Extend Your Lease guide discussion

ktel1

Hi there

I am aware that you cannot offset the cost of the lease extension against income tax, only against capital gains but can you offset the cost of legal fees for this purpose against tax when submitting a tax return? After all, this is a valid cost against your property, isn't it?

Appreciate any advice anyone has on this.
Thanks

richardw

Ktel1 wrote: »

... lease extension ... can you offset the cost of legal fees for this purpose against tax when submitting a tax return?

Is the property part of a buy to let business?

timo1901

richardw wrote: »

Were they a conveyancer or a solicitor?

hi - they were the solicitor who completed the purchase. I have tried to contact them and they said we must have told u about the lease when u signed the contract!

richardw

timo1901 wrote: »

...they said we must have told u about the lease when u signed the contract!

Perhaps ask them to detail and describe when that was, what was said and by what method of communication.

Sir_Numpty

NormW wrote: »

I'll ignore the condescending tone and be forthcoming with further information.

I engaged them to help me purchase a property, not buy a lease. As part of the paperwork they sent me I understood the lease had 66 years remaining, but with no further comments on it, just the number of years stated as fact. 66 years at the time sounded plenty time to me given I was getting a mortgage of 25 years term and I had no reason to think otherwise until this MSE article was published. What I did not know nor was I informed of, is the fact that as the lease only had 66 years remaining in 6 years time the flat I'd bought would be (virtually) unmortgageable by potential buyers should I want to sell and move on. Nor was I informed that the soonest I could apply to extend would be at 64 years remaining and that the cost would be several thousand pounds!

When I engage a professional to help me with matters I'm unfamiliar with, I expect them to give me the best advice they have and point out important issues to consider. As the remaining term on the lease is important for when you come to sell the property and can be at great expense, I would expect them to have pointed this fact out to me. You can't tell me the conveyancer wasn't aware that a 66 year (64 before I can apply to extend) lease is going to be expensive to extend or at least warranted further investigation, but they failed to pass this information on. You cannot expect me, a first time buyer, to have known a 66 year lease was short and going to cost circa £8000-10000 to extend.

I think any claim for damages would not be that great.

The purchase price you paid reflected the fact the lease had 66 years and if you now need to extended it you can only begin to think about claiming from your solicitor the increase in the cost LESS the interest you would have earnt on the money for the cost of the lease extentsion based on its cost at the time of the purchase.

Richard_Webster

The purchase price you paid reflected the fact the lease had 66 years

Well, it might have done, but in my experience estate agents often don't know the length of the lease and only reduce the price if the lease length is causing resistance from buyers. If this was a case where he was the first buyer to come along then there might be no reason for the price to be reduced to reflect the length of the lease.

I had a case a few yaers ago where a client was going to buy a maisonette with just over 70 years left. There was another similar maisonette up the road built by the same builder with 970 years left being advertised at the same price - he bought that!

Tomato

Tomato wrote: »

Hi

I would like some advice please.

Could anyone recommend a letter template to use when approaching freeholder for a quote for lease extension?

I have a flat with 75 years left on the lease. I would like to sell the flat this year. My neighbour’s flat is identical to mine, 75 years LH, is marketed at £115k. It’s been on and off the market for a year. My flat is in a better state (new kitchen and new bathroom). I would like to extend the lease to make the property more appealing to buyers.

I am planning to speak to estate agents as well, especially those who marketed my neighbour’s flat.

Thank you in advance.

Hi

Here is an update on my ‘case’. Any advice would be very much appreciated.

1. I have spoken to the estate agent who is marketing the next door flat with the same lease as mine. He says that there are many properties on the market at the moment. A few months ago my neighbour had an offer of around £92k (the flat was marketed at £115K) which she rejected. When I asked the estate agent if 75 years lease was a ‘put off’ point, he told me that it all depends on the price I would like to get for my flat.

2. Meanwhile I got quotes from surveyors, mostly they were £350-£400, so as to get an estimate of the possible cost of a lease extension.

3. In the meanwhile my mortgage provider has sent me an email saying that they would lend me additional funds for a lease extension, but I need to provide them with details of my solicitor (whom I have not hired yet, though I obtained 3 quotes). Apparently my mortgage provider would transfer an advance to my solicitor who would be dealing with all money matters. Is this the usual practice?

They also said that I have to provide the details of my solicitor by 16 July when it will be 3 month from the date of my application. If I don’t get back to them by then, I would need to re-apply.

4. Now to my freeholder. There are 8 flats in my Close. In the past, 5 flats formed a management company and each bought a share of freehold (that was before I bought the flat). I wrote to the company secretary three months ago enquiring about share of freehold and lease extension. A month and a half later I got a reply:
a. For a share of freehold all shareholders need to decide how much to charge me for some of their shares or issue new shares for me to buy. There was no estimate as to the possible costs.
b. As to the lease extension, he said that it would be a matter for a solicitor.
He also said that they would be liaising with each shareholder to see who would wish to proceed. So far only one shareholder (a friend) has replied in the positive.
At the moment I see no gain in having a share of freehold. I am also not sure if I should try to extend the lease or just adjust the possible selling price so as to simply avoid the problems and costs such an extension would entail.

The purpose of the whole exercise is, of course, not to decrease or avoid the cost of any transaction/s, but to maximise the amount of money in my pocket after all transactions are concluded.

I have this deadline from my mortgage provider and I am not sure what to do: to extend or not to extend. So far the secretary of the freeholder has provided me with no clue as to the cost of a lease extension.

What do you think?

Many thanks.

T

KittyBigPaws

Hi. I've got 73 years left on my lease. I am hoping to extend my lease by less than 90 years to keep the cost down. I know my freeholder has no legal obligation to agree but I'm going to try my luck. My question is this.

I know marriage value will apply. But if I extend by just 50 years will that have a proportionately lower cost to extend?

I guess I'm concerned that the marrige value my not be any lower if I extend for just 50 years. My flat is in a popular part of London with a current market value of about 325 - 350k. To extend by 90 years I'm estimating a cost of 33k which includes the marriage value. :eek: I am worried that the marriage value will remain the same/similar regardless of how long I extend for and this is where the bulk of my cost will be.

My ideal scenario is for me to take the cost to extend by 90 years and then divide it by 90 and multiply it by 50 years to get the new value to extend by a lower number of years. Might it work this way?

Many thanks

need_help_moneysaving

I have exchanged contracts on a flat I bought pre auction. It had failed to sell at the previous auction for 70k. It needs everything doing to it ie. new (flat) roof (6k), replumbing, the chimney fixing, the watertank removing off the roof, double glazing, floors levelling, new kitchen, bathroom, replastering, rendering outside and repainting. I estimate it will cost around 20k to do this, and take me about a year, as I have to get things done as and when. The lease is 58 years. the ground rent was £50 for the first 33 years, £75 for the next 33 years, and £100 for the next 33 years. My surveyor came out looked at it said you will have trouble spending 10k here, WHAT! There is another flat which is immaculate for sale for 140k. This flat is twice the size of mine. It has been for sale for 1 year. The next door flat which has double glazing, no leaky roof, and is half done out inside, and a long lease has sold for 115k. So he has valued my 70k flat as being worth 115k. This makes the lease extension premium £26600. I complete in 6 days. Help what can I do. I can't sleep at night thanks to this. Help, Please!

Leaseman_2

need_help_moneysaving wrote: »

I have exchanged contracts on a flat I bought pre auction. It had failed to sell at the previous auction for 70k. It needs everything doing to it ie. new (flat) roof (6k), replumbing, the chimney fixing, the watertank removing off the roof, double glazing, floors levelling, new kitchen, bathroom, replastering, rendering outside and repainting. I estimate it will cost around 20k to do this, and take me about a year, as I have to get things done as and when. The lease is 58 years. the ground rent was £50 for the first 33 years, £75 for the next 33 years, and £100 for the next 33 years. My surveyor came out looked at it said you will have trouble spending 10k here, WHAT! There is another flat which is immaculate for sale for 140k. This flat is twice the size of mine. It has been for sale for 1 year. The next door flat which has double glazing, no leaky roof, and is half done out inside, and a long lease has sold for 115k. So he has valued my 70k flat as being worth 115k. This makes the lease extension premium £26600. I complete in 6 days. Help what can I do. I can't sleep at night thanks to this. Help, Please!

You say that this was 'your surveyor' but have not clarified the purpose for which he was instructed. Unless you have bought from a qualifying leaseholder and with the benefit of an assignable 'S42' notice you will not have a right to demand a lease extension until you have owned the flat for 2 years by which time you will have only 56 years unexpired... In order to get a good nights sleep you really need some proper help. In the first instance chat this through with your solicitor. Unless the solicitor recommends otherwise look up The Leasehold Advisory Sevice and find a surveyor from their list as soon as possible.