Extend Your Lease guide discussion

eddddy

oldwiring wrote: »

However the former is not so fixed, and as current interest rates are low and continue for some time, do some free holders now apply a lower discount rate to the future income stream, and so additional costs to the lessee?

Assuming it's a statutory lease extension...

I suspect that the leaseholder's valuer starts by using a Yield Rate that favours the leaseholder as much as possible.

And the freeholder's valuer starts by using a Yield Rate that favours the freeholder as much as possible.

I suspect it's then a case of who negotiates hardest, or who gives in first etc.


(I believe that the Yield Rate used is supposed to reflect what freeholds are selling for in the local area.

If it goes to tribunal, each valuer would have to present their evidence of why their choice of Yield Rate is correct - and the tribunal would decide whose evidence is more compelling.)

DAE22

Hello
I am looking to sell but the lease is 66 years and we brought at 73. At the time it was the only option we had to purchase (and the focus didn't seem to be the 80 year rule that now seems apparent - more 'banks won't lend under 60 years' so we thought we had time).

To extend will be £20+k and we are faced with either spending all our savings on this OR further interest due to a loan. When is it worth putting on the market for cash buyers only, vs extending the lease? Currently unsure on how to proceed and all suggestion/information would be a great help.

eddddy

DAE22 wrote: »

When is it worth putting on the market for cash buyers only, vs extending the lease?

If you did a statutory lease extension, you would almost always make a profit by doing the lease extension.

DAE22 wrote: »

To extend will be £20+k

Is that based on the online calculators (for a statutory lease extension), or a suggestion from your freeholder (for an informal lease extension)?

If it's an informal lease extension, it's important to carefully check the terms being offered.

If the informal extension terms are good, you might be able to arrange to sell with an extension on completion - so you don't have to find any cash in advance. The cash comes from the sale proceeds instead.

On a more general level, you could ask some local estate agents about the value of your flat with/without a lease extension.

DAE22

Many thanks for your feedback.

Lease extension cost is a quote from the freeholder, sadly. They are an property company and movement seems minimum. Re: estate agents, we have had one in and they have said their top price will only be met if the lease is extended.

Considering maybe putting on the market without extension and see if we can drop the price to accommodate the current lease - however, your suggestion of arranging the sale and payment post is an interesting route to explore.

Many thanks for your suggestions.

eddddy

DAE22 wrote: »

Lease extension cost is a quote from the freeholder, sadly.

So what are the terms? (How many years added to lease? What ground rent?)

DAE22 wrote: »

They are an property company and movement seems minimum.

OK - but how hard have you negotiated?

One strategy that might be worth a go is to say that your planning to do a statutory lease extension, and the premium you'll be offering is, say £13k, but you're prepared to pay them, say £14.5k for an informal extension (on the same terms), to save higher legal fees and hassle.

matty_hunt

Situation: Old house converted into block of five flats. Block run by management company. Management company owned of equal share by the five flat owners. As such, management company run very informally and past paperwork is lacking. One flat is up for sale and has highlighted there is a lease on the flat. Only one document found relating to lease, Notice of Transfer, for one flat. Lease: Date 10th Nov 1988. Term: 99 years. Disposition Transfer date 22nd Dec 1997. Term: Residue. Transfer Dated 25th Feb 1998. The names on it are not the current owners of that flat, current owners have no paperwork or knowledge despite purchase in 2006. There are no other records, terms of the lease or deed of covenant.
With 70 years remaining and one flat up for sale, this needs to be addressed.
My simplistic assumption is that all flats have lease starting 1998. As shareholders of the management company we can renew it to ourselves without charging a renewal fee. I guess there will be legal fees for this but no need for valuation as the management company is not looking to profit for the lease extension. Ideally we extend to ourselves for 999 years.
Is that assumption correct? Given we have no paperwork, is there a way to find a record somewhere?
Does each leaseholder have to instruct a solicitor to contact Management Company for extension or can Management Company contact solicitor to renew all leases first?
Thanks for any advice.

da_rule

matty_hunt wrote: »

Situation: Old house converted into block of five flats. Block run by management company. Management company owned of equal share by the five flat owners. As such, management company run very informally and past paperwork is lacking. One flat is up for sale and has highlighted there is a lease on the flat. Only one document found relating to lease, Notice of Transfer, for one flat. Lease: Date 10th Nov 1988. Term: 99 years. Disposition Transfer date 22nd Dec 1997. Term: Residue. Transfer Dated 25th Feb 1998. The names on it are not the current owners of that flat, current owners have no paperwork or knowledge despite purchase in 2006. There are no other records, terms of the lease or deed of covenant.
With 70 years remaining and one flat up for sale, this needs to be addressed.
My simplistic assumption is that all flats have lease starting 1998. As shareholders of the management company we can renew it to ourselves without charging a renewal fee. I guess there will be legal fees for this but no need for valuation as the management company is not looking to profit for the lease extension. Ideally we extend to ourselves for 999 years.
Is that assumption correct? Given we have no paperwork, is there a way to find a record somewhere?
Does each leaseholder have to instruct a solicitor to contact Management Company for extension or can Management Company contact solicitor to renew all leases first?
Thanks for any advice.

Have you checked the Land Registry.

matty_hunt

Many thanks da_rule. Didn't realise the info Land Reg hold. Its confirmed each flat has a 99 year lease from Nov 1988 but I can't see any further details about the lease terms other than the freehold is owned by the Management Company. Since the management company is the five flat owners, it should be straight forward to get lease extension, just get a solicitor involved and they will update land reg, I guess!

eddddy

matty_hunt wrote: »

Since the management company is the five flat owners, it should be straight forward to get lease extension, just get a solicitor involved and they will update land reg, I guess!

The solicitor will probably provide a deed of variation for each lease, and register it with land reg.

If the leaseholders have mortgages, they'll also need a Deed of Substituted Security for their mortgage lenders.

It's pretty standard stuff - you should be able to get quotes from solicitors for doing all 5 leases at once.

Tom99

matty_hunt wrote: »

Many thanks da_rule. Didn't realise the info Land Reg hold. Its confirmed each flat has a 99 year lease from Nov 1988 but I can't see any further details about the lease terms other than the freehold is owned by the Management Company. Since the management company is the five flat owners, it should be straight forward to get lease extension, just get a solicitor involved and they will update land reg, I guess!

[FONT=Verdana, sans-serif]A lease extension deed of variation is normally a very short document which just refers to the old term/new term and old rent/new rent but since some (or all?) of the 5 leases seem to be missing you may as well create 5 complete new leases.[/FONT]
[FONT=Verdana, sans-serif]That way you can update any necessary clauses in the lease and every party will then have a copy of the lease for future reference.[/FONT]