Lease Extension Details

Mind_Overload

Hello,
I have approx. 82 years left on my lease, on a 50% shared ownership flat. I have contacted the freeholder ( The Housing Association)  and this is their reply.
Does this seem fair? I am totally new to this, and a bit out of my depth. I still need to find a Solicitor ASAP.

Can anyone clarify this exactly? "Shared owners pay pro-rata to their equity unless they are Staircasing to 100%."
Do i not pay the full premium as I am shared ownership?

Many thanks

I can confirm that we are willing to extend leases where the Leaseholder does not have the statutory right to do so (such as Shared Owners) or chooses not to go through the statutory process.

 

Our requirements are that you will meet the cost of the valuation by a suitably qualified Valuer, our legal costs and the premium for the lease extension. We will also charge you for our administrative charges. 

 

The costs as of the date of this letter are:

 

Valuer’s Fee:	£500 + vat	Non-refundable
Administration Fee:	£300 inc. vat	Non-refundable
Premium for Lease Extension	To be confirmed following valuation
Catalyst’s Legal Costs (Estimated):	To be confirmed
Your Legal Costs	To be confirmed	To be agreed with your Legal Representative.

 

 

 

If you wish the matter to proceed you will need to make a payment for £900 to cover the cost of the valuer’s fee and our administration fee.  

 

This payment can be made over the phone using a debit/credit card or by bank transfer.  If paying by bank transfer our bank details are:

 

Once payment has been made please send us an email confirmation.

 

Unless we are advised otherwise, it is our intention to instruct the valuer to calculate the cost based on a 90 year lease extension on top of the current term.

 

Once the valuation has been received we will make a formal offer to extend your lease and you will be able to decide whether or not you wish to proceed.

 

If you are a 100% Leaseholder you will pay the full premium.

 

Shared owners pay pro-rata to their equity unless they are Staircasing to 100%.

eddddy

Is your property a flat (as opposed to a house)?

It all seems to be what you would expect. The £900 fees seem a bit on the high side, but I doubt there's scope to haggle on that.

I imagine they use the 'statutory formula' for calculating the lease extension premium (i.e. the cost of the lease extension) - so you can get a rough idea of what it will be using the online calculators, like this one:
https://www.lease-advice.org/calculator/

If you enter the full value of the flat (i.e. the value of 100%), you would only need to pay 50% of whatever answer it calculates.

Mind_Overload

Thanks a lot Edddy!

It is a 2 bedroom flat, near Heathrow, I'm probably paying London rates - Damn!

I was originally misinformed, until now I was unaware you only pay 50% of the premium on a shared ownership. Entering value as £280k (should not be higher than that), £0 Ground Rent, 82 years remaining comes in £4k to £6k, so hopefully my premium should be £3k max.

Does anyone know a good lease extension solicitor, preferably out of London?

Mind_Overload

Can anyone kindly advise on the below I received from a solicitor? Many thanks

As the property is currently shared ownership the only way you would be able to extend the lease is via a private agreement with your freeholder. They do no not have to negotiate on their terms. Unless otherwise agreed with your freeholder, you will likely be responsible for the full value of the lease extension, not just for your share.

RoseBerni

On fb there is an excellent group National Leaseholder Campaign 
they have lists of solicitors they specialise in lease extensions  

eddddy

marcus-darkus said:

Can anyone kindly advise on the below I received from a solicitor? Many thanks

As the property is currently shared ownership the only way you would be able to extend the lease is via a private agreement with your freeholder. They do no not have to negotiate on their terms. Unless otherwise agreed with your freeholder, you will likely be responsible for the full value of the lease extension, not just for your share.

Do you mean just the underlined sentence? "They do no not have to negotiate on their terms."

In simple terms, it means that the Housing Association can refuse to offer you a lease extension, or they can ask for any price they like for the lease extension - and they can ask for any price they like for their fees. So you can't 'force' them to do anything.

(But Housing Associations are usually reasonably fair organisations - so hopefully, they won't try to rip you off.)


Also, the solicitor is assuming that you'll have to pay 100% of the premium - but you have a letter from the Housing Association saying "Shared owners pay pro-rata to their equity unless they are Staircasing to 100%". 

I guess your solicitor hasn't seen that letter.


In case you're confused, when the solicitor says "the only way you would be able to extend the lease is via a private agreement with your freeholder" , that's another way of saying you can only do an "informal lease extension". 

Mind_Overload

Thank you so much eddddy, you have explained everything perfectly, I feel a lot more at ease now! 

Mind_Overload

I asked the solicitor if they can supply a valuer, they replied:Do you need to have your own valuation? Normally the freeholder arranges this.

 I was under the impression you got one both ends, to make sure the value is fair? But is it worth paying for my own valuer if they cost £500 up, would the HA generally be fair with its value?

Many thanks 

Jonboy_1984

If it is genuinely a take it or leave it informal extension offer and no scope to negotiate, how do you benefit from having your own valuation vs the calculator above?

If you have a strategy to use the data from your own valuation, there are also desktop surveys available from some RICS surveyors, a couple of quotes a family member got last year were around £300 for these vs £500-£600 for one with a visit.

eddddy

marcus-darkus said:

I asked the solicitor if they can supply a valuer, they replied:Do you need to have your own valuation? Normally the freeholder arranges this.

 I was under the impression you got one both ends, to make sure the value is fair? But is it worth paying for my own valuer if they cost £500 up, would the HA generally be fair with its value?

Many thanks 

What would you do if your valuer came up with a much lower price than the HA's valuer?

I doubt that the HA would be open to negotiation.

Some HAs allow the leaseholder to pick their own choice of RICS valuer - sometimes from a shortlist provided by the HA. You could ask if that's possible.

And/or you can ask the HA if they'll provide you with the full valuation report and calculation - to see if you agree with the figures they've used. But again, even if you disagree, I doubt that the HA would budge.


Unfortunately, the HA have you 'over a barrel' with this. They can make-up whatever rules they want.

In my experience, HAs wouldn't be intentionally unfair - but perhaps they sometimes do daft things for daft reasons, which unintentionally puts leaseholders (and others) in a worse position. 

Mind_Overload

I was confused, for some reason I thought it was the norm to have two valuers, I think I've overwhelmed myself reading to many articles on a new subject to me.

Many thanks to both of you for making it clear to me..