77 years left on lease, landlord wants £28k to extend!

jodiesmitham

Hi there.

I live in a 3 bedroom flat (worth around £160k now) and 77 years left on the lease. My landlord has quoted £28k to extend the lease to 99 years. He thinks the flat is valued at £200k, but none of the flat on my road have gone for that. The last 3 bedroom flat sold 3 months ago went for £130k!!

I am guessing it would not increase the value of my property by too much, only the saleability.

Not sure what to do. If I go ahead and start this process, the quote may only decrease by a small percentage.

Any ideas if this is normal? Either that or is it worth trying to sell?

Thanks,

Jodie

ryan86uk

77 years is more than enough on a lease. I wouldn't even look at extending it until around the 30 year point (minimum)!

Going by that pattern in 23 years time are you going to extend to 99 years again? COSTLY!

princeofpounds

That advice was really bad. You should generally extend leases before they become too short, and the 70-80yr mark is important as a house is not easily mortgageable under that.

But... the law is on your side! If you have been living there for more than 2 years you can basically compel an extension and get an independent valuation to do so.

For more information visit lease-advice.org. LEASE are a government-funded advice service and pretty good at what they do. They will explain how to take your freeholder to a leasehold valuation tribunal (LVT) and that will sort it all for you. Generally even making a freeholder aware that you understand the procedure can result in a climbdown.

Richard_Webster

For more information visit lease-advice.org. LEASE are a government-funded advice service and pretty good at what they do. They will explain how to take your freeholder to a leasehold valuation tribunal (LVT) and that will sort it all for you. Generally even making a freeholder aware that you understand the procedure can result in a climbdown.

I've just gone to the Lease Advice Org website's extension calculator and put in the value and assumed the lease ran from 25 March 1989 and had a an annual ground rent of £100 and they come up with a figure of between £6,000 and £7,000 for a 90 year extension (to make the lease 167 yaers) and reduction of the ground rent to nil.

So the freeholder is really trying it on - certainly do as suggested and remind him that he can be forced to give 167 yaers and no ground rent. You might accept a slight increase in ground rent (which benefits him long term) and 167 year lease but you shouldn't be paying much more than the figures suggested on the Lease Advice Org website.

Jowo_2

jodiesmitham wrote: »

... My landlord has quoted £28k to extend the lease to 99 years.

He's years out of date if he thinks he only has to extend the lease up to 99 years in length.

"The right under the Leasehold Reform, Housing and Urban Development Act 1993 is to add 90 years to what is left on your existing lease. For example, if you have 75 years left on your lease you will be given a new lease of 165 years. Alternatively you may be able to extend your lease to any number of years by negotiating with your landlord."

http://www.lease-advice.org/information/faqs/faq.asp?item=95

Use that site to understand the dispute service as it looks like your landlord is either a fantasist, chancer or massively ignorant so while you can hope for the best, you should prepare for the worst as it might end up having to be sorted out via the Leasehold Tribunal Service.

My friend had similar circumstances to you (not a dispute with the freeholder though, they offered 1k and the freeholder negotiated it up to 2k for an extra 99 years on the lease which both parties were happy with, particularly my friend as it looks like she got a bargain according to that calculator). Her solictor said the length of the original lease of approx 76 years was not an issue from a conveyancing or mortgage perspective and was perfectly adequately. However, all 3 estate agents who valued the property said that while it shouldn't be an issue, they tended to find buyers were very twitchy about leases under 80 years, the length of the lease was one of the first questions most viewers asked about and many would not bother to then view it. Again, the estate agents didn't think it was that much of a deal but said it was hard to convince many buyers to change their mind.

mystic_trev

Richard_Webster wrote: »

I've just gone to the Lease Advice Org website's extension calculator and put in the value and assumed the lease ran from 25 March 1989 and had a an annual ground rent of £100 and they come up with a figure of between £6,000 and £7,000 for a 90 year extension (to make the lease 167 yaers) and reduction of the ground rent to nil.

Yes - About bang on what I've just paid to extend the Lease's on a couple of my Flats (79 years) roughly same value. Expect a total of around £8,000 - £9,000 once you've paid both sets of Legal and Surveyors fees.

jodiesmitham

A massive thanks to you all. I am wondering if it makes any difference being above a shop? It didn't appear to be a variable on the LAO website, so I don't think it matters.

Is it worth me trying to negotiate with him before I start proceedings? My only worry is that I make a start, get the valuation done and it turns out to be around the £28k mark due to some loophole.

Also, from what I've read, the tribunal would charge a maximum of £500 for their services, which is reasonable. However, is there any way to control the landlord's costs i.e. could he find a way to charge thousands via his solicitor as a form of recompense for not getting his way?

Thanks in advance.

Jodie

Jowo_2

jodiesmitham wrote: »

...
Also, from what I've read, the tribunal would charge a maximum of £500 for their services, which is reasonable. However, is there any way to control the landlord's costs i.e. could he find a way to charge thousands via his solicitor as a form of recompense for not getting his way?

Hopefully a member of MSE with more knowledge and experience will be able to respond more fully to your points.

From memory of my friend's sale which I helped with, she was told to pick up the landlord's 'reasonable' costs (though I can't provide a fuller definition of this) and this included things like the legal work with extending the lease on his side, and if it went to LVT, the cost of the valuation by a surveyor on his side, too.

The valuation by a surveyor was fairly pricey - think it was quoted at around £300 or so, and it might require several if it was disputed.

But hopefully this post will prompt the memory of someone who has gone through this more recently and can provide up to date estimates of basic legal work, plus the extra legal work if subject to a dispute.

jodiesmitham

Thanks Jowo.

I'm going to take the plunge and book an appointment with my solicitor, if anything just to see what he thinks about the £28k. I really wanted to agree with the landlord before involving solicitors etc as I don't want the to'ing and fro'ing which will cost me money.

Cheers.

Jodie

leandygandy

Hi,

We were in a similar situation with our lease extension (1 bed flat, 72 years on the lease). We informally enquired last summer as our flat was on the market and we had a buyer lined up - our freeholders wanted £15k to extend the lease to 99 years, and to amend the ground rent to approx 6x what it is now. I suspect they thought that we'd just pay it if we were desperate to move, however we weren't and our buyer pulled out.

We're now going down the legal s42 route and I'm so glad we didn't pay them (not that we could, we don't have that sort of money lol) as their figures appear wayyyyy off the mark! Our surveyor reported the extension should cost approx £4.5k to add a further 100 years and revert to a peppercorn rent (even allowing for the freeholders to negotiate upwards that's a major difference), so if we are lucky we may pull the whole lot in for less than £10k - it really does depend on how reasonable the freeholders decide to be now that they've seen that we're going down the proper route and know our rights.

timmyt

ryan86uk wrote: »

77 years is more than enough on a lease. I wouldn't even look at extending it until around the 30 year point (minimum)!

Going by that pattern in 23 years time are you going to extend to 99 years again? COSTLY!

ignore the above post, completely wrong.

77 is low and will put off many buyers. Ask your Agent but also make enquiries of the Landlord and be ready to extend if needs be.

Google 'Nick Plotnek' for help in this area