extending leasehold

bozzy18

Hello, I'm supporting a lovely lady with learning disabilities with extending her leasehold for her flat. Unfortunately it is 51 years left and the freeholder are insisting that she pays £1200 plus VAT for valuation. The lady can't afford this.


Any suggestions on way forward please?


Thanks.


Boz

always_sunny

She could use the statutory extension, but she will still have to pay for the extensions costs, valuation (her and freeholder), etc

If she is hoping to get it extended for free or next to nothing it's highly unlikely I am afraid.
£1200 with 51 years left doesn't seem hugely high, it depends on the flat value, location, etc. I assume she's in England/Wales (where leasehold exist)?

cloo

Yes, £1200 seems a bit pricey for a valuation but if she can't afford that then it's doubtful she can afford an extension, which is likely to be a four-figure sum, plus the extra cost of 'marriage value' could come into it as it's under 70 years

eddddy

Is she trying to negotiate an 'Informal Lease Extension'?

If so, she might pay the £1200 (which is about double the going rate), and then get a ridiculous offer from the freeholder.

It might be safer to go for a 'statutory lease extension'. But the total fees are likely to be £3k to £4k (in addition to the extension price).

But if she can't afford £1200, how will she afford the extension price?

Or is she selling with a lease extension on completion?

bozzy18

yes she will sell the flat with a lease extension on completion. The flat has been valued at £250k to £270k. The location is in Surrey.


Boz

eddddy

bozzy18 wrote: »

yes she will sell the flat with a lease extension on completion.

It's a very difficult situation.

As I said, even if the leaseholder pays the £1.2k, there is no guarantee that the freeholder will come back with a sensible price.

In the leaseholder's position, I'd be tempted to arrange my own valuation, and then make an offer to the freeholder on that basis.

But the valuation would still cost around £400 to £600, and the freeholder might just reject the offer out of hand.

System

If she can't pay the £1200 i'd worry whether she could pay the premium, which will be thousands, as well as her own valuation and legal fees (£3500 in fees for me)

bozzy18

Thanks Eddddy. I agree its a very difficult situation and it is a shame that she has come into this without understanding/realising what was going on.

If she agrees to the freeholder using his own valuer - how do we know the valuer is impartial and won't be biased towards the freeholder and bump up the valuation?

bozzy18

Thanks Matthew. She would be paying for all the costs from the proceed of sale which is the norm for people selling properties.

eddddy

MatthewAinsworth wrote: »

If she can't pay the £1200 i'd worry whether she could pay the premium,

The leaseholder is wanting an extension on completion (of the sale of the flat).

So the buyer will pay the premium, not the current leaseholder.

MatthewAinsworth wrote: »

which will be thousands, as well as her own valuation and legal fees (£3500 in fees for me)

I suspect that's for a 'Statutory Lease Extension'.

That's not really relevant here, as it's not really possible to get a statutory lease extension date to coincide with a sale completion date.

eddddy

bozzy18 wrote: »

If she agrees to the freeholder using his own valuer - how do we know the valuer is impartial and won't be biased towards the freeholder and bump up the valuation?

Has the freeholder said that you will even see the valuers report?

The process is often more like this:

- The valuer gives the freeholder a figure of say £25k

- Then the freeholder asks the leaseholder for say £40k

- Perhaps the leaseholder arranges their own valuation.

- The negotiations/arguments begin....

Edit to add...

The freeholder is in a very strong position.

The leaseholder doesn't have funds to do a statutory lease extension.

Without a lease extension, the leaseholder may find it very hard to sell, and will have to take a very big hit on price.

Most freeholders would realise this, and 'fleece' the leaseholder accordingly - for an informal lease extension.