Leasehold extension - stopping the clock?

NinjaTune

Hope this makes sense (probably not, tired and stressed).

If you make an enquiry about extending a leasehold just prior to 80 years remaining does this 'stop the clock' in terms of getting into marriage value territory?

Background:

Shared ownership flat, 50%.  The owners (not me) enquired about extending the leasehold in April this year but COVID/lockdown and a lack of funds at that time put paid to any further action.  The owners are now in a position to proceed with getting a valuation done but I'm not sure if the time delay has taken them below 80 years remaining on leasehold - will need to check that tomorrow.  Obviously this will make a huge difference to the cost of extending the lease.

Advice please, and thank you.

eddddy

If it was a statutory lease extension, serving a section 42 notice would have 'stopped the clock'.

But shared ownership leasholders are not eligible for statutory lease extensions - so it has to be an informal lease extension.

 With informal lease extensions there are no fixed rules, the freeholder can 'make up' any rules they like. (They don't even need to have a rule about including marriage value at less than 80 years.)

So it's a case of seeing what the freeholder says, and if you don't like it, seeing if you can persuade the freeholder to do something different.

NinjaTune

Thank you @eddddy

They were advised back in April that they can extend to 125 years under an informal lease extension.  My worry is that due to the delay it may have dropped below 80 years which makes a £10k difference according to the leasehold calculator.  I know that's just a rough guide but probably a fair ballpark figure.

She's going to speak to the HA again tomorrow so hopefully will have more of an idea then.  Need to check the actual dates of the lease and, if still over 80 years, start the valuation process ASAP.

eddddy

Yep - the online leasehold calculator is for statutory lease extensions. The informal lease extension price might be calculated in a completely different way.

As a starting point, a statutory lease extension adds 90 years to the lease (and reduces the ground rent to zero), it sounds like the informal lease extension you describe will add 45 years to the lease.

There's also the question of whether the leaseholder pays 50% of the freeholder's calculated lease extension cost or 100% of the freeholder's calculated lease extension cost (and how the HA deals with future staircasing costs, once the lease has been extended).

So there are a lot of variables.

(And based on some of the previous posts by people extending shared ownership leases, the rules/calculations used by some HAs don't seem very logical.)

NinjaTune

Thanks again @eddddy

The HA has confirmed that as it's a 50% ownership, the extension cost will be 50% of the valuation.  They sent a link to the leasehold calculator so I assume it tallies reasonably well with what they tend to charge.  At 80 years that comes in roughly at 5k-7k but at 79 years it jumps to 15k-17k.  They are in a catch-22 really as if they don't extend the lease then the flat becomes almost impossible to sell, especially as flats are proving difficult to sell at the moment as it is.

princeofpounds

How many of these shared ownership lease extension problem threads have we had on there through the summer? This appears to be quite a serious issue for a lot of people. I wonder if it will get political. The housing associations must have known what they were doing when they granted relatively short leases to SO buyers, seems a rather cynical way to drive them towards staircasing ASAP.