Lease Extension advise please?

cathymcg

hi, viewed a flat i was interested in for BTL, Estate Agent told me it had 84 years remaining on a 99 year term, I put in an offer of £119,000 which was accepted.
When solicitors sent through paperwork for the flat the lease has only 74 years remaining! I contacted Freeholder who said they want £10,000 plus fees to extend back to 99 year term, in doing this they also said the ground rent which is now £90 pa (set until 2031) will increase to £250pa on grant of extension and double every 20 Years.

if I decide not to extend and go ahead with purchase what effect will it have on my resale value in a few years. or would I be better to extend now, in case they hike the price further, Is there a limit to what a freeholder can charge
just need some friendly advice

annie123

Extend it, asap, but you do not have to accept the costs, get yourself a surveyor who will work out costs and then start negotiations with the freeholder. Your buyer will need 30 years plus the term of their mortgage, and with mortgages getting longer you will have trouble selling.

cattie

These are the best people for help & advice on most issues to do with leasehold property & it's a goverment funded agency. http://www.lease-advice.org/newintro.htm

First of all unless you feel the flat is a real bargain at the price you offered then I would go back to the vendor & negotiate the price down to take in the cost of having to extend an expensive lease. Unfortunately a lease of under 80 yrs remaining costs quite a lot more than one with 80yrs or more. Under 80 yrs something called marriage value comes into play with the price & as it's a little complicated to explain you'll find details about it on the above website.

If you don't extend it will certainly affect the saleability as well as the price of your flat if you want to sell in the future.

With a leasehold property the freeholder doesn't have to agree to an extension untill you've owned the flat for 2yrs, but obviously your potential freeholder is happy to negotiate with you. Once you've owned a leasehold property for 2yrs you have the legal right to an extension & if a price cannot be agreed the people I've mentioned above can arrange for a surveyor/tribunal to set a realistic market price based on a set of figures they will use, taking into account marriage value etc.

Hope this has helped a little.

cathymcg

thankyou for that, will look at the site you have mentioned, and see what would be best long term, Ideally would love to buy freehold but in the price bracket I want only flats and maisonettes availablein this area.
Thankyou again