Extend Your Lease guide discussion

WizWard

NormW wrote: »

I too am in a very similar position to centrehalf, I bought 6 years ago and now my lease has approx 59 years and 11 months left. It had 66 years when I bought which means it would've dropped down to 64 before I was eligible to extend. I cannot recall nor find anything in the paperwork from the purchase advising me that the lease would need to be or be expensive to extend. Had I been advised this I'd have negotiated a lower price for the property or found a different property.

At the time I was a first time buyer and totally reliant on the advice of the conveyancer and financial adviser I got the mortgage through. It's only since yesterday when I got my weekely MSE email I've done a lot of reading and discovered I have a problem that I feel should've been highlighted strongly to me, I would not have bought this property with the knowledge that in 5 years I would have to pay out £10-12000 to extend the lease.

Do you think I might have a case against the conveyancer for badly advising me?

All help and advice greatly appreciated,

Norman.

Not sure why you think you have a case against the conveyancer? You presumably engaged him/her to help you buy a lease with a term of 66 years unexpired and this is precisely what you bought. Which particular part of the term "a lease for 66 years" did you not understand?

propertyman

spendaddict wrote: »

Now that I am close to 60 years I know that it will be an issue so have reflected it in the asking price, I think this is an excellent forum but feel that it is making some people panick unneccesarily.

The panic is that people expect the value of the flat to go up or down with the market, but not have the value fall off a cliff at 80 years or less unexpired.

At 60 odd the number of lenders and therefore buyers become scarcer and scarcer and exercising the extension rights by transfer to a buyer are not simple things for the average buyer nor the average EA to understand.

As long as that is understood shorter leases can be an appropriate investment as a wasting asset.

At 73 years the lessee faces a huge premium, but at say 40, the potential resale value to a freehold investor is often quite high and they may well pay a reverse premium for you to sell it them, reversing the loss of capital that the flat owner has experienced over time.

richardw

spendaddict wrote: »

...Now that I am close to 60 years I know that it will be an issue so have reflected it in the asking price...

What is your estimate of the Marriage Value?

spendaddict

I have had a cost from the freeholder that the extension will cost £8,500 plus legal costs to take the lease back to 99 years with peppercorn rent. I am marketing my property at £8,000 less than ones with the extended lease and am fully expecting to be knocked down on the market price by another £8,000 to get a sale in this market. Am I being unrealistic? I have checked what the same properties have sold for in the same road in the last 12 months so I am not being optimistic (hopefully).

richardw

spendaddict wrote: »

...I have had a cost from the freeholder that the extension will cost £8,500 plus legal costs to take the lease back to 99 years with peppercorn rent....

Do any of the other flats have 189 year leases where they have gone down the statutory route?

jo-fo

Hi,
Has anyone had any experience of lease extensions with a freeholder who is in administration?
Beginning in October last year, 3 of the 8 flats in our block have been attempting to extend our 83 year lease through the administrator, and to date have paid £600 to receive a valuation of £6,000. We have attempted to negotiate through our property manager, but have now been told that as the freehold is going to market soon, the administrator will not permit us to proceed further.
- Do we have any right to hold them to their orginal offer of 6k?
- Do we have any right to a refund of incurred costs?
- Will a s42 notice on the freeholder hold if there is a change in freeholder?
- If the freehold is to be sold, shouldn't we as leaseholders be offered the purchase of it?
And yes, I will definitely be speaking to a solicitor (although want to avoid more big bills)...
Thanks in advance for any tips or guidance.

richardw

jo-fo wrote: »

Hi,
Has anyone had any experience of lease extensions with a freeholder who is in administration?
Beginning in October last year, 3 of the 8 flats in our block have been attempting to extend our 83 year lease through the administrator, and to date have paid £600 to receive a valuation of £6,000. We have attempted to negotiate through our property manager, but have now been told that as the freehold is going to market soon, the administrator will not permit us to proceed further.
- Do we have any right to hold them to their orginal offer of 6k?
- Do we have any right to a refund of incurred costs?
- Will a s42 notice on the freeholder hold if there is a change in freeholder?
- If the freehold is to be sold, shouldn't we as leaseholders be offered the purchase of it?
And yes, I will definitely be speaking to a solicitor (although want to avoid more big bills)...
Thanks in advance for any tips or guidance.

BTW https://forums.moneysavingexpert.com/discussion/3839173

propertyman

spendaddict wrote: »

I have had a cost from the freeholder that the extension will cost £8,500 plus legal costs to take the lease back to 99 years with peppercorn rent. I am marketing my property at £8,000 less than ones with the extended lease and am fully expecting to be knocked down on the market price by another £8,000 to get a sale in this market. Am I being unrealistic? I have checked what the same properties have sold for in the same road in the last 12 months so I am not being optimistic (hopefully).

Why not pay the £8.5 and sell the property without taking a £16K hit?

Buyers at 60 odd years and those needing a mortgage are relatively hard to find in most markets. Those you do find might not understand, and pull out on later on after advice and valuation.

propertyman

jo-fo wrote: »

- Do we have any right to hold them to their orginal offer of 6k?
- Do we have any right to a refund of incurred costs?
- Will a s42 notice on the freeholder hold if there is a change in freeholder?
- If the freehold is to be sold, shouldn't we as leaseholders be offered the purchase of it?

1: No, its likely a negotiation subject to contract/lease.
2: No unless you made that a precondition.
3: Yes a section 42 claim applies see below.
4: If being sold at auction you will already have been offered.If not you have remedies after the sale or organise,as a group, and purchase at action.

The sale price will be affected by a lease extension, you could threaten "either agree to terms or we will make a claim under section 42", either way a negotiated extension or a statutory one affect the freehold sale.

LozzaD

Hi everyone,

I too have spent a lot of time browsing the forums and site for information and I'd really appreciate some advice on my circumstances.

I bought a flat (one of three in a converted house) in June 2010 for £130k with 83 years on the lease and a third share of the freehold. The owner of the downstairs flat bought the freehold jointly with the former owner of my flat and subsequently sold a third of the freehold to a housing association that owns the third flat (which is let out).

What I would like to know is firstly, whether as a holder of a third of the freehold I would need to extend the lease and secondly, if it does need to b extended, how the ownership of the freehold (equally by three parties) would affect this process and the costs involved.

Thanks for the help!
Loz