Lease Extension Nighmare

MrMarc_2

Hello all, and welcome to my first post here.

I'm looking for some advice. Back in 2004, I bought a property with my then girlfriend. It was a leasehold flat costing £249,950, with I think 65 years left on the lease. The estate agent suggested around £5,000 would be sufficient to extend the lease.

Time went by, we split up and I forgot about the extending the lease. Anyway, the other week I enquired about extending the leasehold and was quoted £91,000. Since then I have felt physically sick with worry. There are 50.5 years left on the lease.

There's no way I can afford to pay for the lease extension, so I'm at a bit of a loss as to what to do. I had hoped to eventually sell up and move out of London and have some money in the bank for my retirement, as the property should be worth around £550,000 - but is worth considerably less with such a short lease. I have less than £100,000 left to pay on the mortgage, so potentially there is a decent amount of equity here. But I now feel like I'm stuck here till I die. What are my options?

Is it likely the law will ever be changed to add a price cap to this lease extension situation?

billy_goat

MrMarc wrote: »

Hello all, and welcome to my first post here.

I'm looking for some advice. Back in 2004, I bought a property with my then girlfriend. It was a leasehold flat costing £249,950, with I think 65 years left on the lease. The estate agent suggested around £5,000 would be sufficient to extend the lease It would have cost more like 20-30k....

Time went by, we split up and I forgot about the extending the lease. Anyway, the other week I enquired about extending the leasehold and was quoted £91,000 Somewhere in the region of 80-100k seems reasonable, without knowing the ground rent clause. Since then I have felt physically sick with worry. There are 50.5 years left on the lease.

There's no way I can afford to pay for the lease extension Yes but..., so I'm at a bit of a loss as to what to do. I had hoped to eventually sell up and move out of London and have some money in the bank for my retirement, as the property should be worth around £550,000 - but is worth considerably less with such a short lease. I have less than £100,000 left to pay on the mortgage, so potentially there is a decent amount of equity here you have money here. And this is why you should have spent the money on the lease 11 years ago (sorry, but true). But I now feel like I'm stuck here till I die. What are my options? Sell it at 100k below the value with a long lease/ remortgage for the lease extension money/ invoke the legislation and sell with the lease extension request

Is it likely the law will ever be changed to add a price cap to this lease extension situation? No. This is perfectly reasonable.

Sorry, the above isnt helpful but its kind of tough love on this one. People seem to think that because they 'buy' a place with a mortgage that it is theirs. Its not. If it is a leasehold property then they have bought the right to live in it for a given period and extend that lease if they wish, and as that period gets shorter there are mechanisms in place to calculate the cost to extend. In this case the lease length is very low. Most lenders would not lend on a lease of this length and you would need a cash buyer if sold as is iirc.

AdrianC

I am astonished that anybody lent you money to buy a place with only 65 years on the lease... But that was before the financial crisis, I s'pose.

OK, £91k to renew the lease. Statutory, I expect?

So how much is the property worth now, and how much would it be worth with a full long lease? More than a £91k difference, I bet...

strawberries1

MrMarc, sorry you're in such difficulty but whatever you do do not go via voluntary negotiation with the freeholder.

Evoke the statue and go that route.

Consider buying the freehold or at the very least serve a s.56 notice.

Speak to a surveyor and enfranchisement solicitor.

http://www.lease-advice.org/

http://www.capitalleasehold.co.uk/lease-extension-calculator/

Hoploz

Where has the £91k come from? Is this what the freeholder has asked for?Have you run it through the online lease extension calculators?

I'm only querying this as a property I was interested in had 42 years left and the lease was going to be around £25k to extend. But I didn't buy it in the end so haven't actually been through the process.

hazyjo

I'm more surprised that when you split up and presumably took the whole mortgage in your name, nobody mentioned lease length. That's some difference from sharing a mortgage to having the same amount to yourself. Either you had a small mortgage to start with, or you had a massive payrise or came into money, or you split up some years later which means the lease would be even lower. And the lender didn't say anything?!


She is off the mortgage/deeds isn't she?


Jx

System

Let it, with permission, and if you do extend i think it would then be deductable against your capital gains

strawberries1

MatthewAinsworth wrote: »

Let it, with permission, and if you do extend i think it would then be deductable against your capital gains

Interesting curve. Can he avail himself of that only if he rented it out and not if he lived in it privately?

System

Strawberries - i may be wrong but i don't think residential has capital gains,

Lamy_2

MatthewAinsworth wrote: »

Strawberries - i may be wrong but i don't think residential has capital gains,

Residential doesn't but if it's let out it becomes a tenanted property therefore would attract capital gains.