FTB - lease question

Firsttimehelpneeded

Hi,

I have recently had an offer of £275k accepted on a flat. The lease currently has 82.5 years remaining.

This is obviously a problem for us as we know we have no legal right to extend until we have owned it for two years at which point there will be 80.5 years left.

The agent advises it is likely the freehold will be offered later in the year for between £6-10k but can give no guarantee. This would obviously be our preferred route.

We have as part of the purchase asked for them to serve a section 42 and assign the benefit into our name.

Is this the best way of doing it or should we be doing something different?

If we go down the section 42 route do you have any idea how expensive the legal fees will be? I'm advised the lease will cost 6-8k, in what region would the legal fees be?

Thanks for your help!:money:

economic

you will have to pay your legal costs as well as the freeholders legal costs (which need to be reasonable). now reasonable is open to interpretation however i would have thought its in total 4k or so for both yours and freeholders.

the lease extension should probably cost same or very close to buying freedhold as long as all leaseholders are buying a share.

who were you advised by the cost? better to get a rough idea of the cost yourself through varios online calculators.

economic

also you should serve section 42 anyway so that you dont have to wait 2 years to extend the lease.

eddddy

You seem to have a good handle on how the process works.

In my experience, you should allow up to £4k for fees.

To avoid some of the fees, I know of a leaseholder who serves s42 notices (say for £6k), then informally offers a bit more (say £7k) if the freeholder accepts without challenge - and therefore without running up extra fees.

But this needs to be checked with a solicitor, to avoid jeopardising the statutory process. And don't accept worse terms than 90 years extra, and a peppercorn ground rent.

Firsttimehelpneeded

Thanks for the comments so far all, really appreciated. If the section 42 is served and the benefit is assigned to me, do I have to go through with it or can I have it assigned to me so that I can 'strike' at any time in the next two years. I am guessing it will be cheaper and easier to buy the freehold when offered (I know others have bought it in previous years) but without the guarantee it will be offered I feel like I need a back up plan.

csgohan4

Don't trust what the agent says, their working for themselves and the vendor to get a sale


Think carefully about the low lease and leasehold in general.


Extension of the lease comes potential changes to service charges/maintenance charges which could double every x years for e.g

economic

why does extension of lease come with potential changes to servcie charges????

eddddy

Firsttimehelpneeded wrote: »

Thanks for the comments so far all, really appreciated. If the section 42 is served and the benefit is assigned to me, do I have to go through with it or can I have it assigned to me so that I can 'strike' at any time in the next two years. I am guessing it will be cheaper and easier to buy the freehold when offered (I know others have bought it in previous years) but without the guarantee it will be offered I feel like I need a back up plan.

You can discontinue - but obviously, you will have to pay all costs (so could be up to £4k)

In simple terms, if you pay £6k for a lease extension, the value of the freehold is instantly reduced by £6k. So if you then jointly buy the freehold, you should pay £6k less than other leaseholders.

But... if the other leaseholders don't understand/accept this, negotiations might fall apart - and the freehold end up being sold on the open market.

economic

i would push for freehold as its so much better in terms of conrol and you never have to worry about extending a lease etc.

i just sold my leasehold flat which had 88 years remaining and am buying a share of freehold flat. i like the idea of owning part of a freehold as opposed to simoly just being a tenant.

if i didnt sell i think after a few years if i did want to sell i would have to go through the process of extending the lease which is going to be costly with upto 4k legal fees....

economic

dont forget buying the freehold is very costly too in terms of legal fees. also you need to rely on other leaseholder(s) which can be problematic. and its not a quick process- 6 months minimum and can even take a year!

thats why i now always go for share of freehold flats. having owned a leasehold flat i know how problematic they can be specially if the freeholder is an idiot (they usually are). leaseholders have rights however very very very difficult to get these rights enforced.

Firsttimehelpneeded

The freehold is offered to everyone by the landlord. They have done it in the past and only a handful of people in the building have taken it up. Doesn't seem to be one where the leaseholders need to collectively buy them out. Land registry records show several with 999 years and rest all 99. As part of the conveyancing process should I be asking the seller to contact the landlord to ask the cost of increasing/a guarantee the freehold will be offered?

What stage do I do this and do I go through my solicitor?