Flat Lease Quote

pointer7

Hi All,

I was hoping for a bit of advice really, my flat is on the market and I have a very interested party. The agents informed me that my lease is 63 years (was only 74 when I moved in but this wasn't picked up when I bought) I have a quote of £11,200 plus around 2k of charges.

If I have to pay this first this will be very difficult for me now. What alternatives, if any, are there other than cash buyer or auction?

G_M

pointer7 wrote: »

Hi All,

I was hoping for a bit of advice really, my flat is on the market and I have a very interested party. The agents informed me that my lease is 63 years
Surely you mean the other way round: You informed the agent.... yes?

(was only 74 when I moved in but this wasn't picked up when I bought)
How come you didn't pick this up? The lease date and length must surely have given you a clue.....

I have a quote of £11,200 plus around 2k of charges.
For what? If a new TV it's a bit pricey!
If a lease extension, that seems fair. Or even good value.

If I have to pay this first this will be very difficult for me now. What alternatives, if any, are there other than cash buyer or auction?

You've covered
* lease extension (I think)
* cash buyer
* auction (though auction will also = cash buyer)

That leaves stay where you are?

ProDave

Option 4 is sell it for £11200 less than market value and let the buyer pay for the lease extension.

That should still be mortgagable. The rule seems to be (or used to) the lender expects 25 years lease to remain at the end of the mortgage term.

Without knowing where you are the cost of the lease extension may be a significant percentage of the value, or insignificant.

chappers

pointer7 wrote: »

Hi All,

I was hoping for a bit of advice really, my flat is on the market and I have a very interested party. The agents informed me that my lease is 63 years (was only 74 when I moved in but this wasn't picked up when I bought) I have a quote of £11,200 plus around 2k of charges.

If I have to pay this first this will be very difficult for me now. What alternatives, if any, are there other than cash buyer or auction?

you can agree to pay for the lease extension on completion, in effect out of the proceeds of the sale, it might mean you may have to borrow it back again as part of your mortgage on an onward purchase.

pointer7

Paying as part of completion would be my best option I think if it would mean a sale

Tom99

[FONT=Verdana, sans-serif]Or you can agree to serve the statutory lease extension notice and just assign that notice to your purchaser who will pay for and complete the lease extension.[/FONT]

Hama4075

As I understand it, a statutory lease extension notice doesn't guarantee a lease extension. The statutory right to lease extension still has to meet the required criteria. There may be no reason against it, just that it isn't a guarantee for the buyer.

When I was selling a property saying the lease could be extended, the buyer's solicitor required the legal work to extend the lease to be completed as part of the contract to buy - if I had been the buyer I would have wanted the same. It wasn't what I wanted as a seller, though...

3card

I stand corrected but i thought new buyers had to wait 2 years after purchase before they they could start the process of extending the lease?

I understand that as the present lease holder you could start the process and pass 'the process'' over to the buyer so save them waiting the 2 years

I am not sure how you do this but i'm sure your solicitor can advise

HTH

eddddy

pointer7 wrote: »

I have a quote of £11,200 plus around 2k of charges.

So that would be an informal lease extension - so you need to be cautious.

How many years would be added, and what are the ground rent terms?


FWIW, I've just been involved in a 'lease extension on completion'. My advice would be...

... Use an EA who really understands 'lease extension on completion' and is happy to chase all 3 parties up to exchange - Buyer, Seller and Freeholder

Also, there's the complication of the extra fees (including the £2k). e.g. Who pays them if the transaction falls through?

pointer7

I do have an official quote I just quoted then figures as rough ones..

Well if we take the risk and pay to extend now, we can't guarantee a buyer so will be 13k out of pocket (although maybe easier to sell in future) but if the party that's interested is happy with us extending it only if he makes an offer then the risk is lessened although still is a risk if he pulls out at last minute before he pays a deposit

Tom99

[FONT=Verdana, sans-serif]Just about 100% of buyers will want longer than a 63 year lease so if you have to money then extend the lease before you sell.[/FONT]
[FONT=Verdana, sans-serif]What exactly have you been offered for £11,200, it could be a very bad deal. Eg high and rising ground rent, only 99yr or 125yr lease, onerous new terms.[/FONT]
[FONT=Verdana, sans-serif]A statutory lease extension will get you a new lease for 153yr from today at a peppercorn rent but that might cost you more than £11,200 and certainly more than £2,000 in fees since you will pay both sides valuation/negotiation and legal fees.[/FONT]
[FONT=Verdana, sans-serif]You can get an idea of the price for a statutory extension here:[/FONT]
[FONT=Verdana, sans-serif]https://www.lease-advice.org/calculator/[/FONT]