Extend Your Lease guide discussion

sukavi2011

Hi all, am looking for a little advice. I have recently moved into a flat with 89yr lease, by time it comes to extend will be 87yr. Property value is currently around 260k. I have used the lease calculator and it says 6-8k for 90yrs. I am wondering what the situation might be in around 18 months time. If the government are making changes this year then hopefully this will be for the better. Then there was the issue of appointing solicitor etc. I was thinking of asking same one I bought and sold last/this property, but obviously would make sense to get several comparisons. My property is ex local authority hence they are the freeholders. I see this as possibly a good thing but may be wrong. Any advise much appreciated

eddddy

sukavi2011 wrote: »

I was thinking of asking same one I bought and sold last/this property, but obviously would make sense to get several comparisons.

Lease extensions are quite a specialist area. Does your conveyancing solicitor also specialise in this area?

I would go for a solicitor with good past experience in lease extensions.

Trung_UK

Is anyone able to help me please with my question?

I think I have 83 years left on my leasehold on a shared ownership property (house) but my final goal is to purchase the property outright including freehold. (lived here for 3+ years)

If I let my lease run lower than 80 years how does that effect the costs of buying 100% and the freehold (or if I can't then staircasing on leasehold).

Does this mean that the longer I leave the lease, the cheaper it is for me to buy the property?

I could really use some help please. I'm new so can't post links but I did create a thread which is below.

http://
forums.moneysavingexpert.com/showthread.php?t=5785643&highlight=lease+staircasing

or search "Shared Ownership: Staircasing vs Lease running low" on the forum.

Many Thanks

eddddy

Trung_UK wrote: »

I think I have 83 years left on my leasehold on a shared ownership property (house) but my final goal is to purchase the property outright including freehold. (lived here for 3+ years)

If I let my lease run lower than 80 years how does that effect the costs of buying 100% and the freehold (or if I can't then staircasing on leasehold).

Does this mean that the longer I leave the lease, the cheaper it is for me to buy the property?

Different housing associations have different rules. So it's best to ask yours. I suspect they have 'fact-sheets' that explain this - or the information might even be on their website.

kadirayoob

Quite helpful, but would you rather increase the length of your lease or sell it off and buy a new one. I would recommend that you buy a new home, over a period of time a home becomes old and begins to have faults in it. Hence it is better you sell this one off and add the lease to the new one. You might end up saving some money this way.:money:

heathdene

Hi


I am currently looking at extending my Lease.


Current length is 64 yrs


Value of 2 bed flat is £195k


Freeholder tells me that I need to send a payment of £350 in order for them to give me a renewal valuation.


A solicitor who family member used to work for told me to make the payment and see what their valuation is and then maybe instruct our own surveyor. He gave me details of the surveyor they've used in the past who now tells me that I should hold off from paying the £350 and directly contest the cost of the renewal.


It seems that everyone in from my position to solicitors has different experiences with this and there seems to be no set rules in approaching and dealing with this.


Any advice greatly appreciated.

eddddy

heathdene wrote: »

It seems that everyone in from my position to solicitors has different experiences with this and there seems to be no set rules in approaching and dealing with this.

There are 2 approaches to extending a lease:

1. Statutory lease extension
2. Informal lease extension

With an informal lease extension - You're correct, there are no rules. The freeholder can ask for any fee they like, and then ask for any price they like. Similarly, you can make any offer you like.

So the freeholder might charge you £350 and then give you a valuation of £100,000 to extend the lease. And you can counter-offer £500, if you want.

... and you might never reach an agreement.


With a statutory lease extension - there are rules. But it's more expensive - total fees could be around £4k. And it will probably take longer - 6 to 18 months. And a definite price will be agreed.

You could start by reading this: https://www.lease-advice.org/article/lease-extension-of-leasehold-flats-the-two-routes/

MHF123

Hi there,
I wonder if you can help. I am one of 8 flats in my building who all own equal shares in our freehold. We own it via a management company (in which we have equal shares) that was set up to own the freehold as I understand that private individuals are unable to own freeholds (or at least they were at the time that this was set up). We are also all lessees and our leases have now all fallen below 70 years so we need to extend them fairly rapidly. We all thought this would be a simple matter of paying a lawyer to sort out the paperwork seeing as we are all effectively asking for lease extensions from ourselves. However after seeking initial advice, it appears that we may have to charge ourselves the market value for the lease extensions which could be as much as £50-60k per flat! Although we could then reimburse the money to ourselves from the management company via dividends, apparently we will have to pay corporation tax on the lease income that the company gains and then capital gains tax as individuals on the value of the leases that we have granted ourselves, so we get double-taxed to the tune of some £20k or more. Surely there must be some way round this? Aren't there "share of freeholders' with management companies set up to hold their freehold all over the country who have had to deal with this same issue when they come to extending their leases? How do they normally sort this out?

eddddy

MHF123 wrote: »

However after seeking initial advice, it appears that we may have to charge ourselves the market value for the lease extensions which could be as much as £50-60k per flat!

Who gave you this advice? Did they say why they are advising this?

Is it something to do with different flats having different lease lengths - perhaps because some flats paid for lease extensions before the freehold was bought?

Or perhaps because flats are different sizes, and therefore different values?

Tom99

MHF123 wrote: »

Hi there,
I wonder if you can help. I am one of 8 flats in my building who all own equal shares in our freehold. We own it via a management company (in which we have equal shares) that was set up to own the freehold as I understand that private individuals are unable to own freeholds (or at least they were at the time that this was set up). We are also all lessees and our leases have now all fallen below 70 years so we need to extend them fairly rapidly. We all thought this would be a simple matter of paying a lawyer to sort out the paperwork seeing as we are all effectively asking for lease extensions from ourselves. However after seeking initial advice, it appears that we may have to charge ourselves the market value for the lease extensions which could be as much as £50-60k per flat! Although we could then reimburse the money to ourselves from the management company via dividends, apparently we will have to pay corporation tax on the lease income that the company gains and then capital gains tax as individuals on the value of the leases that we have granted ourselves, so we get double-taxed to the tune of some £20k or more. Surely there must be some way round this? Aren't there "share of freeholders' with management companies set up to hold their freehold all over the country who have had to deal with this same issue when they come to extending their leases? How do they normally sort this out?

[FONT=Verdana, sans-serif]If all 8 flats are on exactly the same lease length and ground rent and all 8 freeholders and leaseholders are in agreement, you can extend all 8 leases to 999 years at a peppercorn rent at a cost of £0 premium for each tenant.

[/FONT] [FONT=Verdana, sans-serif]You will however all have to pay your own and a share of the freeholder legal costs.[/FONT]