Extend Your Lease guide discussion

GTG

Tom99 wrote: »

If its a LA landlord watch out for any expensive repairs being planned

I agree Tom and I think it is a very good point. Having had that experience as an LA leaseholder I can attest to that. I would also point out that this applies to any landlord or a management company that is not directly controlled by the leaseholders. It can even apply to one controlled by them if the leaseholders are apathetic towards the running of the company. When people spend other peoples money the virtues of prudence and honesty can easily be lost.

The conveyancing solicitor should point anything of an onerous nature like this to their client.

curious_badger

Hi all, joining the thread.

I have entered voluntary negotiations with the freeholder (Piervalley Ltd).

We have a 1 bedroom flat, currently 83 years unexpired on the lease. Property is currently worth £159,000 (according to housing price index).

Have been offered the following for a 125 lease:
Premium: £6,800
New Ground Rent: £200 (per annum)
Valuation + Processing fees: £580
Legal costs: £895 + vat

Not sure if this is worth accepting, bit out of my depth. Haven't got a solicitor yet.

buglawton

Not bad but watch out for a ground rent multiplier after every x years.

miller3653

You should use the MSE calculator above. Should be able to extend for 99 years. A multiplier on ground rent would not be applicable on a lease extension, that is one reason for a lease extension. I suggest you seek legal advice: try Leasehold Law.

curious_badger

Thanks both, the quote does mention an increase on the £200 per annum after 15 years:

“ A new ground rent of £200.00 per annum to increase every 15 years by the higher of the increase in the Retail Price Index or by £200.00 as at the month immediately preceding each rent review period. Costs recovery clause should the Landlord wish to pursue costs in respect of any future breach “

Not sure if that should be ringing alarm bells? Or is it normal/typical ..?

miller3653

alarm bells definitely, seek advice

curious_badger

Thanks miller - have spoken with a solicitor who agrees that it is extortianate. Time to let them have at it

buglawton

Many modern leases regrettably have a doubling clause on the ground rent every 15 or 20 years. +£200 after 15 is a doubling. But if I read it correctly, that means another £200 at 30 years to bring it it £600, that's +50% on £400 after the second 15 years. So it's not actually going to double in future 15 year milestones but just add steps of £200. If your solicitor is experienced he should be able to tell what's a 'typical' GR escalator and therefore if this is acceptable.

amal

How can we abolish leasehold? It is painfullly unfair on home owners, who purchased flats at a market value which assumed full ownership of an asset that could be passed on to generations to come. Sadly the cost of renewing the lease increases with every year, making it impossible to extend. This is a trap towards reversion of the lease.

What can we do to get the politicians to act?

buglawton

There was an official govt petition earlier this year to abolish leasehold:
https://petition.parliament.uk/archived/petitions/176070
That attracted a munificent 97 signatures.

This year there was a lot of politician soundbite style media headlines about the unfairness of recent leases, so I'm astonished about it being 97 votes in the above petition. Makes me wonder if the was another more practical petition, basically to ensure that owning leases is not a speculative for-profit activity.

To totally abolish leasehold might be a mistake, lenders oddly enough often prefer a clear cut leasehold flat over a share of freehold type. Actually lenders on bad recent leasehold-terms houses have solicitors and were aware of the lease terms. Now the same lenders have downgraded the valuations after all the publicity. So maybe they miss-sold the mortgages the first time around!

There was also a big leaseholder survey this year as part of a plan for legal reform, not sure where that went as I can't find it's official page. Looks like UK legislators were talking the talk and as usual not walking the walk.