Extend Your Lease guide discussion

spinoxxxx

Hello,
Two years ago i incresed my lease to 99 years and accepted a annual ground rent payment of £150 which then doubles every twenty years.
For an extra two thousand pounds i could've gone for a peppercorn rent ( zero ground rent) but i opted out as i thought id be selling my property in a couple of years.
I deeply regret this now and wondered if anyone knows how to calculate a new lease deal changing it to peppercorn state in my position. Im assuming the gradual increase in rent payments has to be calculated in somewhere and i fear this could cost me a fortune to change.
Thanks in advance
Steve

want2bmortgage3

I haven't been offered the chance of zero ground rent, although I could request this. The problem is the quote is already a bit high for what I can afford, and with no ground rent, they'll want even more for the premium!

To be honest coming across this problem has made me question the whole idea of leasehold, and I realise it is an outdated, feudal system. It makes me want to sell up and look elsewhere, for a freehold place.

SKPatel

spinoxxxx wrote: »

Hello,
Two years ago i incresed my lease to 99 years and accepted a annual ground rent payment of £150 which then doubles every twenty years.
For an extra two thousand pounds i could've gone for a peppercorn rent ( zero ground rent) but i opted out as i thought id be selling my property in a couple of years.
I deeply regret this now and wondered if anyone knows how to calculate a new lease deal changing it to peppercorn state in my position. Im assuming the gradual increase in rent payments has to be calculated in somewhere and i fear this could cost me a fortune to change.
Thanks in advance
Steve

Hello Steve,

You can try and negotiate a zero ground rent with your freeholder although I'm not sure they will be interested if you have just extended your lease.

The other alternative is to extend your lease under the legislation by another 90 years and then you are entitled to a zero ground rent. However, as you mention, this may be costly. I would suggest that you seek advice from a surveyor about whether this is a viable option.

Good Luck!

tim123456789

want2bmortgage3 wrote: »

I haven't been offered the chance of zero ground rent, although I could request this. The problem is the quote is already a bit high for what I can afford, and with no ground rent, they'll want even more for the premium!

.

The LA calculator is for a zero ground rent and a 99 year extension.

So, assuming that valuation is correct, for a 33 year extension and an increase in ground rent you should be paying much less than the premimum thay have asked for.

ISTM that they are taking the Mick.

Tell them that you have been (professionally) advised that their current offer is significanlty in excess of full value (even when allowing for the reduced fees) and that if they cannot come up with a better one you will be forced to make a statutory application (as that is the only route that you have where you can get a legally binding third party assessment of the value). And you will need to follow up this threat, as you do need to extend the lease if you intend to sell.

It may be useful to indicate which of the parts of the deal you would most like them to adjust as otherwise they might just come back with the same deal for a longer term (which isn't the solution that you want)

want2bmortgage3

I have worked out roughly what I'd have to pay via the statutory route via a online formula and it come out as £12310 which sounds about right, as the L-A website said £11-12k.

So I would add to this the fees I would have to pay for the freeholders valuation and solicitor which is at least £2k.

That gives a total of £14310, would I have to add fees of my own for my solicitor to that as well? If so what sort of figure would that be?

If I can complete this estimate, based on statutory terms then I can compare that with the £15600 + £950 =£16550 quote I have from the freeholder and make them an offer.

I would have to try and work out a value for the ground rent, which on the freeholders proposed terms would work out @ £155k over the 99 years compared with £0 statutory. How can you work out a price to compensate for that???? Also the 99 years vs 155 years, I would have to factor the length of term in as well?

richardw

Perhaps see post #261 again.

IanIan

want2bmortgage3 wrote: »

I would have to try and work out a value for the ground rent, which on the freeholders proposed terms would work out @ £155k over the 99 years compared with £0 statutory. How can you work out a price to compensate for that???? Also the 99 years vs 155 years, I would have to factor the length of term in as well?

It seems that you now need professional advice. See post number 13 which suggests the questions to ask professionals before they are engaged.

notsurewhereIstand

Can you sell a flat with an extended lease before it's registered with the Land Registry, as long as the solicitors record everything and inform the LR later ?

notsurewhereIstand

........................bump

SKPatel

Hello!

If you complete the lease extension and the parties' solicitors have agreed that the lease extension will be registered after completion of the sale/purchase then that should be fine. Usually it will be the buyer who registers the lease extension with their ownership of the property and there will be clauses referring to this in the contract for sale.

Hope this helps!