Lease extension

nickyboi

some really good feedback guys I can use all of this for ammo to pass onto my solicitor to then forward to the freeholder as I believed they was trying it on.

Andyguil - I am aware of the law regarding the 2 year period to live at the address before you can apply for the lease extension and the current owners have been there for 3 or so years. I will also speak to my solicitor and say to him that we want the 99 years added, peppercorn ground rent and at the price of £5000 the only issue I have is I dont want it to become a long drawn out process. Therefore the statutory route will be the last option. I will also read the link you provided to gain a better understanding.

Partialycloudy - Buying the freehold was another route I was looking to take but I feel this could become expensive and even a longer process. Also the mortgage has been maxed out and im borrowing money to cover all costs of this extension so need to keep my costs to a minimum, even if in the long run is more beneficial. Im not sure when it was last reviewed but it says to be reviewed every 5 years in accordance with the retail prices index. So I believe it will be from when the lease extension starts. The area is also in Surrey.

Cattie - I am willing to pay something in the region of £10 even the £80 it previously was but £250 is an extreme jump.

Thanks again guys.

nickyboi

So here is the quote as it might clear up a few questions.

I would have to take our clients instructions but would be prepared to recommend them to enter into a deed of variation, or a new lease, so as to extend the existing lease to create a new 99 year lease from a current date on the following terms.
1. payment of a capital consideration of £7,500
2. an increase in the ground rent to £250 per annum to be reviewed every five years in accordance with the retail prices index.
3. payment of our fees in the matter in the sum of £475 plus vat, payable whether the matter proceeds to completion or not.
4. payment of our clients legal costs, payable whether the matter proceeds to completion or not.
5. inclusion in the deed of variation other matters of a relatively minor nature so as to modernise the lease as considered appropriate by our clients solicitors. it is anticipated that this would cover for updating the fee for notices, providing for payment of landlords costs in respect of breaches of covenant and interest on arrears of rent.

Hope this helps as I understand most of it but wish they would make it easier to understand.

ethank

This is not 99 years added to your lease. This is a new lease of 99 years. In effect they would be cancelling the old lease.

ognum

I have recently dropped out of the purchase of a leasehold property due to an escalating ground rent(and other issues by a money grabbing freeholder). The desire by some freeholders of increasing the ground rent by inflation is rediculous IMO. It's Ok at the moment where inflation is low so maybe an increas of 2% a year but what if it's 5% or more a year and this compounds onto the GR each year it soon adds up.

You may find that in this situation the flat will be difficult to resell when the GR is a massive yearly sum!

mart.vader

OP, The FH's can muck about, muck about, and then they can muck about some more.

The longer they do this, the higher the premium they can ask for.
Once you start the statutory route, no matter how long it takes, the clock is "stopped".

I applied under the Leasehold Reform, Housing and Urban Development Act 1993, but as I understand it, this has been simplified into the Commonhold Act 2002 ?

When you start this process, you will need an "expert" surveyor to put your value on the lease extension. If its the same as when I did it, the FH then has not more than two months to send a counter notice. Logically this means that he will get his "expert" surveyor (at your cost) to put his value on it.

After you send the initial notice you are liable for the FH's reasonable costs in providing a valuation, until the date you make the application for the LVT hearing. So you get to pay for his valuation providing it is done within two months

In my case, the FH didn't send his valuer (himself) to do his 10 minute valuation until five months after he had sent his counter-notice, didn't realise my house is double-glazed, couldn't take any photos as his camera didn't work. Although any professional valuer would have known that he couldn't charge anything after the LVT application, he even tried to charge for taxi fares to the LVT hearing. Took me to court as I refused to pay him the £450 that he wanted for his "professional" valuation. At court he found out that LVT matters cannot be heard in court. Unfortunately the LVT lack the cohones to do too much, so they made me pay half of his fee for guesstimating the premium.

If you have a FH like this, you should consider getting rid, and buying the freehold.

nickyboi

Thanks for your feedback guys.

Ognum - I was so close to doing this (dropping out) but I do like this property and feel like the potential added value could out weigh the risks. Do you know with what I posted above, the quote itself, can they put up the ground rent before this 5 year period? I feel that even though £250 is a big jump from £80 when we do come to sell the house its still an incentive that there is no service charge included plus if the ground rent increases due to inflation this would be the case for other properties that also have a freeholder charging ground rent.

mart.vader - So the update is that the sellers are willing to pass on the deeds to us now they have received a quote from the freeholder and are willing to contribute £4000 but have no further part in the lease extension. So it puts me in a tricky situation do i or dont i?
I can cover the costs of the freeholders and feel this to be an investment.
So the question I really need some feedback on is if I do take over the deeds and complete, what is the best route to take i.e accept the quote of the freeholder, negotiate or go down the statutory route?
Also I have asked my solicitor to get all fees together to do this as he has informed me we will need to re-register the property with the land registry once I extend the lease. So I would like to know if anyone has any information on what fees I would have to pay from this point to completion and extending the lease?

Thank you again for taking the time to assist me in this stressful time.

AndyGuil

£250 isn't peppercorn. Any rises on peppercorn will be tiny. If the freeholder is being unreasonable then get the current owner to start the statutory process and pass this in to you if you have the money to go through with this. Otherwise, buy it and then go statutory in 2 years.

nickyboi

The issue is there is 80 years left on the lease so if I left it 2 years the freeholder would then be entitled to a marriage value plus the lease would be costlier to extend.
Can I ask what the statutory route actually involves?

AndyGuil

nickyboi wrote: »

The issue is there is 80 years left on the lease so if I left it 2 years the freeholder would then be entitled to a marriage value plus the lease would be costlier to extend.
Can I ask what the statutory route actually involves?

You need a solicitor and they will handle everything. They will serve section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 (or the latest act). If you think you can afford it now then you can instruct the current owner to do this and pass it onto you. Your current solicitor may be able to handle this. Avoiding marriage value is attractive.

I recently purchased a property that will require a lease extension. It has fallen below 80 years. At the moment I have focused the money on renovating. Later I will approach the freeholder and ask to extend first offering the value I find online then at most offering this value plus the costs of solicitors as if I was going down the statutory route. If this is not accepted I will take the statutory route.

nickyboi

ok thanks for the advice.

My current solicitor seems to be pretty clued up with the lease extension so he should be able to handle it but being the weekend I need to wait till monday to get some advice off him hence why im here.
So does the quote that I posted above seem as if the freeholder has been approached informally? Also if this is the case how do I go about negotiating without going the route of surveyors? Can I just send a counter notice saying I would be willing to pay £5000 plus your fees if the ground rent is to increase or do I require a surveyor to do this for me?

Thanks