Extend Your Lease guide discussion

Krispy_

Hi,

I'm a FTB and the property I'm interested in (1 bed flat) has been advertised with an asking price of £137.5k, with 78 years remaining on the lease. The lease calculator places an estimated cost of £6-7k, with anticipated £2.5k professional costs. No doubt, this will have to be factored in to any offer!

The vendor will have been in the property for two years in October - at this point, he will have qualified (2yrs) to serve a section 42 notice to the freeholder. How much is this likely to cost? And once rights have been passed on to the purchaser, how quickly would I need to act?

An alternative would be to approach the freeholder directly and attempt to negotiate a 25yr extension. I assume similar professional costs would be incurred? I am intending to remain in the property <5yrs so this would leave a more appealing 99yr lease when putting it back on the market.

Could the valuation exercise when purchasing the property be combined with the valuation required for assessing a lease extension?

santunup

Hi All,

I have been reading discussion reg. extending lease by 90 years. Is it possible to extend the lease for a shorter term, say 25 or 50 years? That way, the cost may be lesser !!!

Thanks,
Santunu

dcro1

Hi,

I have just 59 years left on a lease (via Chancery St James) for a flat that is worth circa £85,000 and I pay ground rent of £20 per year.

My problem is I simply don't have the money to extend at this juncture without remortgaging. A calculator suggested about £11,000 + costs.

I do have a fair bit of equity in the property - just £58,000 left on the mortgage. That said I have a large amount of personal debt and I'm not sure the bank would entertain extending my mortgage.

I appreciate that the answer will probably be talk to your mortgage lender, which I will, but any advice or steers about what will happen if the lease continues to dwindle would be appreciated.

I really didn't understand the ramifications of any of this and don't feel like it was ever spelled out to me at any stage in the purchase process 14 years ago. Does this give me any recourse to action?

Thanks

annemarielazarus

I have a situation where there has been mistakes (professional negligence) made with the assignment of a section 42 notice lease. The background is as follows:

I purchased a short leasehold flat which completed recently on the assumption that a section 42 notice would be assigned to me. I had to pay for the vendors solicitors for this and also paid a premium on the sale price of the flat to the vendor. This entailed that a s42 notice was done (1 day before completion), a clause was entered in the sale contract and a deed of assignment done. Everything ok to this point.

Issue 1: After completion the freeholder’s solicitor wrote to the vendor’s solicitor requesting information. The vendor’s solicitor failed to respond within 21 days. The freeholder’s solicitor is therefore saying the s42 notice has expired and is invalid.

Issue 2: it seems like neither the vendors solicitor nor my solicitor informed the freeholder of the lease assignment in a timely manner. I don’t know which one is legally supposed to inform the freeholder (or both) but I was certainly charged for notifying the freeholder on the completion statement. The vendor’s solicitor has only now just notified the freeholder of the transfer (a month after completion, i.e. very late). Surely he should have been professionally aware of the s42 notice and done it a lot earlier? My solicitor has also still not informed the freeholder, surely he should have done this sooner? [addendum note: my solicitor has now confirmed he did send a notice of transfer but to the managing agent]

Can I pursue either solicitor’s indemnity insurance for negligence as surely one of them have messed up and I have lost out on thousands? Do you think the seller's conveyancers can be held liable as he failed to reply within 21 days as he had a professional duty of care with me? In my opinion not replying was fatal to the whole process falling down.
Do you think because the vendor's solicitor did not respond (or make me/my solicitor aware) within the 21 day deadline it was fatal to the breakdown of the section 42 notice application process? I wonder whether his defence that he was away on holiday at the time would be valid? Surely he had a duty of care to me in this instance and not just his client? Donoghue vs Stevenson, Caparo vs Dickman, Smith vs Eric Bush, where I paid for the s42 notice reassignment, there was no conflict of interest in respect of this notice, where there is 'proximity' between the vendor's solicitor and me, where I placed reliance on him, where he didn't use a disclaimer with me, where there was an assumption of responsibility to me, etc? Just to add to the facts, I had informed the freeholder’s managing agent before and after completion of the transfer inc emails/letters as proof that I was the one to communicate with going forward. Can the agent also be held partly responsible and taken to his ombudsman? Thank you in advance

richardw

Was a S42 notice issued on the freeholder before exchange of contracts?

Fire_Fox

Annmarielazarus
Are you using a solicitor who specialises in leasehold matters including extensions and disputes?
What does your conveyancer say about the actions of the vendor's solicitor and the actions of the managing agent?
Why did you and your solicitor write to the managing agent not the freeholder directly, did the freeholder request this?
Have you requested a copy of the agent's contract to see if lease extension matters are in his remit?
Have you spoken to the LEASE telephone advice service regarding the managing agent's actions?
http://www.lease-advice.org/publications/

propertyman

Notices of assignment are the responsibility of the lessee, however in practice it is the purchaser that gives notice through their solicitor as they know who the purchaser is and has the information about mortgagees etc.

It is common practice that these notices go to the Agent, who acts as agent for the freeholder, and would be dealing with day to day management. As an agent , the FH is therefore considered to be aware. However an agent or the freeholder should not deal with you as an owner until the Notice is served, as until then, the vendor is still the owner - no matter how many emails you send

It is very common that the Agent first knows of any extension when they are told about the new rent and term to enter in their records!

The issue is that the S42 notice was served, but that the FH addressed questions to the vendor's solicitor, who should have advised them of the assignment of the claim, and should have redirected the enquiries to your solicitor. Similarly your solicitor ought to have known that there was a 21 day clock and to have follwed up the matter earlier.

As to whether there is case for negligence depends entirely on what the instructions were to the solicitors. Was your solicitor instructed to deal with the lease extension and not just the purchase and what agreements were made with the vendors solicitors about post completion correspondence. There is indeed a duty of care but also a matter of professional courtesy, or a good old fashioned !!!! up.

Your first course of action is to meet with your solicitor and find out all that happened, as above, and how they can help in resolving it. That might reveal the precise circumstances as to why the notice expired ( yes we know there was no response- so who was supposed to respond?)

You might also approach the freeholder as many are willing to offer lease extensions on the same terms as the statutory extension.

amandajc

We seem in danger of reaching deadlock in our negotiations with the freeholder about the price of our lease extension. The flat is valued at £79,000 and has 72 years left on the lease (ground rent £25). The freeholders have come down to £7,800 from an initial price of £9,000 but we are very reluctant to pay more than £6,000 - the Lease Extension Calculator comes up with a figure of £5,000.

In addition the freeholder's surveyor has quoted costs of £950.

However our surveyor is saying that the charges for going to LVT will be over £1,700. Is this a reasonable cost? and if not, is there anything we can do about it? Has anyone else experience of going to LVT and the costs involved. Thanks

propertyman

Strictly speaking you do not have to pay the landlords cots of application to the LVT. http://www.lease-advice.org/information/faqs/faq.asp?item=97

and (5) of this http://www.legislation.gov.uk/ukpga/1993/28/section/60


However you do have to pay for the landlords reasonable costs, so there it is inevitable that some of that cost will end up in your bill. You can ask the LVT to determine costs and have this disallowed and the overall costs determined.

It is a common tactic to frighten applicants so you might respond and say "you are wrong on £1750 and you know that", and frankly if the Surveyor is an RICS member should know that and should not be saying that- I would make it clear that you will take that up with the RICS - very naughty.

Fire_Fox

amandajc wrote: »

We seem in danger of reaching deadlock in our negotiations with the freeholder about the price of our lease extension. The flat is valued at £79,000 and has 72 years left on the lease (ground rent £25). The freeholders have come down to £7,800 from an initial price of £9,000 but we are very reluctant to pay more than £6,000 - the Lease Extension Calculator comes up with a figure of £5,000.

In addition the freeholder's surveyor has quoted costs of £950.

However our surveyor is saying that the charges for going to LVT will be over £1,700. Is this a reasonable cost? and if not, is there anything we can do about it? Has anyone else experience of going to LVT and the costs involved. Thanks

Are you following the procedure exactly as laid out in the legislation, if so how far have you got, or are you trying to negotiate informally or semi formally?

Who is going to charge you that much for going to the LVT, are you thinking you need to be represented throughout? You don't because the LVT is designed to be user friendly and not prohibitively expensive. Plenty of information on LEASE on what you should expect and should not expect to pay with regards to lease extension and when applying to the LVT http://www.lease-advice.org/publications/

Also check website of your nearest LVT itself, some even produce instructional DVDs. There are LVT decisions on the LEASE website which are often worth trawling.