Lease on maisonette - Advice urgently needed?!? BTL

eddddy

Xxadele92xx said:

Okay so today I've been researching who owns the leasehold... and they went into liquidation in March!!! If i wanted to extend the lease or write to them regarding reducing the ground rent - who would I contact? 

I guess you mean... who owns the freehold.

And just to make sure, I assume you checked the current registered owners of the freehold, not the original parties to the lease.

• Assuming the freehold has some value, the liquidators will sell it to somebody else - so you will have a new freeholder (but the leaseholders might have the right of first refusal to buy it first.) You could even buy the freehold from the liquidator yourself, if you wanted.

• In theory, leaseholders have a statutory right to extend the lease - whatever the freeholder's situation is (in liquidation or missing etc). But the hassle and legal fees might be greater.

• I doubt that the liquidator would enter into a discussion with you about varying the ground rent - but I guess you could try.

But, there might be a more immediate problem, if the freeholder is in liquidation. Who is insuring the building and doing urgent repairs etc? 

eddddy

eddddy said:

Xxadele92xx said:

Okay so today I've been researching who owns the leasehold... and they went into liquidation in March!!! If i wanted to extend the lease or write to them regarding reducing the ground rent - who would I contact? 

And just to make sure, I assume you checked the current registered owners of the freehold, not the original parties to the lease.

Maybe double check that you're looking at the current registered owners of the freehold. Where did you get the info? Did you download the freehold title?

I ask, because re-reading your first post makes it sound like you're a long way into the buying process. Your solicitor should have found out by now, if the freeholder is in liquidation.

Xxadele92xx

This is from the current freehold title. I am pretty certain they are in liquidation. This was supposed to be a quick sale and has been with my solicitor for 5 weeks so far. He said we should be done in another 2 weeks but if he hasn't even realized they are in liquidation or mentioned it to me.... I will raise this when he comes back with the banks response!! I would say its pretty obvious I have  no idea about leasehold premises. 

Xxadele92xx

Hi Everyone, well as you can see I am slightly out of my depth with this (Good job I have my solicitor advising me!!!!). 
So I got confused and the freeholder isnt in liquidation. I contacted the vendor directly and expressed my concern about doubling ground rent. I explained that the ground rent is not a problem at the moment, however it will be in 47 yrs time as the ground rent will be over £250.00 (Will be £300 PA). I told him to prevent this from doubling I need a deed of variation. The vendor has now made initial contact requesting the cost of the Deed of Variation and we are currently awaiting a response. 

1. Do you think the freeholder would accept a deed of variation to eliminate the ground rent? 
2. How much do you think this would cost?
3. Is it worth reducing my offer to extend the lease myself in 2 years time and eliminate this problem? 
4. Is the vendor going to have this problem with anyone who purchases this maisonette? It has fell through twice already (apparently due to 'various' reasons).

FYI - 97 yrs left on the lease, maisonette worth £120k, Ground rent currently at £75 PA. 

eddddy

Xxadele92xx said:

1. Do you think the freeholder would accept a deed of variation to eliminate the ground rent? 

It's impossible for anyone here to guess the freeholder's mindset...

• The freeholder might be disinterested and ignore the request
• The freeholder might be short of cash and be excited by the idea of getting a windfall
• The freeholder might think "I'll only do it if the leaseholder pays me silly money"

Xxadele92xx said:

2. How much do you think this would cost?

Most freeholders would just aim for the most that they can persuade the leaseholder to pay.  So it boils down to...

• who is the better at negotiation - the freeholder or the leaseholder?
• who is more desperate for the lease variation -  the freeholder or the leaseholder?

It would probably be a very, very bad negotiating position for the current owner to say something like "I need a lease variation because I want to sell my flat, and it's unsaleable/unmortgageable at the moment".  That would encourage the freeholder to ask for silly money.

NameUnavailable

The lease is 97 years so fine now but you would want to look at extending it whatver happens within the next 17 years (probably around 7 years). What will the ground rent be in 7 years time?

All leaseholds reduce over time, I wouldn't expect a vendor to reduce the price at all (as long as the price is fair for the market). If the lease was already below 90 years I'd expect the price to reflect that you will need to extend it in the coming years. If the lease was below 80 years it's basically a cash sale only and the value would be affected significantly.

There is nothing really unusual with this situation. If you like the property buy it and plan to extend your lease within the next 7 years, at which time your ground rent will reduce to zero (if you go down the statutory route).