Extending Lease this simple?

iain123

Hello Forum

Newbie post

Thinking of extending the current lease on my flat that has 84.5 years left to run.

I contacted the city of London council and they promptly replied with the email below on how to extend the lease by 90 years.

Is it as "simple" as the council has explained in their email below, do I need to engage a solicitor?

Thanks

"Dear Iain

 Thank you for contacting the xxxx Estate Office regarding an application to extend your lease for an additional 90 years from the original expiry date.

 Please find enclosed a Section 42 Notice, an additional information form and a guide to lease extensions for Barbican properties.

 If you are interested in extending your lease you would need to have a valuation carried out with one of our nominated estate agents.  Our nominated estate agents are Frank Harris (0207 600 7000), Hamilton Brooks (0207 606 8000) & Scott City (0207 600 0026). 

 Once the valuation has been carried out, please provide a copy of the valuation letter in order that we may calculate the premium. If you agree the suggested premium, you should then enter this amount on page 2 of the section 42 document. 

The completed forms should be returned to the Barbican Estate Office and the Comptroller and City Solicitor will respond with a counter notice.  Please ensure that the completed form is returned the day that it is dated. 

 The charge for a standard transaction is £375.00 for the City of London’s Legal Fees and Land Registry charge of approximately £8.00. These fees are in addition to the premium and are paid on completion of the new lease.

 The above standard legal fee will apply assuming that this matter proves straightforward, but the fee may be increased if it does not.

 If you require any further assistance, please do not hesitate to contact me.

canaldumidi

The free government lease advice website here (https://www.lease-advice.org/) explains the 2 ways a lease can be extended.

for a flat lease extension: https://www.lease-advice.org/faq/how-can-i-extend-my-lease/

for a house lease extension: https://www.lease-advice.org/faq/what-happens-when-my-lease-runs-out/ or you could perhaps buy the freehold: https://www.lease-advice.org/faq/i-own-a-leasehold-house-how-do-i-buy-the-freehold/

princeofpounds

Unless you are happy with DIY conveyancing you will need to retain a solicitor - this is a transaction of a legal interest in land and so the paperwork on your side can be rather legalistic and needs to be right.

Extending a lease can be done in one of two ways. 

- The informal route - essentially a negotiated price.

- The statutory route - a tribunal where you can force an extension on terms defined in law (including the price, based on a formula).

Because of the existence of the statutory route, a sensible freeholder will often offer terms in negotiation that are similar, otherwise you may as well just go for a Tribunal which is a waste of time for everyone. 

But typically they might ask for a small premium, aware that the informal route is more convenient and carries lower legal costs for you.

Whilst you would hope an official institution wouldn't mess you around too much, you can't rely on their valuation as some freeholders will ask for a silly price and hope to get lucky. Similarly, don't assume your solicitor will give you advice on pricing - many do not see that as part of their remit. 

If your lease is simple (you have an idea of property value, don't have escalating ground rent etc.) then you will probably get a good estimation from one of the many leasehold extension calculators found on the web. Otherwise you can always get a surveyor to value it, or your solicitor may give you some ballpark guidance if they are experienced with these things and provide a personal service (when you look for one, ask them what guidance they would give you on this). 

But yes, a lease extension can be very easy when everyone is happy to just move through the process.

tacpot12

On the face of it, it really is that simple. I think that City of London must have decided that there is little point spending time and money arguing about something where they will have to come to an agreement eventually and where there is a mechanism to decide on the price. They may also want to stop collecting the ground gent.

However, they are suggesting that you use one of their nominated estate agents. This is unusual. The link that canaldumidi has provided confirms that normally your would appoint your valuer yourself, and the council would appoint their own valuer. I'm not sure if you are walking into a trap if you accept one of their nominated estate agents to do the valuation. 

It's also not clear if the council's solicitor is also going to act on both your behalves. Again, this would be unusual. Normally each party would appoint their one conveyancer to register the change with the Land Registy. However if this is possible, it would certainly save legal fees, but you do run a risk if you don't have access to an independent valuation and independent legal advice. 

 

eddddy

iain123 said:

Is it as "simple" as the council has explained in their email below, do I need to engage a solicitor?

The reason a lease extension isn't usually "simple" - is because of negotiations over the price.


In simple terms, it often goes something like this:

• The leaseholder instructs a valuer - who calculates that the lease extension should cost £4k

• The freeholder instructs a valuer - who calculates that the lease extension should cost £10k

If the leaseholder said "OK, I'll pay the £10k" - it would be very quick and simple.

It's the argument about the price - that takes all the time and pain. And maybe they end up agreeing at £6k.



In your case, it would the freeholder's valuer who would do the valuation, and the freeholder would then calculate the price payable. You might not know if the price they come up with is 'fair' or ridiculously high.

If you want, you could instruct your own valuer to calculate what they think the lease extension should cost. So you know if your freeholder is being fair, or not.