Estate agent lied to me about length of lease - advice?

7sefton

Hi everyone

I'm in the middle of buying my first flat (a small 2 bed in south east London with share of freehold).

Throughout my search, I was always looking a properties that had at least 83 years left on the lease and was very strict on myself with this. I found a place I liked and the estate agent assured me (always verbally) numerous times that the lease was long, and much more than 83. She said she was still waiting for the exact length from the vendor but advised me it would be at least 90 years.

My offer of £256,000 was accepted, survey & valuation done and mortgage offer made (based on at least 90 years on the lease).

Today my solicitor has told me the lease documents actually only show 82 years. She's chasing up to see if any extensions etc have been left out, but I fear the worst.

Needless to say I'm furious with the estate agent (and myself for falling for her misleading). The solicitor said to sit tight until her additional requests from the vendor's solicitors have been answered, but I want to start considering my options:

- I really like the flat; it's in a good location and I think had potential to grow in value in the future.
- For various reasons, I don't really have the time to go back to square one looking for properties and making offers.
- I've already paid money on legal fees.
- The estate agent has said numerous times that the vendor is keen to complete as quickly as possible because the flat has been empty for a while with no rental income.

What's my best course of action if it turns out the lease is only 82? Should I walk away, or should I negotiate (and what could I aim for?).

Thanks so much for any advice

anselld

Reduce your offer by the estimated difference in value caused by the shorter lease. Put that money aside to fund a lease extension.

[Deleted User]

anselld wrote: »

Reduce your offer by the estimated difference in value caused by the shorter lease. Put that money aside to fund a lease extension.

I agree.

Also you can use this calculator to see how much more it will cost you to extend the lease at 79 or 80 years, compared with 88*

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

*It takes 2 years before you have the right to a lease extension.

Ms_Sophia

Cherry_Gale wrote: »

I agree.

Also you can use this calculator to see how much more it will cost you to extend the lease at 79 or 80 years, compared with 88*

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

*It takes 2 years before you have the right to a lease extension.

You can request the vendor to start the lease extension process (before the exchange, naturally), and in this case you can continue the process after the complaetion - at your own expense, of course.
This way you do not have to wait 2 years. The downside of waiting is not only the actual waiting but that after 2 years it'd be 80 years left - this would make it more expensive to extend. And I believe if the lease less than 80 years, then marriage value comes to play, i.e. it'd be even more expensive.

kingstreet

So you'll be a joint freeholder as well?

Have you approached the other joint freeholders, presumably your fellow leaseholders, to see if they have plans to do bulk lease extensions on the whole block?

Dird

Why is 83 your cut off?

G_M

kingstreet wrote: »

So you'll be a joint freeholder as well?

Have you approached the other joint freeholders, presumably your fellow leaseholders, to see if they have plans to do bulk lease extensions on the whole block?

Knock on doors.

You should always do this anyway
a) to see what the neighbours are like
b) because they'll tell you far more about the flat, the buildibg, the street than the seller ever will (unless they slam the door in your face, which also tells you something....)

Assuming it is the other building's leaseholders you'll be sharing the freehold with (and assuming they live here rather than letting their flats), you can find out how quick, easy, expensive an extension might be.

Surrey_EA

Cherry_Gale wrote: »

I agree.

Also you can use this calculator to see how much more it will cost you to extend the lease at 79 or 80 years, compared with 88*

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

*It takes 2 years before you have the right to a lease extension.

As the OP is buying a property that is "leasehold, share of freehold" I believe the process is easier and cheaper than extending the lease on a property where one is not a joint freeholder.

This explains the process better than I ever can:

http://www.ker.co.uk/News/residential-property/132-how-to-extend-your-lease-if-you-own-a-share-of-the-freehold.html

macman

I doubt that the EA lied. They are dependent on the vendor for such info, and the vendor may have told them 'about 90 years'. Vendors frequently forget such details until the paperwork emerges.

Richard_Webster

GM's comments about talking to the other flat owners is important. If there is a "shared freehold" then it takes the agreement of the other co-freeholders to do a lease extension. "Shared Freehold" is not a separate form of ownership and all the normal rules about tlease extensions still apply - it is just the fact that the lesseess of the flats together own the freehold that makes a difference in practice in most cases.

So the seller can be asked to sort this quickly without the need for using statutory processes. If he can't then this usually means that there is a problem, perhaps one of the co-freeholders refuses to co-operate. Usually as it is for everyone's mutual benfit for a lease extension to be free to "shared freeholders". Sometimes a flatowners thinks he can profit somehow form it and won't sign unless omeone pays hima large sum of money because someone has told him that lease extensions cost. Another issue is that some flatowners in this situation can't undderstand why a lease needs to be extended because "there's no lease, we are freeholders...."

Another problem can be that the frehold is literally jointly owned by up to 4 people but one of them haas disappearedor had his fat repossessed ancd so the remaining co-freeholders cvan't get his signature.

Once you have owned the flat for 2 years it will cost a few thousand pounds in legal costs plus the price to force a lease extension through the statutory process. If one co-freeholder is obstinate or can't be found this may be the only way. So you should reduce your offer by that cost. Frankly I can't imagine there is very much difference (if any) between the value of a 83 year lease and that of one for 82 years in the open market so I wouldn't get involved in that calculation. However the prerceived cost of litigated extension should be put tot he selelr to encourage him to get the others to agree.

The reality is that the selelr either can or can't organise an of the extension quickly with the co-operation of the others. The sooner you find out the answer to that the better.

The seller may take the view that not all buyers are savvy and he will find someone else who swill believe vague stories from estate agents abouthow wonderful shared frehold isand not go into it properly or not be advised by his solicitors properly about it.

7sefton

Thanks for everyone's helpful comments so far! I really appreciate them.

Richard_Webster wrote: »

GM's comments about talking to the other flat owners is important. If there is a "shared freehold" then it takes the agreement of the other co-freeholders to do a lease extension. "Shared Freehold" is not a separate form of ownership and all the normal rules about tlease extensions still apply - it is just the fact that the lesseess of the flats together own the freehold that makes a difference in practice in most cases.

So the seller can be asked to sort this quickly without the need for using statutory processes. If he can't then this usually means that there is a problem, perhaps one of the co-freeholders refuses to co-operate. Usually as it is for everyone's mutual benfit for a lease extension to be free to "shared freeholders". Sometimes a flatowners thinks he can profit somehow form it and won't sign unless omeone pays hima large sum of money because someone has told him that lease extensions cost. Another issue is that some flatowners in this situation can't undderstand why a lease needs to be extended because "there's no lease, we are freeholders...."

Another problem can be that the frehold is literally jointly owned by up to 4 people but one of them haas disappearedor had his fat repossessed ancd so the remaining co-freeholders cvan't get his signature.

Once you have owned the flat for 2 years it will cost a few thousand pounds in legal costs plus the price to force a lease extension through the statutory process. If one co-freeholder is obstinate or can't be found this may be the only way. So you should reduce your offer by that cost. Frankly I can't imagine there is very much difference (if any) between the value of a 83 year lease and that of one for 82 years in the open market so I wouldn't get involved in that calculation. However the prerceived cost of litigated extension should be put tot he selelr to encourage him to get the others to agree.

The reality is that the selelr either can or can't organise an of the extension quickly with the co-operation of the others. The sooner you find out the answer to that the better.

The seller may take the view that not all buyers are savvy and he will find someone else who swill believe vague stories from estate agents abouthow wonderful shared frehold isand not go into it properly or not be advised by his solicitors properly about it.

The block I am buying a flat in is quite large (about 40 flats, all share of freehold) and the lease document makes reference to a 'Freeholding Company Limited'.

From what I can see from the other legal documents, the flats have various lengths of leases on them (about a third are the same as mine, others have obviously been renewed more recently because they run for over 200 years).

What does this all mean for me, if I want to renew? I.e. it doesn't seem like every share of freeholder needs to agree and renew the lease at the same time, otherwise there wouldn't be differing lengths of lease in the block, would there?