About to sell a flat but the lease renewal and fees will come out greater

jenskelce

I really need some advice. I co-own a flat with my ex, we've had it for 13 years since we split as it has always been in negative equity but becuase of where we live in Cornwall being a sought after place right now the value has gone up. We have just accepted an offer of £150000 (asking price was £155000) but the freeholder won't negotiate and is charging £20000 lease renewal and extra, as yet undeslcosed, solicitor fees. As we still owe £127000 on the property, by the time the esate agents have taken their cut and we have all these other extra costs we will come out in debt. My ex wants to carry on regardless as he just wants shot of it, as do I. My husband says to stop the sale and rent it out again when our current tennants move out at the end of August but my ex will not do that (we don't even have the right mortgage for it and that freaks him out). I litreally don't know what to do for the best other than tell the estate agents that unless the invsetor who has made the offer ups his offer to £155000 to cover the unexpacted cost of the lease renewal we will have to pull out. But that would be a gamble as if he just pulls out we will have lost our buyer altogether and the only other offer we've had is for £145000. 

Any advice would be gratefully recieved at this point - I am very stressed out about it.   

sharp910sh

I would advise to sell and move on with your life unless you do not have the extra funds required. 

Elliott.T123

Are you able to come to an agreement with your ex that he will cover the full shortfall in return for your agreement to sell?

AdrianC

Is this a statutory lease renewal?

For a £155k property to be looking at £20k stat renewal, the lease must be down to less than 60 years, assuming low ground rent.

eddddy

jenskelce said:

...but the freeholder won't negotiate and is charging £20000 lease renewal and extra, as yet undeslcosed, solicitor fees.  

It's possible that the freeholder is just playing 'hardball' in their negotiations.

i.e. They say they won't accept less than £20k, because they think they have the upper hand.


Have you checked the online calculators to see what a 'statutory lease extension' would cost....

Here's one: https://www.lease-advice.org/calculator/
Google 'lease extension calculator' for others


You could play 'hardball' back at the freeholder by saying something like...

"A lease extension premium of £20k would put us in negative equity, so we can't sell - so we won't extend the lease, so you'll get no money for the foreseeable future.

If you reduce the premium to £15k and give us a fixed fee quote from your solicitor, we may be able to sell - so you'll get £15k almost immediately."


And/or, depending on what the lease extension calculators say (for the sake of argument, let's say they say £14k)...

Instead of extending the lease now, we will suggest to our buyer that they get a statutory lease extension at an estimated cost of £14k, so you might prefer to accept £15k now instead.

jenskelce

AdrianC said:

Is this a statutory lease renewal?

For a £155k property to be looking at £20k stat renewal, the lease must be down to less than 60 years, assuming low ground rent.

It's at 52 years, to be fair to them stat is higher at around 28000

jenskelce

Elliott.T123 said:

Are you able to come to an agreement with your ex that he will cover the full shortfall in return for your agreement to sell?

No he has less money than I do! We are not in dire straights but neither have thousands to spare either. 

eddddy

jenskelce said:

AdrianC said:

Is this a statutory lease renewal?

For a £155k property to be looking at £20k stat renewal, the lease must be down to less than 60 years, assuming low ground rent.

It's at 52 years, to be fair to them stat is higher at around 28000

Is the freeholder offering the same terms as a statutory lease extension?

i.e. Adding 90 years to the term and reducing the ground rent to zero


(Some freeholders offer deals with increased ground rent and/or escalating ground rent, which can be much less valuable.)

GDB2222

With a 52 year lease, the clock is ticking, and the lease extension cost is just going to get higher all the time. It's perfectly reasonable to ask your freeholder what his solicitor is likely to charge - a few hundred pounds in my experience. 

AdrianC

jenskelce said:

AdrianC said:

Is this a statutory lease renewal?

For a £155k property to be looking at £20k stat renewal, the lease must be down to less than 60 years, assuming low ground rent.

It's at 52 years, to be fair to them stat is higher at around 28000

So you bought it with just 65 years on the lease, and haven't bothered doing anything about it until now?

GDB2222

AdrianC said:

jenskelce said:

AdrianC said:

Is this a statutory lease renewal?

For a £155k property to be looking at £20k stat renewal, the lease must be down to less than 60 years, assuming low ground rent.

It's at 52 years, to be fair to them stat is higher at around 28000

So you bought it with just 65 years on the lease, and haven't bothered doing anything about it until now?

This forum tends to be a bit too judgemental. Yes, in an ideal world, the OP would not be in her present position, but she is. So, there's no point saying so.

My own concern is that she can get out of her difficulty now, by selling with a relatively modest input of cash. If she rents it out for another year, the value may go up (but so may the lease extension cost), but equally values could fall back again, and she'll be stuck with a slowly depreciating asset for years to come.