Extending a lease if I own the Freehold and the Leasehold

groodt

Hi

Situation:
* A converted property into 2 flats.
* 1 Freehold and 2 Leaseholds (1 LH per flat)
* I currently own the Freehold + 1 Leasehold
* I am purchasing the other flat and therefore the other LH.

When I own both Leaseholds, will I be able to extend the leases? Or does it not matter? What would happen if leases expire?

Any advice appreciated!

TrickyDicky101

It wouldn't matter I believe - unless of course you subsequently want to sell one of the leases.

Do you intend to combine the two properties into one?

EDIT: It may matter if you need to raise a mortgage to purchase the lease you do not currently own

groodt

No intention of combining the properties.

I am able to get a mortgage with the existing lease.

Am I correct in thinking that if/when I sell, then a lease extension is possible and could be offered to a buyer?

Hoploz

Yes you would just need to come to an agreement with yourself

AdrianC

There are three hats. You cannot wear more than one hat at a time.
One is labelled "Freeholder". You own this hat.
One is labelled "Leaseholder, flat A". You own this hat, too.
One is labelled "Leaseholder, flat B". You are currently buying this hat from the person who has been wearing it.

With your "Leaseholder, A" hat on, you write a note asking the wearer of the "Freeholder" hat to extend the lease. You swap hats. You, obviously, agree to extend the lease. The only cost involved is the legal cost of doing so. The same will apply once you've bought the "Leaseholder, B" hat.

Whether you do this now or the week before you sell any one of the three hats is entirely up to you. Should one of the leases get towards the end of the lease, then the wearer of that leasehold hat obviously wants to renew it. That's going to still be legal-cost-only, because the usual marriage value won't get charged, as it would in many other cases, because - with your freeholder hat on - you're very kindly disposed towards the wearers of the leaseholder hats, and aren't taking the opportunity to charge them.

You could either sell the lease hat with a fresh expiry date or ask the buyer to pay for it later. Your call. But the end income is likely to be the same...

groodt

Ok, thanks.

Am I correct in thinking that I cannot extend it without selling it? i.e. I cannot decide on a random day to extend the lease for the sake of it. I can only extend it for another buyer?

G_M

Nobody owns that many hats surely? 1 for summer, 1 for winter - that's it!

But seriously, the only dificulty will be if you are a greedy freeholder, and demand that the leaseholder pays loadsamoney in exchnage for extending the lease (or leases).

Then as leaseholder, it could cost you dear.

AdrianC

groodt wrote: »

Am I correct in thinking that I cannot extend it without selling it? i.e. I cannot decide on a random day to extend the lease for the sake of it. I can only extend it for another buyer?

You can extend it whenever you want...

eddddy

groodt wrote: »

I am able to get a mortgage with the existing lease.

So I guess you're saying you'll be buying with a mortgage.

If you were buying without a mortgage, you'd have even more flexibility.

Instead of extending the current leases, you could just cancel the leases and create completely new ones for any length of time you choose, and containing any terms you choose.

You could even re-model the building into, say, 3 or 4 flats (subject to feasibility, planning etc) and then sell them with new leases.

Richard_Webster

You can't grant a lease to yourself. If you want to sell one of the flats leasehold then you merge the present one into the freehold and grant a new lease for however long you want.

G_M

Richard_Webster wrote: »

You can't grant a lease to yourself. If you want to sell one of the flats leasehold then you merge the present one into the freehold and grant a new lease for however long you want.

But presumably the OP could extend an existing lease, even if he owns both free and lease?