Extend Your Lease guide discussion

SKPatel

Hello!

I would suggest that you seek advised from a qualified surveyor regarding the premium.

As your brother is negotiating outside of the legislation, the freeholder can make any offer they wish and may negotiate further.

If your brother finds the figures to be unreasonable, he can serve a statutory notice on the freeholder requesting a lease extension of a further 90 years with a zero ground rent. He will have had to have owned his flat for 2 years in order to do this.

Good luck!

geet

Thanks, my brother's logic is that the mse calculator gives the figure of 25K (and this must be for adding 90 years with no increase in ground rent) and he has brought it down to 20K (flip side being the lease is taken to 99 years only with periodic increase in ground rent) and that a statutory route too may come with the figure 25K. i am not sure what to tell him. maybe someone has similar experience - since the freeholder benefits in the long run by giving a total lease of 99 years with increase in ground rent should my brother be negotiating further? Thanks.

AndyGuil

I would add 90 or 99 years. That way it becomes worth as much as freehold when the total is over 100.

jkm1975

i have read the MSE article with interest and would appreciate any advice on the following paragraph

"You have to have owned the flat for two years before you can extend. A seller can get the ball rolling and pass the rights to the purchaser. But if a buyer waits until they've completed the purchase, it'll be another two years before they've a right to extend"

can anyone explain how i "pass the rights to the purchaser" and what i do to "get the ball rolling" i would like to pass the entitlement on as it will help secure a sale, but obviously dont wish to spend much on the process, otherwise i would pay for the whole extension myself and re-price teh sale accordingly.

thanks

Ed-P

I have been researching this subject recently and put together a couple of guides on lease extensions on Slideshare and Goarticles. Unfortunately as a new user I am not allowed to post links on here but please do reply with your email if you would like them. In the meantime, here are a few of the top tips included in my Slideshare guide on How to Extend the Lease Extension on Your Flat:

The shorter the lease the lower the value of your property – this could also be the reason you bagged a bargain! If the lease runs out the property reverts back to the freeholder.

Apply for your lease extension before you think you need to. The longer you leave it the more expensive it will be. Mike Tibbatts of Mike Tibbatts & Co said:

"Now is always the right time to get a!statutory lease extension. Every day you don't, you are handing more value over to your freeholder."!

The basic rules for allowing lease extensions include the requirement that:
You have owned the property for two years
Your lease has at least 21 years left to run

It is important to seek advice from a qualified professional to guide you through the process and provide you with ‘current’ advice. I also recommend you look further into freehold enfranchisement, which will also help you understand your rights.

Ask about fixed fees. If the freeholder delays the process it could cost you more, unless the solicitor offers a fixed fee.

I hope this helps! Please don't hesitate to ask me any questions. :money:

viejita

Hi
I have 2 flats in the same block, both with 74 years to run on their leases. We got a valuation and approached the freeholders informally and agreed a price on the extension. Now the freeholder wants to put 2 new clauses.

The first entitles them to claim at least £75 plus VAT each time we let or remortgage the property.

The second clause indemnifies the freeholder against all costs and expenses for any advice sought or any action contemplated or taken by or on behalf of the freeholder in order to prevent or procure the remedying of any breach or non performance by the tenant of any of the covenants, conditions or agreement to be observed or performed on the part of the Tenant in the Lease.

Our solicitor said these clauses would make the flats hard to sell and that we should go down the formal lease extension route, which would mean the freeholder could not alter the term of the original lease by inserting these clauses. We plan to sell both flats.

If we sell and assign the section 42 to the buyer after exchange, do we have to wait to complete until after the freeholder serves their counter-notice or can be completion be as normal?

Or if we go down the route of extending the lease, is it likely that the freeholder will offer the same price for the lease extension? If he doesn't, can we go to the LVT to adjudicate?

Thanks

stilettogirl85

Bella56 wrote: »

Just an update, incase anyone ever searches for info on extending a shared ownership lease.
This was for a HA flat worth £80,000 with 83 years' lease remaining.
The whole process took 6 months from start to finish, but our solicitor wasn't particularly in a hurry, nor were we to part with our cash so not a problem!

HA fees incl. valuation £1480
Our solicitor fees £870
Cost of lease extension £3250
Total £5600

Ouch! But hopefully it will have been worth it when it comes time to sell up.

Hi Bella56 (and others who may be able to help!!)

I am looking at buying a HA flat with 50/50 ownership. There are 88 years left on the lease and the ground rent is £843 a year according to the current owner.

Bashing this into the calculator, it says that to extend the lease now would cost £12,000++!!! Has this been anyone else's experience with the HA? Or are they more reasonable than a private freeholder?

Also, would I just be extending the lease on my half, or would it be the whole (i.e. the bit that the HA still owns)? Would be a bit of a raw deal if I ever decided to staircase and I had 150+ years on my lease and only 60/70 odd years on the bit I was staircasing.

All advice welcome!!

stilettogirl85

I am replying to my own question, but having spent the last few hours trawling forums and reading up on my local HA's own guidance, here is what I have found:

1. The freeholder is not necessarily the HA as I had assumed. The title deeds can look a bit like this: A Freeholder grants headlease to Housing Authority grants 50% (or whatever shared ownership percentage) sublease to Me.

2. Only the 100% owner of a lease can apply to the freeholder on a formal statutory basis (i.e. HA on my behalf). However, it appears that the HA would be willing to do this, but I would have to pay their legal fees, plus my own (possibly plus Freeholder's!) and the cost of the lease extension. If the Freeholder suggested a huge amount, I can only try and negotiate and do not have the right to take them to a tribunal.

3. If I want to extend the lease, I must extend 100% of the lease - i.e. my half and the HA's half.

4. Due to point 3 above, by extending the lease, I have made the property more valuable. Yay! Except...this then means that if I want to staircase I have to pay more because I have made the property more valuable!! Additionally, again because I have made the property more valuable, the rent on the 50% share I do not own may increase!!

Currently the lease has 88 years remaining. It is a 1 bed flat and I am 29 this year and single. I am hoping that will not always be the case and in 5 years' time I will want to sell and move in with a partner!

This would mean that there would still be 83 years left on the lease....so is it worth buying the property in the hope that as the lease will still be above the magic 80 years it won't massively affect the sale value??

Bella56

Hi Stiletto,
That seems really expensive! Maybe ours was so much lower because we had a nominal ground rent - I think it said a peppercorn a year??? So basically nothing? That seems alot of money to put into a property if you're planning on selling while it is still at a decent level, but hopefully someone more knowledgable can help you.

Tykva

Hello everyone,


we have 75 years left of lease. Free estate agents evaluations showed the market price of around 150-155K as it is now. Ground rent is £75 per year. We have talked to the landlord informally who returned us back with the quote of 10K+£450 solicitors fee to extend for 99 years with no ground rent fee further on. We have asked him from what market price he came up with the quote, his answer was (he himself is a real estate agent in the are) somebody sold similar flat on our street for 140K recently. He then said he can agree with 10K including all fees (surveyor and solicitor will be his as he has some he works with for a long time now).


The calculator says about 8K plus fees for additional 90 years. So overall quote seems like all right but more like to gain by the freeholder. It seems to me if we approach officially via solicitor at the end we will end up paying 10K too but that involving kind of negotiating costs. Whereas current 10K will be earned by parties involved with freeholder. So all gains of informal negotiations are for him. Whereas of course initially we started so to cut our own expenses too. Do you think quote is reasonable? Or am I wrong? Should we negotiate further? Please advise. Thank you!