Extend Your Lease guide discussion

Mean_Gary

Dear MSE thank you for writing this guide, I wish I had known more before I bought my flat as a first time buyer. It had 81 years on the lease at the time of purchase and I am fairly certain I was advised that there was a 'problem' for leases of below 80 years but I could not determine why this was or what the implications of the 'problem' would be so didnt do anything about it. Of course then banks were lending like no tomorrow and I think todays lending environment has made the sub-80yr lease issue more problematic.

Anyway, I would like to sell my flat which now has 76 years left. All the estate agents Ive seen have advised I look into the costs and terms of extending. I have informally approached the freeholder and await a reply; I shall contact my solicitor when they respond. I have no interest in extending the lease but will negotiate on the selling price with regards to the likely cost of extension which according to the calculator is £7,000 - £8,000. The guide suggests 'A seller can get the ball rolling and pass the rights to the purchaser' (so that the purchaser doesnt have to wait two years). Can anyone expand a bit more on this please? What does this entail? What costs might apply 'to get the ball rolling'?

Thanks in advance.

Mean_Gary

Richard, looks like you answered my question as I was typing it!

Is there a cost involved in serving a tenants notice?

If my freeholder comes back with a price less than or equal to the guide price from the calculator, do I still need to serve a tenants notice?

Thanks

richardw

Mean_Gary wrote: »

Is there a cost involved in serving a tenants notice?

If my freeholder comes back with a price less than or equal to the guide price from the calculator, do I still need to serve a tenants notice?

Yes there are costs. But you've made an informal approach so aren't there yet, best to wait for the response.
If you can agree without doing the statutory process, you won't have to do a tenant's notice, but double check that any agreement with the freeholder is assignable to a possible purchaser, get legal advice on this.

I think the most important thing to consider is potential buyers may not be interested until the risk of the issues going to a Leasehold Valuation tribunal is diminished. Although this is important, don't let it allow you to pay too much for the new lease.

Have others with similar flats and the same freeholder extended their leases?

Richard_Webster

The guide suggests 'A seller can get the ball rolling and pass the rights to the purchaser' (so that the purchaser doesnt have to wait two years). Can anyone expand a bit more on this please? What does this entail? What costs might apply 'to get the ball rolling'?

Unless it is a strong seller's market (which it isn't) a buyer would be mad to accept assignment of a notice when he has no idea what he will end up paying for the lease extension at the end of it all. He also has the costs of the negotiations etc.

Why bother? He would buy another flat without the hassle. So I think this idea of signing over a notice is unreal. If you are selling you have either to have the extension done and dusted completely or have it set up so that it is done back to back with the sale using the buyer's money to pay for the extension.

richardw

Richard_Webster wrote: »

If you are selling you have either to have the extension done and dusted completely or have it set up so that it is done back to back with the sale using the buyer's money to pay for the extension.

Exactly. Spot on here. This is the easiest for potential buyers and also for getting sensible valuations from valuers and for the marketing of flats.

Mean_Gary

Thanks for your replies.

As far as I know no other leasholders have extended (only 4 flats in the building).

Makes sense what you say re madness of buyer to accept the rights but if I come to a written agreement with the freeholder and they are happy to transfer the rights then presumably this would be ok for the buyer?

I am keen to move on with my life so I want to be as little involved in this as possible. Hence I am considering cutting the proposed asking price (not on the market yet) by £10,000 and be done with it!

propertyman

I disagree with #25 & 26- sorry chaps. They criticise one set of assumptions by substituting others, which are equally challenge able.

First and foremost they should only be paying what the flat with a short lease is worth!

Secondly they are not required to complete the extension.,

They are then only out of pocket on costs, having paid exactly for what they got.

In an ideal world the flat would be marketed with a longer lease, MSE is full of examples where people are half packed up without the first idea of what they are doing and, in so many cases, an Agent with not much more- and committed to plans that prevent starting over.

There are still strong sellers markets,and circumstances or local supply such that alternative choices are not available.

Each situation must therefore be evaluated on its own merits, and particularly in the current climate, makes it that much more important to consider professional valuation advice so that the risk of an adverse premium is minimised, or as is often the case, an early agreement reached.

propertyman

Mean_Gary wrote: »

T

Makes sense what you say re madness of buyer to accept the rights but if I come to a written agreement with the freeholder and they are happy to transfer the rights then presumably this would be ok for the buyer?

It is only madness if the buyer goes in blind. While there is always a small risk of an adverse decisions( which might be in the buyers favour) if they have advice on the current value the value of the likely premium, and the value of the flat with the 90 year extension, then with a reasonable degree of certainty, they know what they are in for.

Many seek relevance on the various free calculators, the purpose of which are not to give a figure but a guide so that the person has a broad understanding of the outcome before engaging formal advisors.

richardw

propertyman wrote: »

...MSE is full of examples where people are half packed up without the first idea of what they are doing and, in so many cases, an Agent with not much more- and committed to plans that prevent starting over.....

What exactly do you mean? An example would be helpful.

richardw

propertyman wrote: »

There are still strong sellers markets,and circumstances or local supply such that alternative choices are not available.

Each situation must therefore be evaluated on its own merits, and particularly in the current climate, makes it that much more important to consider professional valuation advice so that the risk of an adverse premium is minimised, or as is often the case, an early agreement reached.

Yes, agree with this.