Share of freehold - extending my lease

MMGG

Hi, I am purchasing a flat that comes with share of freehold (shared with one other flat) and there are 80 years left on the lease of the flat I'm buying. Is it straightforward to extend the lease and as I would have share of freehold, is it true that it's free for me to extend the lease? Thanks.

Richard_Webster

In most cases the other shared freeholders will agree to sign a lease extension deed for no more costs than the legal costs involved in drawing up the deed and liaising with your mortgage lender (who consent will be required).

However, the crucial point is that they do not have to do so. Your only entitlement is that after you have owned the flat for 2 years you can require a 90 year extension at a nil ground rent but may then have to pay the going rate for such an extension.

So it is vitally important to contact the other shared freeholders now to find out what their attitude is to a "free" lease extension. Do not assume anything.

You will also want to find out how the building is managed in practice and to try to find out how they get along together - whether there are any tensions or issues that cause problems. You do not want to walk into a minefield you cannot get out of easily. Shared freeholds can be wonderful if all the flat owners get on and make common sense decisions about maintenance etc but if they don't, oh dear.

MMGG

Thank you very much for your answer and guidance. Just to clarify, can I extend the lease before I've lived there for 2 years or would it be advisable to get the vendor to do this in advance of exchange? And, am I right in understanding that I would have to pay the going rate to extend my lease if the other shared freeholders didn't want to do theirs?

Richard_Webster

See below in Green

Thank you very much for your answer and guidance. Just to clarify, can I extend the lease before I've lived there for 2 years
If the others are happy to do this then you don't have to wait for 2 yaers but you can't make them
or would it be advisable to get the vendor to do this in advance of exchange? Gpod idea if the other lessees are prepared to extend and no doubt the estate agents etc are telling you it is all straightforward to get an extension.

If it is then it is quite reasonable for the seller to organise it and you can reasonably ask why he can't if he won't do it.Some people can be plain difficult or not understand and say they are not going to sign a lease extension because "we don't have leases we're shared freeholders...."

So if the seller won't organise this you can quite reasonably ask the seller why it is so difficult for him to organise the extension - "...the others are happy to do it - aren't they?", you say. If the seller prevaricates it is a sign that he knows or thinks that he will have problems with the others.

And, am I right in understanding that I would have to pay the going rate to extend my lease if the other shared freeholders didn't want to do theirs?
Not quite. They might be prepared to sign for you to have a lease extension but not want the cost £500-£750 ish for legal work for themselves.

Main thing is talk to other lessees - don't believe what the estate agents or the seller tells you.

MMGG

Thank you very much for the additional explanation - very helpful indeed.

Leasehold_Solutions

MMGG

I echo the advice to take the Estate Agent's advice with a pinch of salt. They are rarely well versed in complex leasehold enfranchisement matters. The experts are members of the Association of Leasehold Enfranchisement Practitioners - you can get free initial advice from a local one and find them on ALEP's web site via their online search.

If there are only two shareholders in the freehold you want to be very sure that the other party is someone you can get on with. Your destinies will be intimately tied together with regard to the property. They will be a lot more than just a neighbour, they will be co-investor and you will both be in charge of looking after the whole building. You should definitely meet with the neighbour and also get other opinions if you can of them.

When you extend the lease you will increase the value of the property. Get some tax advice on how to deal with this if it is not your main residence.

Leaseman_2

When looking for an expert, start with The Royal Institution of Chartered Surveyors website. Go to 'find a surveyor' then 'advanced search' and put in area of practice 'Leasehold Enfranchisement' That way you will get a qualified Chartered Surveyor!