Buying a flat with pending lease extension

lbchange123

I’m new here so, hello all!

I’m in the process of buying a leasehold flat, which has 85 years left to run on the lease. The seller has already applied for the lease to be extended to 172 years and this has been agreed by the freeholder. Everything has been completed, paid for and paperwork has been filed at the land registry by seller’s solicitor. 

The issue I’m having is that the new lease doesn’t show up on the land registry records and my mortgage lender require the conveyancer for confirm that the lease is over 99 years of lease before completion. Exact wording below.

“Conveyancer to confirm that the lease is to be extended to a term of not less than 99 year at or before the point of mortgage completion. Completion funds will on be released until written confirmation has been received, prior to you submitting the Certificate of Title"

Has anyone had any experience with this? Do we need to wait until new lease has been registered at the land registry or can the purchase go ahead without this? Subject to of course obtaining paperwork proving the extension has been agreed between seller and the freeholder and it’s been filed at land registry.

I know I should be asking my solicitor, but I have had way too many issues with my solicitor and don’t have much faith in them. That’s a story for another day.

Thank you in advance!!

Jonboy_1984

The sellers solicitor should really have applied for the land registry to expedite the registration of the lease when your sale was agreed.

user1977

Registration doesn't need to be complete. After all, your mortgage lender also needs you to be the owner, and the seller's mortgage to be discharged - but those things don't get registered any earlier than the mortgage. Your solicitor can confirm that everything is in place and being registered or covered by adequate solicitor undertakings.

eddddy

Going a bit off topic - it's unusual for a mortgage lender to not accept an 85 year lease, and to require a lease over 99 years.

Which mortgage lender is it? Is there a special reason why they require a 99 year lease?



I'm guessing it was a statutory lease extension (which would add 90 years to the lease, which makes your figures slightly wrong).

But if it wasn't - and it was an informal lease extension granted before 30th June 2022, check the ground rent terms are ok - although your solicitor should have done that already.

lbchange123

Thank you all for responses.

Jonboy_1984 said:

The sellers solicitor should really have applied for the land registry to expedite the registration of the lease when your sale was agreed.

Unfortunately I think my solicitor is the worst in the country and sellers are equally bad, so that didn't happen.

user1977 said:

Registration doesn't need to be complete. After all, your mortgage lender also needs you to be the owner, and the seller's mortgage to be discharged - but those things don't get registered any earlier than the mortgage. Your solicitor can confirm that everything is in place and being registered or covered by adequate solicitor undertakings.

This makes perfect sense. Thank you, it's really useful. 

eddddy said:

Going a bit off topic - it's unusual for a mortgage lender to not accept an 85 year lease, and to require a lease over 99 years.

Which mortgage lender is it? Is there a special reason why they require a 99 year lease?



I'm guessing it was a statutory lease extension (which would add 90 years to the lease, which makes your figures slightly wrong).

But if it wasn't - and it was an informal lease extension granted before 30th June 2022, check the ground rent terms are ok - although your solicitor should have done that already.

I think it's because its a ex-local authority flat and valuer asked for a 99 year lease to be in place. The lender is Santander. 

Not sure if it was statutory or informal, but the ground rent is £10 per year. I won't be too sure about my solicitor checking anything its looking like I'd need to hire another conveyancer to check their work. They told the lender lease was more than 99 years without checking it first!

eddddy

lbchange123 said:

Not sure if it was statutory or informal, but the ground rent is £10 per year. I won't be too sure about my solicitor checking anything its looking like I'd need to hire another conveyancer to check their work. They told the lender lease was more than 99 years without checking it first!

At a guess - I'd say the ground rent on the original lease was £10 a year.  I'd be very surprised if that wasn't changed as part of the lease extension.

You need to look at a copy of the lease extension deed - not the original lease.

No freeholder would want the hassle of collecting £10 per year.

Either they'd reduce it to zero (to make it hassle free), or increase it to £100 or £200 or more, to make it worthwhile collecting it - and to increase the value of the freehold.


TBH - if the freeholder is a local authority, I doubt they've done anything nasty with the ground rent. 

In fact, I'd guess it was a statutory lease extension with a £0 ground rent.

lbchange123

eddddy said:

lbchange123 said:

Not sure if it was statutory or informal, but the ground rent is £10 per year. I won't be too sure about my solicitor checking anything its looking like I'd need to hire another conveyancer to check their work. They told the lender lease was more than 99 years without checking it first!

At a guess - I'd say the ground rent on the original lease was £10 a year.  I'd be very surprised if that wasn't changed as part of the lease extension.

You need to look at a copy of the lease extension deed - not the original lease.

No freeholder would want the hassle of collecting £10 per year.

Either they'd reduce it to zero (to make it hassle free), or increase it to £100 or £200 or more, to make it worthwhile collecting it - and to increase the value of the freehold.


TBH - if the freeholder is a local authority, I doubt they've done anything nasty with the ground rent. 

In fact, I'd guess it was a statutory lease extension with a £0 ground rent.

It is a local authority, just looked at the deed its peppercorn ground rent if demanded. So no issue there. 

From what I know, the landlord prefer to use service charge and repairs to make money instead of the ground rent it seems, there is a £20k bill for lift replacement which the seller is picking up. 

eddddy

lbchange123 said:

From what I know, the landlord prefer to use service charge and repairs to make money instead of the ground rent it seems, there is a £20k bill for lift replacement which the seller is picking up. 

Landlords aren't allowed to make money out of the service charge.

But local authorities have a reputation for spending lavishly on building refurbishments - and maybe not getting good value for money.

And it's partially your money (and other leaseholder's money) that they they are spending.

Kirant91

Hello, I am a buyer in a similar situation my solicitor who doesn’t seem to know much about lease extensions said I can’t complete the sale until the new lease is registered. I asked if we can complete & then register the lease following an understanding from the seller solicitor but my solicitor said it would not be possible. Were you able to resolve this? 

Jonboy_1984

Kirant91 said:

Hello, I am a buyer in a similar situation my solicitor who doesn’t seem to know much about lease extensions said I can’t complete the sale until the new lease is registered. I asked if we can complete & then register the lease following an understanding from the seller solicitor but my solicitor said it would not be possible. Were you able to resolve this? 

We had exactly that with the flat we sold a few months after extending the lease. Our solicitor applied for the land registry to expedite ( https://www.gov.uk/guidance/request-an-expedite ) the registration of the lease extension, which took 14 days, and then the sale carried on as normal. If the sellers solicitor is unsure, ask the seller to refer to the solicitor that handled the extension (same one in our case).

Kirant91

Thank you Jonboy! I came accross expedited registration but wasn’t sure how successful those applications were that is really helpful thanks