Lease Extension

harlequin55

My 95 year old Father in Law has recently handed over all his affairs for me to manage under a Power of Attorney. On reviewing these it is apparent that there are just 62 years remaining on the lease of the flat that he owns. He bought the flat about 10 years ago so the remaining lease at that time would have been 72 years.
I am no expert on lease arrangements but it appears that the lease may have been allowed to slip to a position where it may become difficult to sell the property at the market rate. After some research online it seems that mortgage lenders will not lend against a property with less than 80 years remaining on the lease. The flat is part of a semi sheltered retirement property and therefore purchasers are generally cash buyers. 
A couple of matters come to mind regarding this matter and I would be most grateful for any feedback from those with greater knowledge than I have on lease hold arrangements.
1. Extending the lease now is going to be very expensive, but nevertheless should this be done and if so for how long?
2. I understand from my Father in Law that the advising solicitor at the time of purchase asked if he wanted to extend the lease. He said no and that was the end of the discussion. No advice was given on the potential consequences of letting the lease run on without extending. Being a layman my Father in Law was no expert on lease arrangemnts and I question whether or not the solicitor was at fault in not advising further on this issue. If there is fault, who can I refer the matter to?

Thank you for taking the time to read this and I would welcome any advice that the forum can provide

Slithery

harlequin55 said:

I am no expert on lease arrangements but it appears that the lease may have been allowed to slip to a position where it may become difficult to sell the property at the market rate.

It will sell at the market rate - the market rate for a property with a short lease.

harlequin55 said:

1. Extending the lease now is going to be very expensive, but nevertheless should this be done and if so for how long?

Is he going to live for another 62 years? If not then there is no need to extend.

harlequin55 said:

2. I understand from my Father in Law that the advising solicitor at the time of purchase asked if he wanted to extend the lease. He said no and that was the end of the discussion. No advice was given on the potential consequences of letting the lease run on without extending. Being a layman my Father in Law was no expert on lease arrangemnts and I question whether or not the solicitor was at fault in not advising further on this issue. If there is fault, who can I refer the matter to?

No, there was no fault by the solicitor.

bris

Your FIL said no so that's that. The only one concerned about the lease is you at this stage you who happens to most likely be the one benefitting from the lease extension. 
1.  Who is paying for this extension? The FIL obviously doesn't want to waste money at this time in his life as he has no benefit to it,  as selling his home is the last thing on his mind.

2. The solicitor works for his client and does as he wishes were you there when they had this conversation?  A no is a no so trying to blame the solicitor is a waste of time, however if you want to try your luck then the SRA oversee complaints against solicitors in England and Wales.

TBG01

Wonder if anyone could help. I was asked if I wanted salt and vinegar on my fish and chips. I said no and that was the end of that. Not knowing how my fish and chips would taste without salt and vinegar I question whether or not the takeaway is at fault in not advising further on this issue.

AdrianC

harlequin55 said:

My 95 year old Father in Law has recently handed over all his affairs for me to manage under a Power of Attorney. On reviewing these it is apparent that there are just 62 years remaining on the lease of the flat that he owns. He bought the flat about 10 years ago so the remaining lease at that time would have been 72 years.
I am no expert on lease arrangements but it appears that the lease may have been allowed to slip to a position where it may become difficult to sell the property at the market rate. After some research online it seems that mortgage lenders will not lend against a property with less than 80 years remaining on the lease. The flat is part of a semi sheltered retirement property and therefore purchasers are generally cash buyers. 
A couple of matters come to mind regarding this matter and I would be most grateful for any feedback from those with greater knowledge than I have on lease hold arrangements.
1. Extending the lease now is going to be very expensive, but nevertheless should this be done and if so for how long?
2. I understand from my Father in Law that the advising solicitor at the time of purchase asked if he wanted to extend the lease. He said no and that was the end of the discussion. No advice was given on the potential consequences of letting the lease run on without extending. Being a layman my Father in Law was no expert on lease arrangemnts and I question whether or not the solicitor was at fault in not advising further on this issue. If there is fault, who can I refer the matter to?

Will your father in law live until he's 157 years old?

No?

Then this lease is not his problem. Let him spend the rest of his life in peace.

If you are the executor of his estate, THEN you can investigate whether it's worth the estate extending the lease before sale or not...

eddddy

harlequin55 said:

1. Extending the lease now is going to be very expensive, but nevertheless should this be done and if so for how long?

A statutory lease extension would add 90 years to the lease.

 You could ask the freeholder about an 'informal' lease extension - which could be for any number of years. But many freeholders would see this as an opportunity to offer you an overpriced deal.

harlequin55 said:

After some research online it seems that mortgage lenders will not lend against a property with less than 80 years remaining on the lease. The flat is part of a semi sheltered retirement property and therefore purchasers are generally cash buyers. 

These types of retirement properties aren't usually mortgageable, however long their lease. Also, as the potential buyers are generally retired with limited income, they wouldn't be able to get a mortgage for any property.


More generally, it would probably make financial sense to extend the lease sooner rather than later - because the cost of the lease extension will probably increase as the lease gets shorter. But obviously, your FiL will need a chunk of cash to do that.

Grumpy_chap

harlequin55 said:

My 95 year old Father in Law 

1. Extending the lease now is going to be very expensive, but nevertheless should this be done and if so for how long?
2. I understand from my Father in Law that the advising solicitor at the time of purchase asked if he wanted to extend the lease. He said no and that was the end of the discussion. No advice was given on the potential consequences of letting the lease run on without extending. Being a layman my Father in Law was no expert on lease arrangemnts and I question whether or not the solicitor was at fault in not advising further on this issue. If there is fault, who can I refer the matter to?

1(a) - Extending the lease will get more expensive every year that the current lease reduces.  A suitably experienced solicitor should be able to advise on the likely cost of an extension very quickly with a simple "desk-top" calculation.

1(b) - Determining "should this be done and for how long" is a complex question for which there is not nearly enough information in the OP for anyone to comment meaningfully.  In making this assessment, you must remember that any decision must be taken in the best interests of your FiL, not what is in your best interest (maximising inheritance) or what you would do if this was your property at your (presumably somewhat younger) age / life-stage.  The benefit of longer lease versus reduction in available capital is far less for a person age 95 than a person age 55.

2 - There is no claim on the Solicitor.  At that time, your FiL was 85 yo and may well have assessed that a lease of 72 years would be sufficient to meet his needs.  Having a shorter lease would have been a bit lower cost than a property with a 999 virtual freehold lease, but also the retention of capital / funds rather than spend on the lease-extension.  Your FiL may compound his own expectations and reach the point whereby the lease expires and homelessness beckons - may I suggest that, at that time, your FiL can ensure his future financial security by selling his story to the appropriate equivalent of todays red-tops?

In addition to the above, retirement properties are often unusual in that the rules only allow the property to be sold back to the original developer at the end of use.  If that applies to your FiL's property, it makes the remaining duration of the lease a rather academic parameter.