Shared Freehold extending lease

joanie3

I am several years into my mortgage on a flat.
I have a share of the freehold.
It is a converted house with just our flat upstairs and the ground floor flat.
My dilema is, the other flatholder wishes to remortgage, but as there is less than 75 years on lease left, the lender states she has to extend her lease.
So, she has found solicitor online who will do this for £550 per flat. Plus there is a possibility I would have to contact my mortgage company and pay a fee (approx. £100 or so I've been told).
So why is the cost of doing this so high?
All we both want to do is - stay the same, but have it over longer years. Isn't this just a moneymaking scheme?
Can anyone please direct us to what we should or need to do?

At the moment, all costs are shared (insurance)

Tom99

Legal fees of £550 sound about right and possibly on the low side. Does this incl Land Reg fees?

Since it's your neighbour who wants this change you could:
1 - Ask them to pay all the fees
2 - Don't extend your lease but therefore ask for a premium from your neighbour to allow the extension of their lease. Of course that means you would have to pay them a premium when you want your lease extended.

da_rule

What part are you querying, the £550 or the £100?

Both of these seem quite cheap to be honest.

£550 doesn’t sound like a bad date for a solicitor to review the current lease(s) and draft appropriate extensions.

These extensions then need to be checked by the lender to ensure that they still represent good title and are good to act as security.

There are, technically, two things you cannot do with a lease. One is extend the land covered by the lease, the other is extend the term. If you do either of these, then at law, it has the effect of surrendering the first lease and granting a new lease (which is why the variation needs to be done properly to ensure the old lease is properly incorporated into the extension).

Operationally, the Land Registry will close the current leasehold title and open a new one. They cannot do this if there is a mortgage secured on it. Therefore the lender will also have to provide a Deed of Substituted Security. This means that the lender will consent to the charge being removed from the current title to the new title.

When you look at the work involved, £100 doesn’t seem so bad.

PasturesNew

While you're doing it, you might consider whether it's time/cost efficient to do them both at the same time. How long's yours got left?

Tom99

PasturesNew wrote: »

While you're doing it, you might consider whether it's time/cost efficient to do them both at the same time. How long's yours got left?

That is what is planned and why the OP is complaining about the legal costs they are being asked to pay.

divadee

£550 seems quite cheap to me. And if you extend your lease you will be adding more than 550 value to the property price.

diggingdude

I suppose advice depends on whether you also have 75 years left or 125.

joanie3

It was a 99 year lease in 1994, so now 75 years left. Our Mortgage has another 4 years left to run on it.
I think this was not something that was explained to us when we bought it 6 years ago. All the Estate Agent went on about was it was a shared freehold.
What would happen if I did nothing! Or would it only matter if I wished to sell or raise capital against the property?
Many thanks for the responses so far

eddddy

joanie3 wrote: »

What would happen if I did nothing! Or would it only matter if I wished to sell or raise capital against the property?

A good reason for doing it now (jointly) is because your neighbour is currently keen and co-operative.

Otherwise, maybe you'll want to sell or re-mortgage in a year or two, and your neighbour will be disinterested then. (A bit like you're sounding disinterested at the moment.)

And if your neighbour sells up, you may get a new neighbour who is even more disinterested and / or difficult.

G_M

If your lease also has 75 years to run, then definately get it extended. (the length of your mortgage is irrelevant).


If you are doubtful about the £550 cost, why not shop around and see if you can find a decent local solicitor which experiene of leases to do it cheaper? Just as you would with any significant purchase or expenditure.

zagubov

eddddy wrote: »

A good reason for doing it now (jointly) is because your neighbour is currently keen and co-operative.

Otherwise, maybe you'll want to sell or re-mortgage in a year or two, and your neighbour will be disinterested then. (A bit like you're sounding disinterested at the moment.)

And if your neighbour sells up, you may get a new neighbour who is even more disinterested and / or difficult.

This! ^^^^^^^^^^