Extending lease same time as purchase??????

tululah

I am purchasing a flat which has 63 years left on the lease . I am also purchasing 1/6 of the freehold ( 6 flats in one block)
I have already contacted the other freeholders - there is a management company in place. They have said they have no issue with extending the lease in fact one of the other freeholders did so 18 mths ago.
The sellers want me to extend after gone through as they do not want sale to be held up. (bit complicated one passeed away one in a nursing home )
My question is what is the actual process and how long would it take??
Many thanks in advance

Fire_Fox

Welcome! Do you need a mortgage? If so you are unlikely to be able to complete the sale without the lease being extended at the same time, lender do not like short leases at all. Ask for the estate agent or vendor's solicitor to explain to the vendor that a 63 year lease is not mortgageable so they are going to have to suck it up or sell cheap to a cash buyer.

Ask your solicitor to explain the process to you, timescales will vary because there is a share of the freehold (good, will speed things up) but everyone probably has to sign (may slow things down if people go on holiday or don't live in the block). Information here on the process, but bear in mind you can skip some steps because the management company have already OK'd it http://www.lease-advice.org/publications/

Richard_Webster

If the management company is owned by 6 people then it really shouldn't be that difficult for the seller to organise an extension to take place at the same time as the purchase.

If done later (assuming your lender will accept a 63 year lease - Halifax/Lloyds/Bank of Ireland won't) then there will be some extra cost because the lender's admin fees will have to be paid for consenting to the amendment.

propertyman

The process is to
a; agree the price of the lease extension
b; the change if any to ground rent
c; either a deed of variation to extend the term ( how many years on the lease) or
d; a new lease

This will take some time to agree so you must ask the freeholders now to outline their terms so that either c or d is ready to execute at the same time as you exchange contracts, and that your mortgage application is based on the new term to be granted.

Yorkie1

If the seller doesn't start the process before the sale goes through, you will need to wait 2 years until you can apply, I think.

Richard_Webster

If the seller doesn't start the process before the sale goes through, you will need to wait 2 years until you can apply, I think.

That's right from a legal point of view but I would consider the present members of the freeholder company a load of whatsits if they weren't prepared to agree to an immediate extension at no cost beyond the legal costs of the documents and Land Registry etc fees.

If they insist on him waiting 2 years then OP shouldn't buy the flat because the other flat owners have serious moral and ethical shortcomings.

Buyer's solicitors should be asking about the terms for an extension but if the company dithers around now and can't make up its collective mind now then what hope is there for OP once he has bought the flat? I would be asking why the extension cannot be done at the same time as the purchase. No really good reason why not in my view.

partialycloudy

Don't you have to own the property for two years before an extension can be granted?
Also not to scare you, but we just had a quote for our lease extension on our flat with a 59year lease and it was for £17,000 not including fees. So you need to make sure you are not paying over the odds for the flat with a short lease.....like we did!

Fire_Fox

Partialycloudy read the OP's and RichardWebster's posts again. What you say applies only if there is a separate freeholder, not when all the leaseholders have a share in the freehold and agree to waive the waiting period/ charges.

rpc

If everything is so amenable and a lease extension is no problem, why won't they do it before or at the same time as the sale?

It could be some innocent reason, or it could be because there is a problem that you don't know about and they don't want you to find out about. You don't want to wait until you have bought the house to attempt a lease extension and then uncover a serious issue with the freehold arrangements...

propertyman

Fire_Fox wrote: »

Partialycloudy read the OP's and RichardWebster's posts again. What you say applies only if there is a separate freeholder, not when all the leaseholders have a share in the freehold and agree to waive the waiting period/ charges.

No that's not entirely correct. Not picking out your post though

Irrespective of the identity or ownership of the Landlord ( head lessor or freeholder, other flat owners or BV tax haven outfit )* they are free to negotiate and free to refuse.

The leaseholder in any of those situations* has after 2 years of ownership the right to claim a lease extension against their wishes.
A buyer can agree to take an assignment of the right to extend if exercised by the vendor.

* There are some exempt landlords

Richard_Webster

Quote:
Originally Posted by Fire Fox
Partialycloudy read the OP's and RichardWebster's posts again. What you say applies only if there is a separate freeholder, not when all the leaseholders have a share in the freehold and agree to waive the waiting period/ charges.
No that's not entirely correct. Not picking out your post though

Irrespective of the identity or ownership of the Landlord ( head lessor or freeholder, other flat owners or BV tax haven outfit )* they are free to negotiate and free to refuse.

The leaseholder in any of those situations* has after 2 years of ownership the right to claim a lease extension against their wishes.
A buyer can agree to take an assignment of the right to extend if exercised by the vendor.

Propertyman sets out the law correctly. It is important people do understand that. In what is called a "shared freehold" situation the legal position is no different. They cannot be forced to agree an extension before the 2 year period has elapsed.

However the freeholders (or the members of the freeholder company) do have a choice, and usually as they are also lessees there isn't usually any good reason why they cannot quickly agree and implement a lease extension at no cost beyond the legal costs involved. If they won't agree it something is unsatisfactory about the set up and a buyer would be right to be cautious about proceeding.