60 Year Lease - Can the extension be part of the sale?

MrSheen78

Morning all

I bought my flat when I was in my early 20's, back in 2001. It was mentioned at the time that it had a lease of 78 years left, but at no point was I told what that actually meant. I just figured I'd be either dead or have sold it by then so it didn't matter.

Oh how I wish the younger version of me had been a bit more curious about it.

Cut to 2019 and the flat is rented out. Me and my partner are looking to buy our first house together, and the sale of my old flat will play a huge role in us being able to get the size of mortgage we'd like.

Turns out that having a 60 year lease isn't a good thing.

I contacted the lady who owns the freehold, and she just directed me to the Lease Advice website and said I can find all the info to extend a lease on that website. So it seems she's not up for negotiating directly.

Which is fine, as it turns out. Because it looks like it'll cost in excess of £12k to extend the lease, and that's money that we just don't have.

Soooo....I'm finally getting to the point...

I was wondering if anyone has any experience or knowledge about wrapping a lease extension up as part of a house sale? Something like having it written into the deal that the money from the sale will be used to extend the lease. (Pardon my ignorance if this sounds ridiculous)

Our letting agent offered to contact their landlords to see if anyone wanted to buy it with sitting tenants, but with Brexit and the 60 year lease, she said that nobody was interested.

So we're in a bit of a corner now, and I'm looking for a way to extend the lease and sell the flat.

Any insights, words of advice, suggestions, warnings, all welcome! Thanks!

eddddy

MrSheen78 wrote: »

I was wondering if anyone has any experience or knowledge about wrapping a lease extension up as part of a house sale? Something like having it written into the deal that the money from the sale will be used to extend the lease. (Pardon my ignorance if this sounds ridiculous)

That is often called a 'Lease Extension on Completion'.

You can only really do that with the cooperation of the Freeholder - i.e. informally negotiating a price for the extension.

That way the buyer of your flat could get a mortgage.

You could try an approach to the freehoilder like "It seems if I take the statutory route, the premium would be about £10k, I'm prepared to offer you £12k to avoid the fees and hassle, if you'll do a lease extension on completion"


Another approach would be to sell your flat and start the statutory lease extension process at the same time. But the flat would still be sold with a 60 year lease - so it's unlikely that a buyer could get a mortgage.

MrSheen78

Aha! Ok, thanks. That's good to know.

Do you think it's worth getting some kind of legal bod involved to help out with all the nitty gritty, or is it worth doing it solo to save the money from their fees?

eddddy

MrSheen78 wrote: »

Do you think it's worth getting some kind of legal bod involved to help out with all the nitty gritty, or is it worth doing it solo to save the money from their fees?

If you're aiming at negotiating an informal 'Lease extension on completion', it's probably best to agree a price first, before getting a solicitor involved.

And find a solicitor with experience of both lease extensions and conveyancing - so they can look after both.


Also... I've come across Estate Agents who, kind of, 'specialise' in selling properties with 'Lease Extension on Completion'. They liaise/negotiate with the seller, the freeholder and the buyer.

If you can find a good EA like that, they may be able to give you some advice.

(But whichever EA you go with, make sure they at least understand 'Lease Extension on Completion', otherwise they're likely to confuse/mislead buyers.)

Ozzuk

If you haven't fully understood the lease implications, are you fully aware of your landlord obligations - things like insurance, tax, getting tennants out for selling (or issues of selling with them in place), consent to let, leaseholder permission (if needed).

If you've been lax on those aspects then maybe auction off the property, or say cash buyers only and price accordingly. Depends how many issues you face really, and the values involved - equally it could be worth you sorting everything out properly.

MrSheen78

Ozzuk wrote: »

If you haven't fully understood the lease implications, are you fully aware of your landlord obligations - things like insurance, tax, getting tennants out for selling (or issues of selling with them in place), consent to let, leaseholder permission (if needed).

Thanks. All of the things you mentioned above are all in order and in place.

Ozzuk wrote: »

If you've been lax on those aspects then maybe auction off the property, or say cash buyers only and price accordingly. Depends how many issues you face really, and the values involved - equally it could be worth you sorting everything out properly.

We have considered putting the property to auction, but sorting it all out properly feels like the best thing to do for us.