Advice needed to finance flat lease extension

deddajay

eddddy said:

Rather than talking to the estate agent about this, it might be better to talk to a specialist lease extension solicitor or a RICS lease extension valuer about your options.

Good advice, thank you. I've looked at the Leaseholders advice site and there is some useful information there as well. I will make an appointment with an expert in this field.

NameUnavailable

deddajay said:

NameUnavailable said:

You could also start the formal lease extension process and then sell the flat as it, but the new buyer will benefit from being able to extend the lease (at a price of course) but without having to wait 2 years (you can't extend formally unless you have lived in the flat for 2 years or more).

You will of course be selling at a lower price to allow for the cost of the lease extension, probably to a cash buyer.

If you opted for an informal extension watch out for the freeholder slapping on an increased ground rent, which could also then make the flat difficult to sell!

An informal extension will not be an option with our freeholder. One of our neighbours has already done that and let's just say the freeholder was less than conventional in how he wanted payment, which our neighbours rejected. Our estate agent has already advised we start the process even if it's not completed at the time of sale as I understand that this can all be done just prior to exchange of contracts. I don't fully understand how this works, so will be going over this again with him. Just need to work out the best way to fund it.

A cash buyer may be an option, and two of our four flats are already owned by absent landlords who I've already approached to see if their leases need to be extended, as it may be cheaper to do it together, but I'm waiting to hear back. They may already have extended. I would be open to an offer from either one of them to buy my place.

There's no bulk discount. I guess it might be possible that you all use the same solicitors to deal with the lease extensions which might result in a saving if you can all agree on one firm.

NameUnavailable

deddajay said:

NameUnavailable said:

You could also start the formal lease extension process and then sell the flat as it, but the new buyer will benefit from being able to extend the lease (at a price of course) but without having to wait 2 years (you can't extend formally unless you have lived in the flat for 2 years or more).

You will of course be selling at a lower price to allow for the cost of the lease extension, probably to a cash buyer.

If you opted for an informal extension watch out for the freeholder slapping on an increased ground rent, which could also then make the flat difficult to sell!

An informal extension will not be an option with our freeholder. One of our neighbours has already done that and let's just say the freeholder was less than conventional in how he wanted payment, which our neighbours rejected. Our estate agent has already advised we start the process even if it's not completed at the time of sale as I understand that this can all be done just prior to exchange of contracts. I don't fully understand how this works, so will be going over this again with him. Just need to work out the best way to fund it.

A cash buyer may be an option, and two of our four flats are already owned by absent landlords who I've already approached to see if their leases need to be extended, as it may be cheaper to do it together, but I'm waiting to hear back. They may already have extended. I would be open to an offer from either one of them to buy my place.

I think your agent is thinking about an informal extension i.e. freeholder agrees in advance to extend for X years and the fee is paid out of the proceeds of the sale on completion and the new owner completes with the extended lease.

deddajay

Thank you to everyone who replied. I have now obtained an agreement in principle to take out a new mortgage on our flat which should cover the costs. The alternative is to sell our rented property when the tenant's rental period comes to an end in April, which we may decide to do in any event as I don't really want to have to pay both capital gains and the extra stamp duty for a second property when we do buy. A mortgage on the rental property would be on a buy to let basis, so would cost more.

I've also obtained quotes from various specialist firms to start the process. It's just a bit disappointing to find that my plans to pay off the final small amount of mortgage in a couple of months is now out of the window and I'm having to take out a new mortgage, which wasn't in my retirement plans.