Extend Your Lease guide discussion

eddddy

SooGee13 said:

I see there's no mention of extending your lease when you already own a share of the freehold.It is easier & cheaper than the procedure when you're just a leaseholder,but I'm surprised it's not mentioned. You only need to pay the solicitors' fees, which for a solicitor familiar with the procedure,& there are several on line,is approximately £500+. You and/or your solicitor will ask the other freehold share owners if they agree(usually just a formality) and then your solicitor will draw up the necessary documentation. I believe this is a fairly recent ability,but as I say,I'm surprised it's not mentioned in the article.

Putting it more broadly...

Joint freeholders can vary the leases in any way they choose (subject to the agreement of their mortgage lenders) - that includes extending the leases to 999 years.

It's usually best to do this at the same time as buying the freehold - other joint freeholders might 'lose interest' later.

The barriers to getting other joint freeholders to agree to lease extensions include apathy, misunderstanding and/or 'greed' (i.e. they want a chunk of money, in order to give agreement).

Sometimes it is legitimate to expect a leaseholder / joint freeholder to pay for a lease extension - typically if they have a shorter lease than others. (Unless this was accounted for in the price they paid for their share of the freehold.)

In complex situations, it might be best to instruct a valuer to determine what each leaseholder / joint freeholder should pay for their lease extension - to help avoid arguments.

DaFoot

We have 79 years on our flat lease and looking to sell sometime soon (spring '21?). I'm aware the lease length may be an issue for potential buyers so want to look into costs involved.
I spoke to managing company years back and they gave me quote that seemed silly (extending back to 99 years with an increased ground rent that keeps increasing). While I forget the numbers I do remember it seemed a lot, particularly given we are entitled to a 90 year extension (to around 160-170 years) and peppercorn ground rent.
If the lease wasn't affecting the price, I'd estimate a flat value around £70-75k. Some of the figures I've seen bandied about in this thread are a scarily large amount compared to that value!

We are looking to sell, so it may be worth approaching agent again to get quotes for both the extension to 99 years (just so it's saleable at sensible price)  but also for the statutory 90 year extension which I'm imagining would cost more.  Then decide what to do.

So, a few questions for those of you with some knowledge in this area....
1. What is the likelihood agent will extend to 99 years for reasonable cost (assume cheaper than statutory route), they would prefer that I assume to statutory 90 years?
2. If I ask for a price for both kinds of extension (to 99 and extend by 90), could that mean I unwittingly start some legal status/process (I know there are timescales defined for these things)?
3. Is it worth just asking for 10 years to bring it back above 80 years at a lower cost?
4. Only just dipped under 80 years left, should I just sell as is? Is that likely to make that big a difference to prices offered?
I think my biggest concern is that if I approach managing agent 'informally' I end up in some legal position I don't want to be in (eg can I be considered to have served notice for statutory extension?).

prickettandellissurveyors

DaFoot said:

We have 79 years on our flat lease and looking to sell sometime soon (spring '21?). I'm aware the lease length may be an issue for potential buyers so want to look into costs involved.
I spoke to managing company years back and they gave me quote that seemed silly (extending back to 99 years with an increased ground rent that keeps increasing). While I forget the numbers I do remember it seemed a lot, particularly given we are entitled to a 90 year extension (to around 160-170 years) and peppercorn ground rent.
If the lease wasn't affecting the price, I'd estimate a flat value around £70-75k. Some of the figures I've seen bandied about in this thread are a scarily large amount compared to that value!

We are looking to sell, so it may be worth approaching agent again to get quotes for both the extension to 99 years (just so it's saleable at sensible price)  but also for the statutory 90 year extension which I'm imagining would cost more.  Then decide what to do.

So, a few questions for those of you with some knowledge in this area....
1. What is the likelihood agent will extend to 99 years for reasonable cost (assume cheaper than statutory route), they would prefer that I assume to statutory 90 years?
2. If I ask for a price for both kinds of extension (to 99 and extend by 90), could that mean I unwittingly start some legal status/process (I know there are timescales defined for these things)?
3. Is it worth just asking for 10 years to bring it back above 80 years at a lower cost?
4. Only just dipped under 80 years left, should I just sell as is? Is that likely to make that big a difference to prices offered?
I think my biggest concern is that if I approach managing agent 'informally' I end up in some legal position I don't want to be in (eg can I be considered to have served notice for statutory extension?).

Hi I am a specialist valuer so can answer these for you.
1. A lot of freeholders are happy to proceed informally and prefer to give less additional years and keep ground rent as this benefits them but they do not have to and all you can force is the additional 90 with nil ground rent, by serving Section 42 Notice through your solicitor.
2. No this would be just an informal request. You would need to serve the notice as mentioned in 1. above. To start the formal process.
3. No I would suggest the minimum you look for even when selling is 125 years in total as even 99 years can seem low to some purchasers and it does not really make much difference to the premium you will pay.
4. You could sell but you will get a better price if you have a good long lease with a sensible ground rent or no ground rent at all.
My main advice would be do not agree anything with the freeholder without getting proper advice from a specialist solicitor and valuer. Otherwise you could end up agreeing to a lease that you cannot sell.
Hope this helps let me know if you have any other questions. 
If you let me know the name of the freeholder I may be able to give you more specific information, if I have dealt with them before.
Alison

DaFoot

prickettandellissurveyors said:

DaFoot said:

.....
We are looking to sell, so it may be worth approaching agent again to get quotes for both the extension to 99 years (just so it's saleable at sensible price)  but also for the statutory 90 year extension which I'm imagining would cost more.  Then decide what to do.
...

My main advice would be do not agree anything with the freeholder without getting proper advice from a specialist solicitor and valuer. Otherwise you could end up agreeing to a lease that you cannot sell.
Hope this helps let me know if you have any other questions. 
If you let me know the name of the freeholder I may be able to give you more specific information, if I have dealt with them before.
Alison

Thank you Alison.

I'd be happy to share freeholder name, but perhaps privately.
Do you mind if I message you (does this forum allow private messaging)?

prickettandellissurveyors

DaFoot said:

prickettandellissurveyors said:

DaFoot said:

.....
We are looking to sell, so it may be worth approaching agent again to get quotes for both the extension to 99 years (just so it's saleable at sensible price)  but also for the statutory 90 year extension which I'm imagining would cost more.  Then decide what to do.
...

My main advice would be do not agree anything with the freeholder without getting proper advice from a specialist solicitor and valuer. Otherwise you could end up agreeing to a lease that you cannot sell.
Hope this helps let me know if you have any other questions. 
If you let me know the name of the freeholder I may be able to give you more specific information, if I have dealt with them before.
Alison

Thank you Alison.

I'd be happy to share freeholder name, but perhaps privately.
Do you mind if I message you (does this forum allow private messaging)?

Not sure but you can give me a call on 07917106437

[Deleted User]

Can't believe you are saying these things actually. Seems you knew about the 80 year cut off point when getting a lease extension becomes much more expensive? Increases astronomically with time so you need to hurry up. You need to go down the formal route using an independent solicitor to get the 90 year extension and peppercorn ground rent. Anybody who buys a property with less than 80 years on the lease is an idiot - unless London, maybe.
Leasehold Reforms are being decided by the Government soon but don't hold your breath for much change to flats as this is a Tory Government. 

Jatinder77

It is really helpful to gain a valuation from a professional rent extension surveyor as a substitute than a established property agent. Your Notice may want to be deemed invalid if the discern you endorse is unreasonable so its usually nice to get recommendation about this at the outset to keep away from wasted costs. You might also additionally want your surveyor to negotiate on your behalf later on so its key that s/he has journey in this field. Some surveyors provide a desk pinnacle valuation provider which is much less high-priced and may also swimsuit you at this preliminary stage.

jcw91

Hi there, can anyone give me some advice on extending a lease? 

My husband and I bought a flat in London in 2016 with a 95 year lease which now has 91 years left. That’s lease is owned by our local council and the ground rent is only £10 a year. We’d like to move house some time in 2022 and we’re not sure if it’s worth renewing the lease. 

On the one hand renewing will add value to our flat and a long lease may attract more buyers. However we’re aware that it’s very expensive and we could potentially use the money we have saved up for the lease and put it towards moving costs which would enable us to move sooner.

Thanks for any advice you can give! 

Aliscrum

Hi
I am a lease extension specialist valuer. 95 years is usually a good lease to sell, local agents can advise more there. As your freeholder is the council they will need you to serve notice to extend. If you want to get a rough idea of the premium you can use the calculator at Lease-advice.org. Please bare in mind this is a rough estimate and you will need a formal valuation to serve the notice. Cost on top tend to be £3,000 - £5,000 depending on who you instruct to do the valuation and which solicitors you use.
Hope that helps.
Regards
Alison

eddddy

jcw91 said:

Hi there, can anyone give me some advice on extending a lease? 

My husband and I bought a flat in London in 2016 with a 95 year lease which now has 91 years left. That’s lease is owned by our local council and the ground rent is only £10 a year. We’d like to move house some time in 2022 and we’re not sure if it’s worth renewing the lease. 

On the one hand renewing will add value to our flat and a long lease may attract more buyers. However we’re aware that it’s very expensive and we could potentially use the money we have saved up for the lease and put it towards moving costs which would enable us to move sooner.

Thanks for any advice you can give! 

Maybe look at it this way... assuming the lease would cost £10k to extend (including fees).

2 identical flats in the same block are listed on Rightmove...

• 1 is listed at £240k with a 90 year lease
• 1 is listed at £250k with a 180 year lease

If you were a buyer, which would you be more interested in?

Having had discussions with EAs about this, it was a bit inconclusive. Tthey suggest that some buyers are very squeezed for money, so they'd prefer to pay £240k now and have a few years to save up the extra £10k.

Other buyers prefer to pay £250k now to avoid the hassle.

So you can take your choice! Or maybe even ask a few local EAs for their opinion.