Lease extension Flat

Tysam

Hi I wonder if anybody could advise. I bought a flat in January last year and due to illness am having to sell. Unfortunately due to a second buyer pulling out I have just been advised that this is happening because there is only 67 years left on the 99 year lease which makes my property unmortgageable. I would never had bought it if I had been advised of this by my solicitor.

I have been trying to find a cash buyer but obviously this has been providing difficult so I have now asked the management co (Simarc) to quote me on prices to extend. They gave me 3 options. The first one is to offer a 90 year extension to existing lease for 5671.00 plus costs in the sum of 576.00. Two alternatives are then offered - a new 100 yr lease for 2863.00 with an initial ground rent of 167.00 per annum reviewed on an upwards only basis every ten years in line with the retail price index plus clients costs of 576.00 and the second alternative is no premium but a ground rent of 309.00 paid every ten years on an upwards only basis in line with the retail price index plus clients costs of 576.00.

Presently the ground rent is only 25.00 pa

My property is only worth 60,000 (valued Dec 2014 so I need to know
- would an increase in ground rent put people off buying although I don't personally think that ground rent is too bad
- what other costs will I have to pay? Do I have to pay for another valuation and will I be liable to pay marriage value although tbh I doubt the property will go up much in value.

Obviously a 100 year lease will make it possible for other possible buyers to get a mortgage but i'm terrified I am missing something and I don't want to be landed with other massive fees I haven't been told about apart from my solicitor fees. Please advise if you have ever done this and what fees I need to account for other than those quoted to me.

Thanks so much

eddddy

The high and rising ground rents could be a significant issue.

High/rising ground rents can make future lease extensions expensive, and the flat could even become unmortgageable. Agreeing to a 'bad' lease extension could reduce the value of your flat, instead of increasing it.

In your position, I would talk to a specialist lease extension valuer.

Hoploz

The middle one sounds best to me. Lower cost for you now, and I think £167 pa ground rent is not that high and wouldn't be off-putting. Review after 10 years will probably to be a deal breaker for the new owner.

Of course, it's all relative to what is normal in your area. If every other flat around the local area pays £25 pa then this will seem expensive and someone may prefer to buy an alternative similar property.

For me, I have two flats which have ground rent of approx £300pa, and one I sold last year was about half that, so £167 sounds ok, but I'm in an expensive area of the country.