Leasehold Advise

TEEP

Hello

We own a flat which we have let to the same reliable tenant for 10 years.

The leasehold has 68 years remaining so we are looking at renewing it (I know we should have done this a while ago but we never had the money).

I know it's a expensive procedure. We have used the online tools with the following criteria and results;

Remaining years 68
Ground Rent £300 per year

It gives a figure of between £14,000-£15,000

We had a valuation, the chap that did it was recommended by the solicitors but I can't find him online, he suggested we would be paying £20,000 but he would put an offer of £16,000 to start.

I know fees are on top.

The management company state they use the 'red book' to calculate the the costs of lease extension.

I no longer have contact with the leaseholder as he moved and the details are no longer correct.

My questions are


Does this valuation seem right? How accurate are the online calculators?

Is it worth going through the management company to extend the lease or should we take the statutory route?

Thank you in advance

G_M

https://www.lease-advice.org/

Tom99

With only 68yrs on the lease you are going to be paying quite a chunk of money for the lease extension so probably the 1st thing you should do is employ a chartered surveyor who specialises in lease extensions to give you some up to date figures and maybe some advice on whether to negotiate informally or via the statutory route.

MARSHEE

Hi there,

I was wondering if anyone had experience with voluntary lease extensions within the first 2 years of owning the property) vs after owning for longer than 2 years so you can go through the standard legal process - is it section 42?

I'm almost at 60 years (i know... finger out) but have had other priorities. I had agreed a voluntary amount 1.5 years go but used the cash for upgrades to the property. Now I'm ready to start again and was thinking through the post-2-year route - but the freeholder has suggested a voluntary again.

They say this will benefit me with lower fees, but I'm not convinced and not sure who to turn to for advice?

Any welcome....

eddddy

MARSHEE wrote: »

They say this will benefit me with lower fees, but I'm not convinced and not sure who to turn to for advice?

The fees will probably be lower.

But you have to look at the price and terms the freeholder is offering - they might be fine, or they might be very bad.

You could instruct a leasehold extension valuer, to advise you what you should pay a the lease extension.

bouicca21

If you go down the voluntary route the fees will probably be lower but you will almost certainly end up with escalating ground rent. It may or may not be a reasonable escalation, that will be up for negotiation. You will have to factor that against a statutory extension which will cost more but reduce the ground rent to zero. And of course also bear in mind the effect of your decision on future saleability.

Tom99

MARSHEE wrote: »

Hi there,

I was wondering if anyone had experience with voluntary lease extensions within the first 2 years of owning the property) vs after owning for longer than 2 years so you can go through the standard legal process - is it section 42?

I'm almost at 60 years (i know... finger out) but have had other priorities. I had agreed a voluntary amount 1.5 years go but used the cash for upgrades to the property. Now I'm ready to start again and was thinking through the post-2-year route - but the freeholder has suggested a voluntary again.

They say this will benefit me with lower fees, but I'm not convinced and not sure who to turn to for advice?

Any welcome....

One way of comparing the two options is to work out the price of a statutory extension after your informal extension and add it to the price of the informal extension, for example:

Statutory Extn now, 170yr lease £0 GR - Price £10,000
Informal Extn now, 125yr lease £250pa GR - Price £7,500
Stat Extn after Informal Extn, 215yr lease £0 - Price £5,000

So if you go the informal route the freeholder takes a £5,000 drop in value but gets £7,500 from you - a good deal for them and another bite at the cherry in a few year time.

ThemeOne

MARSHEE wrote: »

Hi there,

I was wondering if anyone had experience with voluntary lease extensions within the first 2 years of owning the property) vs after owning for longer than 2 years so you can go through the standard legal process - is it section 42?

I'm almost at 60 years (i know... finger out) but have had other priorities. I had agreed a voluntary amount 1.5 years go but used the cash for upgrades to the property. Now I'm ready to start again and was thinking through the post-2-year route - but the freeholder has suggested a voluntary again.

They say this will benefit me with lower fees, but I'm not convinced and not sure who to turn to for advice?

Any welcome....

It depends on your landlord. Social landlords such as councils will often offer terms comparable with a statutory extension.