Extend Your Lease guide discussion

buglawton

You can initiate the extension procedure at time of sale.
As Martin says at
http://www.moneysavingexpert.com/mortgages/extend-your-lease

"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"

So makes perfect sense, yet every estate agent who I put this question to when looking at short lease properties, was not the slightest bit interested in putting the proposition to the seller and even seemed surprised it was possible. And no sellers were doing this as part of their sale plan either.

SKPatel

Hello stickle2k,

If all the leaseholders own a share in the freehold company, then you should be able to extend your lease to 999 years provided that the freehold company directors agree. Usually the freehold company waives any premium as you are joint freeholder but you should clarify this with the company directors.

If you have a mortgage then you will need your lender's consent to the lease extension -although this is just a formality.

Therefore, the process should be fairly straightforward and not too costly.

Good Luck!

propertyman

That is not correct. The company or freeholder, five named flatowners, is different legal entity to a flatowner, and owns the freehold. It can sell extensions at full price and use the proceeds as it can. The original agreement or participation doc or trust declaration must give that right. Leases are not always the same length or ground rent and not all want new leases and prefer cash. Sof does not exist as a tenure nor is fh shared.

SKPatel

Hello propertyman,

I have not suggested that share of freehold is a tenure nor that the freehold is shared, if you read my post you will see i have referred to 'a share in the freehold company'. Furthermore, whilst i have suggested that it is usual for any premium to be waived this should not be interpreted to mean that this is always the case. I do agree, the sometimes the freehold company does seek to recover a premium hence why i recommend liaising with the company directors for further clarification.

In my experience, where leaseholders have acquired their freehold and subsequently grant each other 999 year leases it is for a zero premium. Ground rent is either retained (as a source of income for the freeholder) or waived.

propertyman

It was a general comment as your share in the freehold company is
a not correct its a share in a company
b the distinction is lost to a yeah so sof then....

because of b,a is still wrongly interpreted, sadly.

in the same vein i agree with the latter section too, but wilfully mis interpreted as will, rather than might, by many. I am therefore if you like placing an emphasis on doom so that the news is not the end if the world.

sadly too many enfranchisers are not comprehensively advised as you do, their conveyancer or lawyer assuming the client knows what they are doing and merely transfers title while themselves blissfully unaware of the minefields ahead. Or cynically feathering their nest for future fees.

didn't intend to be seen as confrontational

cpage87

Hi All, having just read much of this thread I just wanted to get some opinion on a 96 year lease. Ideally I'd prefer to purchase a property with 100+ years but have found a property that ticks all the boxes, though with a 96 year lease remaining. Given that I am a first time buyer who only intends to own the property for 2/3 years does would anyone else see an issue with this length of lease? My main concern is on the saleability of a property with a lease of only 90-94 years. I've done a fair amount of research on the process and costs involved with extending the lease so am wondering if that would add enough value to the property to make it worth doing. The property is offered at £225,000.

AndyGuil

I wouldn't consider a lease if i was buying until it was near 80 years. Extending doesn't cost much before this.

System

cpage87 wrote: »

Hi All, having just read much of this thread I just wanted to get some opinion on a 96 year lease. Ideally I'd prefer to purchase a property with 100+ years but have found a property that ticks all the boxes, though with a 96 year lease remaining. Given that I am a first time buyer who only intends to own the property for 2/3 years does would anyone else see an issue with this length of lease? My main concern is on the saleability of a property with a lease of only 90-94 years. I've done a fair amount of research on the process and costs involved with extending the lease so am wondering if that would add enough value to the property to make it worth doing. The property is offered at £225,000.

I agree with the person above. 80 years is your magic number and the cost of extending doesn't start hiking up until you get below 80. If you're planning on selling in 2-3 years, I wouldn't be concerned about the existing lease at all.

System

polerina wrote: »

We were ready to put an offer in, we can go full price if necessary... Then we found out that the lease is only 56 years!! EA has told owners that they will need to extend the lease in order to sell it, else it will have to be cash buyers only (which we are not). We are going to view it again on Friday so should have our answer by then as to whether they will extend or not. Now, if they do decide to extend, I gather it will cost around £15,000 if not more... So my question is, are they then likely to re-market the maisonette at a higher price? Which would put us off a bit. Also, how did the EA not already know that information beforehand?! Surely the property's valuation took into account the lease?

Edited to add: EA told us that if owners did decide to extend lease, we could put in an offer "subject to lease extension" (or words to that effect) is that right? and if so would we need to offer over the £115k current price? Or assume that that is the price with a decent lease, considering the EA didn't seem to know it was such a short lease?

If I can add my two cents worth.....in my experience EAs generally know nothing about leases so the fact that yours had no idea about the short lease length doesn't surprise me. A surveyor is really the best person to value the property with the extended lease.

I recently extended my 63-year lease and it cost me £20k (London-based property worth £215k now with the long lease), so £15k might be a bit conservative for a 53-year lease. I think once it gets below 60 years, marriage value is no longer taken into account and the costs can be very expensive indeed. Personally, I wouldn't even think about buying this property unless it comes with the long lease. Lease extensions can be complex, lengthy and costly.

gregsy1

smilalott wrote: »

Hi,

Just to let you know you don't need a solicitor for initial talks with the freeholder nor serving the Section 42 notice nor for that matter going to a Leasehold tribunal. The Section 42 notice is such a basic form very dificult to get it wrong then send it by registered post. Obviously make sure you have the rights to serve the notice, have owned the property for two years.

Always ask the cost of renewal directly from the Freeholder, probably with the exception of local authorities, this figure will always be above what should be paid. They will assume that you need to sell quickly so will offer to bring the lease backup to 99 years, increase your ground rent etc. probably charge you around £6-7k for a 28 year extension, ground rent probably around £150 - £250 with 10 year increments linked way above RPI. Use the generic calculators (Moneysavingexpert's seem reasonably accurate) to find out if their offer is fair. Also if you are in a large block of flats chances are others have renewed, you can view other peoples recently negotiated lease extensions costs if you have a professional subscription to the Land Registry otherwise its going to cost you £30 a go.

If your not planning on selling and have the money go for the full 90 years with no ground rent option so for another £2k you get a 90 year extension (plus remaining term) with no rent.

Go to the Lease Tribunal follow their process, clearly laid out and 9 times out of 10 the freeholder will negotiate somewhere in between, they may leave it till very near the tribunal date but I'm sure they will negotiate.

I negotiated not only the price but also clauses in the contract as they are going to make quite a few adjustments, obviously you may need advice on contractual matters as I do now so will be posting another query on here shortly:), but thats what these forums are about to share knowledge and experience.

Remember you don't pay their legal costs all the time you are negotiating via the Lease tribunal process, so my costs were negliable some surveyor costs but just be a little brave and you will get there I'm sure.

Hi - Do you by any chance have a copy of the necessary S42 Notice form please? I have searched widely online and cannot find a sample... i found the legislation which lists the information that is needed to be included, but as it states that an incorrectly completed Notice form can invalidate the Notice, i want to ensure that i have it correct

thanks