Lease Extension - Rights of First Refusal

Jennie86S

Hi All

Would appreciate any ones advice or help here!

I am in the process of selling my flat, and have told my buyers that I would renew the lease in the meantime.

It is low at 73 years remaining, and I pay £50 ground rent annually.
The flat is being sold at £112k, and my freeholders are quoting me £8,000 plus legal fees to renew!

I understand that 73 years is short, but I did not think that it would cost £8k The Direct Gov website quotes between £6k-£7k, and I have tried to reason with them, however they are saying they are just acting as their Surveyor/Conveyance/Solicitor tells them.

I live in a first floor flat in a block of two purpose built flats.
The leasehold was originally owned by a third party, but last year the flat downstairs was purchased along with the freehold without us knowing until it had all gone through??
We only realised recently when selling the flat, that maybe we should have been given the opportunity to buy the freehold too?

Does Rights of First refusal apply, or not because we are only 50% of the tenants?

Any advice would be much appreciated, as I originally bought the flat at £120,000, so selling for £112,000 and paying £8k for the lease is just too much

Thanks so much

Jen

propertyman

But the valuation for buying the freehold will factor in the right to sell lease extensions, their likely value is the principal element in the freehold value.

Calculators are only an indication.

While you can appeal to the LVT to determinate the value it is likely that you will want advice and valuation evidence to support your case( a calculator is easily set aside by an experienced valuer).

So the FH knows that even if you "win" at £6k it will cost you £2k in fees. So they ask for £8K.


:money:You could suggest a higher ground rent in the extension to reduce the overall premium.

Jennie86S

Thanks very much property man…

Assume we have no breached rights then in terms of Rights of First Refusal?

propertyman

If by leasehold being owned by a third party you meant freehold, then with 2 flats the R2FR may have been ignored and you could have the right to force the sale to the qualifying tenants

However you are going to pay the same terms and fees, all of which is considerately more than a lease extensions, and will take longer than your buyer will likely wait.

Jennie86S

propertyman wrote: »

But the valuation for buying the freehold will factor in the right to sell lease extensions, their likely value is the principal element in the freehold value.

We did not receive a valuation for buying the freehold?
A surveyor came round to our flat, charged us £600, 6 weeks later he quoted £8k plus our freeholders fees to renew for 99 years.

The story is:
A third party owned the property and rented it to "Mr D" on a monthly basis.
The next thing I knew "Mr D" had bought the property and the freehold and was asking for buildings insurance premium from me! :mad:

I had advised the original freeholder previously of my desire to buy the freehold.

Is selling it to "Mr D" not selling it on the open market?!

thanks again for all of the help!

propertyman

You are getting yourself in a muddle. I understood your earlier post.

If you acquired the freehold, the valuation( which you would have done in order to settle on a figure) takes into account the value of the right to sell lease extensions, it is not a cheaper route.

Freehold with 2 Flats at 73 years and assuming "90 year plus 73" extensions to a peppercorn, no other income sources and development value would be roughly £15/16000 based on £7 k per lease.

As posted if the sale to Mr D was not exempt, then you might force a sale to the qualifying tenants ie you and the other in the block, but the terms will be the same and take into account the right to sell you and anyone else a lease extensions.

However, if Mr D was a renting tenant there was no lease in order to trigger the R2FR , or if there was, and it was owned by the freeholder, one flat would not constitute more than 50%.

It is not a cheaper or quicker route than simply extending the lease.

Richard_Webster

if the sale to Mr D was not exempt

And probably it was exempt in that as there were only 2 flats OP could not constitute more than 50% of the qualifying tenants.

propertyman

Richard_Webster wrote: »

And probably it was exempt in that as there were only 2 flats OP could not constitute more than 50% of the qualifying tenants.

And as posted if the flat was rented there would have been no lease to trigger the R2FR