Just been told flat we are buying has a short lease...

pianowoman

Just a quick question. Annoyingly, after having had the valuation and mortgage offer on a flat, we have discovered that the remaining lease is 69 years rather than the 85 we were told.

We have checked with our mortgage provider and they will still lend. The vendor wants a quick sale and does not want to spend time extending the lease (bah!), so we are planning on reducing our offer to reflect the extra money will will have to spend in 2 years extending the lease ourselves. The freeholder has quoted £17,000 to extend. We're thinking of reducing our offer by £25,000 (covering the lease extension and legal fees) - does that sound about right to anyone? I should add this is London so a very aggressive market at the moment.

Thanks!

Jeffrey_Shaw

As a condition for you buying, insist that you want V to serve Notice of Claim [under s.42 of the 1993 Act entitling a leaseholder of two years' standing to extend by 90yrs.] V may be unenthusiastic, so ensure that the contract by which you buy will oblige V to serve the Notice before you complete.

You'll have to indemnify V, i.e. pay all fees of the exercise: V's and the landlord's. On completion, V would assign to you the benefit of the Notice- so that you can start matters rolling without the need to wait two years more.

hazyjo

Freeholder could be quoting more than that in two years' time, but I guess you take yer chances...

Personally, I'd get the seller to do it or withdraw, but that's my opinion. Sounds a bit on the sneaky side, saying it's 85 initially...

How much longer would it add?! Wouldn't have thought it'd be that much as the freeholder's obviously contactable and has given a figure (hopefully in writing at least!).

Jx

pianowoman

Honestly, we don't really know how much longer it would take (anyone have any experience of this?!) and I'm pretty sure the vendor doesn't have a clue considering they read their lease wrong in the first place and thought they had 85 years left when it was 69. Obviously, we'd much prefer the vendor to do it!

@ Jeffrey Shaw - this is really useful, thanks. Generally speaking, is doing it the way you're suggesting cheaper in the long run than waiting the 2 years?

ognum

pianowoman wrote: »

Honestly, we don't really know how much longer it would take (anyone have any experience of this?!) and I'm pretty sure the vendor doesn't have a clue considering they read their lease wrong in the first place and thought they had 85 years left when it was 69. Obviously, we'd much prefer the vendor to do it!

@ Jeffrey Shaw - this is really useful, thanks. Generally speaking, is doing it the way you're suggesting cheaper in the long run than waiting the 2 years?

The problem is the'marriage value' if you leave it another two years, that will undoubtedly increase.

Definnately get the vendor to start the process and then transfer to you.

My guess is they want a quick sale to get rid of the problem, always be wary of a vendor who claims to know nothing!!!!!

Moonraker71

OP, I extended the lease on my flat earlier this year before selling it. It had also fallen to 69 years. The whole process took about 8 weeks, which I think was fairly quick. My freeholder offered me a good deal so there was no protracted negotiation involved. So I certainly think it would add a minimum of a couple of months to the moving process.

Personally if it was me, I would do exactly as Jeffrey Shaw says above and if they didn't agree I would walk away. Anything could happen in two years - they might move the goalposts re: price, you might find yourselves having unexpected financial difficulties down the line for some reason, or something might happen and you may need to sell up very quickly. All probably unlikely, but having a short lease hanging over you is not a good position to be in. Bu good luck whatever you decide.

eddddy

pianowoman wrote: »

J
...so we are planning on reducing our offer to reflect the extra money will will have to spend in 2 years extending the lease ourselves.
...

Hi pianowoman

You don't have to wait 2 years if you and the freeholder are in agreement. (You have to wait 2 years to get the statutory right to extend - so you can force an unwilling freeholder.)

If the freeholder is happy to accept £17k now, you could buy the flat and the lease extension at the same time with a linked exchange of contracts. (i.e. your solicitor would ensure that both contracts are exchanged at the same time.)

Road_Hog

pianowoman wrote: »

so we are planning on reducing our offer to reflect the extra money will will have to spend in 2 years extending the lease ourselves. The freeholder has quoted £17,000 to extend. We're thinking of reducing our offer by £25,000 (covering the lease extension and legal fees) - does that sound about right to anyone?

Depends on the value of the flat.

If it is a £50K flat, then offering half the price would probably result in a 'no'. If it's a one million pound flat, then £25K would probably get a 'yes'.

personally I think you're getting confused with the value difference of 69 and 85 year lease and how much it will cost you to renew the lease.

Is the £17K only to extend the lease for another 16 years to 85 year or is it for longer. £8K is a huge amount for legal fees and not really representative of the cost.

You should be looking at the cost of extending it to 85 years and the real legal costs of £2.5K.

http://www.moneysavingexpert.com/mortgages/extend-your-lease