Leasehold Extension

confused_1st_time_buyer

I am currently in the process of buying my first place. I am trying to extend the lease as part of the sale, using the current owners to start the process as they have been residents for 2 years etc etc ... the company who owns the freehold has asked for 15k to extend the lease. The property is a maisionette in SE London (Kent borders) valued at 150k and currently has 69 years remaining on the lease. I've looked into tribunals and it looks lengthy and costly. Does anyone have any advise on whether this sounds a reasonable price to extend the lease?????? All help / comments / advise welcome. Cheers

deary65

First question how long is the extension. Most leanders won't lend on a lease less than 70yrs.The purchase of a home is a personal matter as to value, many factors come into play.

Doozergirl

We started the process to extend the lease on a flat in SE London valued at £150,000 with 63 years left on the lease last July. Completed the transaction two weeks ago (yawn!)

We were quoted £7,500k which was more than estimates we had been given so we obtained our own valuation. That came back at £12,500! The reason being that a ruling at the LVT in September has sent the cost of lease extensions soaring. We were pretty lucky that the freeholders valuation was done before that!

We used a company in Croydon to do our valuation. It cost £75. You or your vendors might want to do that to set your mind at ease. Also, our valuation for buying the share of freehold came in at £11,000 - so less than the lease! It does involve all the other leaseholders in the building and more admin though.

Also, you can extend the lease without having been there two years, it's just the the freeholder has to agree to it. After 2 years, you can legally force them, that's all. If you manage to negotiate your way into the flat then if you can get the permission from the freeholder to carry on the transaction, then you could buy it now and save waiting forever for the lease extension to come through.

It's only some lenders that won't lend below 70 years, it isn't hard to find one that does. If yours is one of those companies that don't, you simply reduce the term of your mortgage to 24 years instead of 25.

Doodles

Hi. I did exactly that when I bought my flat just over 5 years ago. The flat was £112K and the freeholder wanted £16K to extend the lease. The lease at the time was 68 years.

I chose to do it because the flat price added to the £16grand was still quite a bit cheaper than most of the flats going in the area at that time. Thus the total cost was still within my budget and now the flat is worth £190K so I feel it was the right thing to do.

I think its hard to define what is reasonable. Is the asking price of £150K for the flat alot cheaper than other similar properties in the area? It should be as the value of a flat will go down as the lease gets around the 60-70 years mark.

Also, my ground rent went up when the lease was extended - was £10 a year, upped to £150 a year. Mind you, I don't know if that is a standard thing or whether just specific to my property or something!

Best of luck

confused_1st_time_buyer

Thanks for everyone's tips / advice.
I've already sorted a mortgage, which wasn't too much of a problem on the current length of lease.
The freeholders have currently quoted me an approximate sum of 15k subject to a vaulation. As the property did appear to be somewhat lower price than surrounding properties and the market has already increased a considerable sum since the sale process first began I was considering offering £12,500 immediately and forget the valuations and potential ongoing tribunal. I am worried the costs will spiral out of my control and the whole thing will end up costing me EVEN more.