Informal lease extension

AliceBanned

Hi


I have recently found out that as I am in a shared ownership flat (40% owned with a housing association owning the rest) I can only extend my lease through the informal route.


I am not sure how helpful the informal route is? I am finding it hard to get information on this. The Housing Assoc is recommending it but I presume it suits them better.


When I staircase to 100% which should be at the end of this year or slightly later, I will be able to extend through the formal route. However then I have to wait two years before I can extend the least, by which time it will be 79 years.


Can anyone recommend what might be best for me to do? Even the option of selling up soon appeals to me if I can find somewhere else that I like, or is that a bit drastic? eg an investor could buy the flat 100% and the lease falls below 80 years on 29 Nov 2021 so they might have time before the lease falls below the marriage value.


I am thinking it might be best for me to staircase, wait two years and then extend when at 79 years but I didn't want to stay as long as beyond two years because I might be able to afford a bigger place or something more ideal by then, or what if I want to move because of change of job? Lease issue is a real pain but maybe I've misunderstood it.

eddddy

There's no harm in asking the HA about an informal extension.

Private freeholders might try to fleece you, but a HA might try to be fair - perhaps by trying to make their 'informal route' mirror the 'statutory route'.

Although, from previous posts on here, it seems that HAs sometimes don't understand lease extensions very well, so they come up with strange ideas.

One contentious issue seems to be: Since you own 40% of the lease, should you pay 40% or 100% of the lease extension cost? Different HAs seem too have different policies.

I guess it depends on what happens with ground rent etc, when the lease is extended, and how staircasing costs are calculated before/after an extension.

ThemeOne

The informal route will usually be quicker and involve lower solicitor costs. Social landlords would normally make an informal extension available on the same terms as one obtained via the formal route, but they don't have to, and pinning landlords of any type down on this can be tricky.

As a general rule leases which have fallen below 80 years are a lot more expensive to extend.

My hunch would be you'd be best off extending now informally, but it all depends on specifics.

Have you spoken to a solicitor yet? You might find one who has experience of extending leases from your HA.

AliceBanned

Thank you both. No I haven't spoken to a solicitor yet but I think that would be a good step to take. I'll look into this tomorrow.


The HA has sent me details about lease extension - both routes so I'll see if I can find anything else in there, though on the phone the person I spoke to (aftersales team) seemed to be pushing the informal route. I heard from a colleague that the informal route is not the 'proper' route legally but I guess that depends on how it pans and with whom it is arranged.


It is surprising that so many flats are advertised online with 'lease details being compiled' when it is a major factor in whether or not I would want to buy - so the lease issue will be a problem re moving on as I don't want a short lease again. My flat had 88 years when I bought it so I knew it was getting low but didn't know about the two-year period of ownership before extension (apart from informal route). I could probably do the informal route during the purchase of the remaining share, if I decided to go that way. Suppose leases aren't such a major thing that they should mean I need to fairly quickly move out of somewhere that I generally like and am happy in but I do want to be pragmatic and not lose money by letting it just run down below 80 years.

eddddy

AliceBanned wrote: »

I heard from a colleague that the informal route is not the 'proper' route legally but I guess that depends on how it pans and with whom it is arranged.

In which case, your colleague should explain why they think it's not the 'proper' route legally.

An informal lease extension can be better or worse than a formal/statutory lease extension - it depends on what terms you agree to. And if your freeholder is dodgy, you have to watch out for 'game playing'.

But there's not really any sense in which it isn't a proper legal route.