (some brought the freehold in 1993) are struggling and being forced to extend the leases at a cost of £12000!

You could see what the sums work out at if you reduce the term of the mortgage to one that the lender would agree with. Alternatively, if you speak to an Independent, Whole of Market Broker they may well be able to find you a lender for the full term you need.

tigger987 wrote:

I asked the landlord if they would consider selling the freehold as was done in 1993 but they just laughed at me.!

You can collectively force the freeholder to sell you the freehold. You will need to join forces and get agreement with at least 50% of your fellow leaseholders in your block to do so. Regardless of how many leaseholders join, you need to purchase 100% of the freehold. Check the Leasehold Advisory Service website again for details on qualifying.

tigger987 wrote:

Interestingly the flats who brought the freehold are also having problems selling as they also have 61 years remaining but it is only costing them £300 to extend.

I assume you're talking about a seperate block of flats here as it's impossible for leaseholders to buy the freehold as individuals.

tigger987 wrote:

I have been told that someone else in the street was quoted £12000 to extend but got an independent valuer who said it should be between £3000 and £4000!

Is this a professional valuation? I have a flat with a 63 year lease and was also advised by several people that £3-4000 would be the case for us. Our quote fromt he freeholder came back at £7900. When we obtained our own valuation it came in at £12000! There was a recent ruling at the LVT that has sent lease extensions up by 2/5ths and we were *lucky* enough that the first valuation was obtained before then! Interestingly, our share of the freehold was valued at £11000.

You need to extend *now.* We have also been informed that there is another significant increase in the price of extension when the lease gets to 60 years.

Now you have discovered this, you really need to renegotiate price with your ex-partner because your flat is not worth the same as other similar properties without the lease extension. You will have great trouble in selling as you are discovering, many high street lenders aren't satisfied by this length of lease.

You've got the problem now that you are trying to get a new mortgage. I understand that your existing lender would probably be more happy to let you remortgage for the amount of the extension as it will increase the value of the property just as much.

Sorry for such a long post, it's quite complicated this stuff!
Welcome to MSE, by the way. :wave: Sorry it's not under happier circumstances.

Any more questions, just fire away

nrsql

>> I have been told that someone else in the street was quoted £12000 to extend but got an independent valuer who said it should be between £3000 and £4000.

Similar thing happened to me. After about a year of negotiation it went through at about £12000 + solicitors bills.

EdInvestor

I understand that your existing lender would probably be more happy to let you remortgage for the amount of the extension as it will increase the value of the property just as much.

This is so, but the whole lease extension negotiation thing takes time. You also most definitely need to reorganise the deal with the partner. Do you mean you have purchased his interest without having raised the mortgage to pay for it? :huh:

You need to get your own surveyor to do a valuation on the extension and then negotiate.It can be cheaper if they agree to reduce the number of added years you buy ( eg 125 instead of 199 years).

And do read the lease-advice site on the marriage value so you understand how it works.

I asked the landlord if they would consider selling the freehold as was done in 1993 but they just laughed at me. Interestingly the flats who brought the freehold are also having problems selling as they also have 61 years remaining but it is only costing them £300 to extend.

No idea what you mean by this, as Doozer girl says, it can't be correct.

tigger987

Thanks for the replies, I'll try to explain clearer. The maisonettes are in blocks of 4. I'm not thinking of selling just yet but I have been informed that the people who are trying to sell can not because the prospective buyers mortgage company won't lend on 61 year lease.

A few years ago some of the blocks of 4 brought the freehold but weren't advised that they still needed to extend the lease. I dont really understand but it seems the lease (even thought it is owned by themselves) is still expiring and they have to extend it before they can sell. - they dont have to pay thousands though!

I did increase my mortgage a bit and used my savings to buy my partners share. The only way I will raise they cash is to remortgage again. I have spoken to my partner and he has aggreed to pay some of it as he realises I would never have handed over so much if I'd known what was going to happen. I think I have 3 out of 4 flats willing to explore buying the freehold as I understand this can be a similar price as a lease extension. Another lady in my street is currently in negotiations with the freeholder as she is havig the same problem. They asked for £12,000 and have apparently brought it down to £8500 and she is still negotiating so there might be some hope.

I have certainly learnt the hard way. I just wish my solicitor had advised me to ask for the seller to extend the lease when I brought the maisonette 3 years ago - it seems that everyone else who has brought since did this and all have 99 year leases.

Thankyou again

goldbyron

Maybe they are freeholders of the flats they live in – yet the lease stands at 61 years and the £300 is the legal fees to extend? I am not sure?

EdInvestor

tigger987 wrote:

Thanks for the replies, I'll try to explain clearer. The maisonettes are in blocks of 4. A few years ago some of the blocks of 4 brought the freehold but weren't advised that they still needed to extend the lease.

Oh I see, there must be separate freeholds for each block.

I dont really understand but it seems the lease (even thought it is owned by themselves) is still expiring and they have to extend it before they can sell.

Yes they can grant themselves an extension for GBP zero, they just have to pay the legal costs.

I have spoken to my partner and he has aggreed to pay some of it as he realises I would never have handed over so much if I'd known what was going to happen.

Good, it's only fair as he will get a more valuable asset.

I think I have 3 out of 4 flats willing to explore buying the freehold as I understand this can be a similar price as a lease extension.

Way to go.THis should be enough to do it.

Another lady in my street is currently in negotiations with the freeholder as she is havig the same problem. They asked for £12,000 and have apparently brought it down to £8500 and she is still negotiating so there might be some hope.

How many years do you get for 12k? Fewer years might be cheaper.(Check this on https://www.lease-advice.org.uk )You really need a professional valuation from a surveyor.

all have 99 year leases.

That's not so long for an extension.

tigger987

the 12K is to extend from 61 to 99 years. the original lease was for 99 years. As for the freehold people - yes it is jus thte legal fees they have to pay.

I am going to speak to a solicitor tomorrow. I am just unsure what to write to the holding company whether to ask for a quote for an extension just for me, ask to buy the freehold on behalf of the 3 or 4 of us or ask for quotes for both. I know I need to act quick as in March it goes to 60 years.

thanks very much

tigger987

I have seen a solicitor today. He has advised me to write to the freeholder on behalf of all 4 maisonettes (I have all 4 in aggreement) to ask them to sell us the freehold.
However having read the lease advice publication on disenfranchisement it advised that you have clear plans in place prior to requesting the sale, i.e an offer price, and a company set up.

I'm lost and really don't understand what i'm doing. I'm not sure whether to just go ahead and write requesting the sale and see what happens of actually instruct a solicitor to deal with it. Actually the man I spoke to today was a conveyancer and I have heard that if these cases go to court they then won't represent you and advise you to go to someone who is more familiar with these matters. He seems to think it will be cheaper to buy the freehold than extend 4 leases.

the next bit confuses me more. I have seen some figures on the marriage calculation which looks at the retail price before and after a leasehold extension/freehold purchace. I am getting my flat valued on monday. Do I therefore want a good or bad valuation? A flat over the road with a 99 year lease was valued at 125K and the next door one in my block also at 125K (the estate agent didn't realise there was a 61 year lease on that one)

I'm not sure wherther we should pay a surveyor to calculate the freehold value before writing to them. It alse concerns me that when I spoke tot he freehold company last week they said they wouldn't even be interested in selling us the freehold.

I'm sorry if I'm not making any sense but I don't know if i'm coming or going at the minute. Also there are 4 other maisonettes in the same situation who want to enforce the sale of the freehold too. Can we possibly act as a group of 2 blocks of 4, rather than seperately.

thankyou again

tigger987

I recieved a letter from the freeholder today. They are quoting £15,500 just to extend the lease back to 99 years! with £250 per year ground rent instead of £15! Thats a 31 year extension.
I shall therefore start the official ball rolling under the leasehold act for extension for 90 years plus 61 years remaining plus peppercorn rent. I think lease extension is our only option. we have 75% in aggreement but there is no way we can afford to buy the 4th person if we went for collective enfranchisement, unless it was significantly cheaper than 3 extensions.

What a nightmare. My stress levels are going through the roof.

Doozergirl

Your maisonette block is a separate entity. The freehold relates to your building and the land it stands on. It doesn't involve the land or buildings that make up other blocks so you have to do this with your block only.

What is important for you to do is to to get yourself an independent valuation of a proper lease extension, which you entitled to, and the freehold. We got both done for £150 I think. You can pay jointly for the valuation with the others in your block.

It doesn't matter if the company aren't interested in selling you the freehold, if 50% or more of you want to buy, you can force them to sell. https://www.lease-advice.org does provide details of solicitors etc that will help you with this. I think that at 61 years, it is entirely possible that your share of the freehold will come in at less than the extension and so you may be able to cover the fourth maisonette with the difference.

I think you should talk to the people at the Leashold Advisory Service, get yourself as clued up as you can and then present the fourth resident in the block with the information and stress how important it is that they sort their leases out if they are as short as yours! If their lease is longer, you'll have to try the benefits of being a freeholder route!

The Independent Valuation is the most important thing for you to do now, you mustn't take the freeholders on their word!