Share of Freehold - Lease Extension

rg184

Hello Money Savers,

We're in process of buying a flat in greater London. It is a share of freehold with 9 other freeholders.

When the offer was accepted we were told an extension of the lease was taking place and will be completed before exchange (extension to 999 years).

As we near exchange the estate agent has now said it's likely the extension will take longer (possibly months) and not be done by exchange. They've indicated the delay is due to changes to the lease by other freeholders. They have also indicated that the costs incurred will be minimal as the legal costs are being split with freeholders as only one solicitor is being used to extend everyone's lease. The estate agent/seller don't think it's a big deal as they've indicated costs should be under £500, however from what I've seen lease extensions can costs thousands.

I'm also concerned at implication on value to home. We probably would have put in a lower offer if we knew we were buying a 72 yr lease.

That said I want to understand how big a deal this actually is? Are costs for extending a share of freehold lease minimal? Could have it massive impact to resale value and future costs if for some reason the extension does not happen?

Any advice would be great as we are first time buyers.

Thanks in advance.

jbainbridge

Perhaps some of the freeholders are being awkward?

Don't forget the EA and vendor just want the place sold ... they're always going to play down any problems. Perhaps talk to your solicitor.

eddddy

Effectively, the joint freeholders are offering an informal lease extension.

They can ask for any price they like - e.g. £0 or £500,000.

It sounds like they are currently asking £0. The price and terms they ask for can change at any time, or they can decide not to offer an informal extension at all.

It will get very messy if the lease extension isn't completed before you buy the flat - unless you really know what you're doing, it might be better to walk away,

And will your mortgage lender lend on a flat with just 72 years on the lease?

Hoploz

But if the other leaseholders are joint freeholders then presumably there's no point charging each flat a huge sum to buy the lease extension as they will have to pay the same proportion as they would receive!

Sounds as if it's just a paperwork issue with limited legal fees, if indeed it is the case that all the leaseholders are involved.

I would check this carefully with your solicitor, and ignore the EA who actually knows nothing about this and will say what they think you want to hear.