Buying and then extending lease, Huge fees!

Homebuyer666

Hello

We are in the process of buying a flat, with 78 year lease.
Our first concern was what a lease extension would cost, and the advice from the estate agent was that this would be easy and cost around £ 5000.
We now have found out through our solicitor that the leaseholders are nightmare and sharks, and that extension of the lease would be costly and unfair. We are really close to signing, and have spent over £1000 pounds and 2 months on this purchase and are very unsure of what to do now.

Anyone with experiences they can share?
Thank you

cattie

Estate agents have no real knowledge of lease extension costs so any info they are inclinded to offer with regards to costs should be taken with a large pinch of salt.

It is the freeholder who grants a lease extension, not a leaseholder as you say in your post. Untill you've owned a flat for 2 years you don't have the legal right to a lease extension anyway. A freeholder may agree to an extension before the 2yr period, but he doesn't have to.

A lease with less than 80yrs remaining is more costly to extend than one with more than 80yrs. This is because of something called marriage value, which is to do with how much value your flat increases by because of an extended lease.

All the info you need on the ins & outs of owning leasehold property can be obtained from these people, including a fuller explanation of marriage value. It's a government funded agency & a valuable resource for help & advice. http://www.lease-advice.org

If, when you come to apply for a lease extension with the freeholder after owning the flat for 2yrs, a reasonable market price cannot be agreed, then you can apply to the above people to have a valuation tribunal set an appropriate market price. Of course you have to pay your own & the freeholders costs if this occurs.

You can also try to work out the approx cost of extending a lease with marriage value here http://www.tenancy-agreements.co.uk/lease.php

johnedwards3005

I've been quietly trying to establish a discussion about the cost of extending the 70-years remaining on the lease of my (tenanted) flat with the coporate owner - with very little progress (even in estalishing communicatinons with the right person!). I do understand the statutory process I need to implement to force them to comply, but I feel sure that it is in both parties' interests to try to reach a freely negotiated agreement (if only to save fees!). Does anyone have experence of successfully achieving this?

Doozergirl

Do you have a managing agent? I'd go through them...

If not, perhaps speak to the people at the Leasehold Advisory Service, see what they recommend. Personally, I think an official letter will find it's way to the right desk. They have a funny way of doing that

They are hardly going to be friendly about it - it's just a business transaction to them. They will most likely employ a surveyor to value the lease and make you pay for it, then you have to negotiate, based on your own valuation.

Check with your tenants with regards to post; freeholders will always want to write to you at the flat and rarely comprehend the fact that you don't live there.

johnedwards3005

Thanks Dozergirl - useful thoughts. I'm sure I'll end up going through the statutory process, but I wanted to allow for a simpler solution to emerge if it were possible.
My managing agent advised that extension should be worthwhile, but he doesn't provide such sevices and I've been quoted £600 by a specialist surveyor for his fees in a straightforward case (ie excluding legals); any serious dispute over the values would make that open-ended.

Doozergirl

www.lease-advice.org.uk You can call them too. They are Governement funded, so no sales tactics. Ask them the cheapest way to go about it.

I'm sure you can start the process without having to use a surveyor to start with the demanding letters or negotiating for you. We negotiated ourselves even though the procedure was easier because the freeholders would converse with me! I paid the surveyor's fee for the freeholder's valuation (£299) and I had my own paper valaution carried out for £75, realised I was quids in and still bartered, LOL! Once we agreed, I contacted my solicitor to do the legals.

johnedwards3005

Again very useful - thanks. Your experience demonstrates the necessity of getting engagement from the freeholder to propose a price (even if his suveyor's cost falls to me). I'll keep trying!!