Extend Your Lease guide discussion

reecy_2

Hi everyone, our lease is down to 63 years, we've already written to the freeholder asking how much it would cost to extend the lease and they've come back with £24,000 plus legal fees!
Our ground rent is £93.75 per quarter and the price of our flat (if the lease was extended) is about £180,000.
I'm nervous about challenging the amount in case they withdraw it altogether - can they do that? I feel like I'm held over a barrel as it's SUCH a lot of money and we have no choice but to have it extended. Any advice would be extremely welcome. Thanks

richardw

reecy what is the current value with the current lease?

flying_v

Aargh, i'm in the same boat as many here. Just checked my land registry documents and only 50 years left on the lease (57 when I purchased).

I paid £178,000 and pay £50 per year in ground rent.

Not looking to sell right now as I rent the property out, but imagine this will cost 20k when I come to buy another place.

Feel like an idiot - off to read all my documents to see if anybody told me this at the time!

reecy_2

I'm sorry Richard I really don't know. I only know it would be worth £180,000 with the lease extended as theres a flat in block (with the exact same layout and number of rooms) on the market for that amount.

prickettandellissurveyors

Hi The one thing I can see from all these posts is that there are a lot of questions that need answering and my advice is to find a professional who is experienced in Leasehold work. With regard to legal side a solicitor is best but for valuation issues and negotiations you should contact a surveyor as they are the experts on the calculations. They will also be able to tell you if an offer from the freeholder is fair. Every case is different and what is right for one case may not be in another. For example if you are selling a slightly lower premium for a new 99 or 125 year lease with a new ground rent can be a good option (but be wary about how the ground rent rises because if not looked at carefully the lessee can end up agreeing something that will end up extortionate also if the freeholder is willing to agree as they cannot be forced into this) but if you are intending on keeping the property or passing it on to grand children etc then your statutory right of an additional 90 years with no ground rent is preferable. Any professional confident in their ability should be able to spend a little time discussing your situation, options and how your case is likely to proceed. ALEP is a good place to find someone if you do not have a referral from someone you trust. I am also more than happy to help as I specialise in lease extensions and freehold enfranchisements. Post me a question or contact through our website

With regard to some of the questions already asked

Reecy - it sounds a bit high but cannot tell without a proper valuation. They can withdraw any offer that has been made 'without prejudice and subject to contract'. If a freeholder is pushing for agreement then, in my experience that is usually because they know they are asking too much.

Chris, without a valuation it is difficult to tell and without a value for the flat impossible but bear in mind the ground rent goes up to £4,000 and although that will not be worth, in 100 years, what it is today it may put off a possible purchaser.

Bowski - yes it can be scary for lessees that is why you need professionals on your side that know what they are doing and can explain, advise and support you each step of the way.

propertyman

ChrisC360 wrote: »

I decided to contact the managing agent direct to query the lease extension, they have replied and offered me the following:

A deed of variation - extending the lease back up to 99 years at a cost of £8750 plus £475 in fee's.

An increase in the ground rent to £250 per year doubling at 25year intervals (it is currently £80).

It is hard to say without a formal valuation but in principle a shorter extension and a higher ground rent is a viable alternative where the premium on the statutory basis is more that you can or wish to afford.

One way to look at that is say £15,500 inc fees or £9250 and say 10 years living there at £2500.

While 99 years is not going to affect resale in a few years, in the long terms it might. Offering it with 90 + is not going to cause any real concerns, nor would the ground rent if rents are at that level locally.

If you are only going to be there for a few years 99 is quite viable, but if its longer, then 125 is preferable, though the premium will be higher.

JSF

I have to be honest that I bought a flat a few years without thinking of all the leashold implications. I was happy to let the professionals and solicitors deal with this, get the mortgage and move in and I am happy where I am living.

I am not sure if I got 63 or 73 years left on the lease so I am starting to read up and then approach the landlord. Most people living in the block are happy and not had any problems in the past. So I am hopeful of a reasonable (but unexpected expense) on this.

My question is to anyone that might know is should either the mortgage company or the solicitor seemed to make me aware of how a leasehold works. Yes in hindsight you could say I should have asked, but I just assumed as there was a long lease you just bought a new one near when the other expires (sorry I know I does seem stupid now).

I hope other people now ask about the freehold more closely if they are thinking about purchaing a property. I know I will (but dont intend to move for some time but you never know)

However I think its great was brought to my attention by this site.

richardw

Richard_Webster wrote: »

If you are selling you .... 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.

Would you expand on this a little in how this actually works in practice.

Would this all happen on completion day?

Would the buyer's solicitor have any 'special' requirements?

Would the freeholder's solicitor have any 'special' requirements?

Any thoughts would be interesting.

5lugger

Richard_Webster wrote: »

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.

Not always the case, in certain circumstances the buyer will certainly take on an assignment of notice. It is important to remember that the Initial Notice can be withdrawn if necessary. Yes this could result in having to meet the Landlords reasonable costs, but these can always be challenged at an LVT if thought to be too expensive.

5lugger

ChrisC360 wrote: »

Richard - I don't know, there are 2 blocks and around 40 flats in total, most are buy to let's and so the tenants change often, I have no idea who the individual landlords would be!

ChrisC360 always worth carrying out a search of LVT decisions to see if anyone else in block has extended the lease at a Tribunal. A determination by an LVT would carry a bit more weight.

Details of decisions can be found at the Leashold Advisory Service website http://www.lease-advice.org/lvtdecisions/tables.asp?table=3
and on the Residential Property Tribunal (aka LVT) website http://www.residential-property.judiciary.gov.uk/search/decision_search.jsp

You should be able to narrow results by postcode, so at the very least identify some comparable properties.