advice on what option to take

tim123456789

want2bmortgage3 wrote: »

Hi Tim
What I'm suggesting is that I wouldnt' need to renew the lease if I somehow paid off the mortgage within 7 years?
I could then just let the lease run down, as by the time it runs out I probably wont be here! And just have the rent money as income all this time.
Extreme I know, but is it possible?

well of course it's possible.

But it's the saving equivilent of keeping your cash under the bed because you can't be bothered to go to the bank with it.

In fact it's worse than that, because what you are suggesting gets you a negative return on your capital

tim123456789

want2bmortgage3 wrote: »

I have done some more research. The quote from my freeholder appears to be rather unreasonable:

1. Their quote is only to renew the lease back to 99 years. If I went through the 1993 ACT it would be 67+90=157 years

2. They want increased ground rent £250 a year doubling every 20 years. through the ACT it would be 0.

3. They are quoting on the basis of doing it in-house @ £950 and saying if I serve notice under the ACT then they will be charging at least £1800 for the legal and valuation costs.

a) This would be normal for a non statutory lease extension. Note that the costs of the marriage value has to be included here as if they extent to 99 years you could immediately apply for a statutory extension and pay a marriage value of zero.

b) I have already explained to you that the ground rent has a notional value which directly affects the costs of a new lease (up or down, as appropriate).

c) They are using this threat to get you to agree to a non statutory extension on terms that are favourable to them. You need to get someone to work out whether they are too favourable.

start here:

http://www.lease-advice.org/

tim123456789

want2bmortgage3 wrote: »

Just a question, how am I supposed to know how much the propery is worth right now, with the lower lease? In trying to work out the renewal cost I need to know its worth now and its worth with a full lease.

You take the (assumed) value of the property with a "long" lease (more than 80 years) subtract the costs of getting a new lease and then subtract a bit more (perhaps another 50%) for the "aggro" and reduced sales potential.

want2bmortgage3

I have decided to leave the lease alone until I have occupancy of the property again, whenever my tenants move on I will deal with it then.

When that time comes, I will either sell it as it is at a knock down price, or renew the lease and sell at full price. Whichever works out best at the time.

On a side note, when you are re-mortgaging, and you have to put a value on your property, in my experience the valuer has never questioned this. Does the valuer actually look at the lease length?

Now back to my own property search and I think renting would be the easiest option, no messing with mortgages, no taking on more debt. After all is there any need for two mortgages? Even if you are renting your mortgaged property out? At the end of the day you will get the property back and end up with one property and one mortgage?

tim123456789

want2bmortgage3 wrote: »

I have decided to leave the lease alone until I have occupancy of the property again, whenever my tenants move on I will deal with it then.

When that time comes, I will either sell it as it is at a knock down price, or renew the lease and sell at full price. Whichever works out best at the time.

On a side note, when you are re-mortgaging, and you have to put a value on your property, in my experience the valuer has never questioned this. Does the valuer actually look at the lease length?

He wouldn't be doing his job propery if he didn't

it is material

want2bmortgage3

Hi Tim,
It's just when I re-mortgaged last year there was no query about my valuation of £150k despite the lease then being 68 years.
This is what made me wonder, but thanks for your confirmation.
Maybe next time I re-mortgage it may be an issue.

want2bmortgage3

If anyone is still following, or just wants to re-read from the start!

I am not going to bury my head in the sand, and want to renew the lease hopefully quickly, informally with the freeholder. I have re-mortgage back to up the original amount to help do this.

Last time I posted I was fed up with it all but I realise I am just recovering from mistakes I missed earlier. I should have known about the lease and the implications.

I still have 11 months of a fixed 2 year mortgage deal left, this includes early repayment charges, so I would be stupid really to sell before this date as I'd have to pay close to £3000 as a penalty.

So in the next 11 months I hope to extend the lease, then serve notice to tenants (give them plenty of notice), regain possession of the property, do any work required then get it on the market.

In the meantime I will find somewhere that I can rent for myself for 6-12 months. This rent cost being lower than the rent I'm receiving on my own flat, making it equivalent to being in my own place. This will give me a chance to live by myself and learn more about what I want/need from a property in the future.

When I finally sell the maisonette then I will decide whether to keep renting, or look to buy something else which will be a freehold and somewhere I want to live.

That's the best plan I can come up with, but as usual I welcome any comments and suggestions and thanks once again for reading my long posts.

Leaseman_2

The freeholders are following a familiar path... They would much rather you took a 99 year lease so that they get another windfall within the next 20 years and it clearly suits them to create a nice little earner along the way. Logic would indicate therefore that it is much more likely to be to your advantage to obtain a lease extension on statutory terms. Stop wondering, make up your mind and if you choose the statutory route get a solicitor and valuer on your side experienced in dealing with lease extensions.