Leasehold extension after purchase

louhar247

Hi there, I've put in an offer on a buy-to-let property. It is a 1 bed leasehold flat and has 96 years left on the lease. It was only renewed in 2019 for 99 years as it was at 50 when the current owner bought it. My solicitor is suggesting renewing the lease after we've owned it for 2 years and guesstimating £3.5-£6k as a guide. Does this seem sensible? And do I understand the lease extension is not tax deductible but the legal fees may be? 

It also doesn't have a service charge and is 'as and when'. It is a very tidy block of 4 flats and the only communal area (between 2 first floor flats) has just been updated. I know there are swings and roundabouts to this sort of set up. Anything I should be looking out for / asking? 

In an ideal world I'd be going for freehold but we have lots of factors in the balance of cost / mortgage / rental income and tax bracket / location and this property ticks all the boxes.

EssexHebridean

Surely if it had 50 years on the lease when the current owner bought it, and they extended in 2019 - it would have 99 years - 3 years to date + whatever was left of the 50 on it? 

There is a lease extension calculator available at https://www.lease-advice.org/calculator/ which you may find useful. 

diystarter7

EssexHebridean said:

Surely if it had 50 years on the lease when the current owner bought it, and they extended in 2019 - it would have 99 years - 3 years to date + whatever was left of the 50 on it? 

There is a lease extension calculator available at https://www.lease-advice.org/calculator/ which you may find useful. 

is that on peppercorn rental land only?

louhar247

Thanks. As I understand it because the lease was so low it was just extended up to 99 years.

diystarter7

louhar247 said:

Thanks. As I understand it because the lease was so low it was just extended up to 99 years.

Can you confirm it is as i thought that you got a 99 year least and not 99+ the remaing lease please, ie 50 years.

Thanks

NameUnavailable

Sounds like it was an informal lease extension - make sure the freeholder didn't put in any new clauses or ground rent (have you seen a copy of the lease and revision documents?).

If you do buy it, next time do a formal lease extension which will add another 99 years to whatever is left at the time.

eddddy

louhar247 said:

It also doesn't have a service charge and is 'as and when'. It is a very tidy block of 4 flats and the only communal area (between 2 first floor flats) has just been updated. I know there are swings and roundabouts to this sort of set up. Anything I should be looking out for / asking? 

So who is the freeholder? What type of person or organisation are they?

This arrangement sometimes suggests a 'disinterested' freeholder.

Does the freeholder actually arrange repairs and maintenance - and bill the leaseholders? Or do the leaseholders have to sort things out between themselves?  Has the building been kept in good condition?

eddddy

louhar247 said:

Thanks. As I understand it because the lease was so low it was just extended up to 99 years.

I think something has been misinterpreted by somebody (maybe intentionally or unintentionally).

So 49 years was added to the lease. That would be cheaper than adding 90 years to the lease.

So I guess the leaseholder chose to add 49 years, because they couldn't afford to add 90 years.


What's the ground rent?  Sometimes leaseholders would agree to high ground rents, in order to make the lease extension even  cheaper - or even to make the lease extension free.

louhar247

NameUnavailable said:

Sounds like it was an informal lease extension - make sure the freeholder didn't put in any new clauses or ground rent (have you seen a copy of the lease and revision documents?).

If you do buy it, next time do a formal lease extension which will add another 99 years to whatever is left at the time.

I haven’t seen a copy of the lease or revision documents yet - the offer was only accepted on Monday so this is very helpful.

louhar247

eddddy said:

louhar247 said:

It also doesn't have a service charge and is 'as and when'. It is a very tidy block of 4 flats and the only communal area (between 2 first floor flats) has just been updated. I know there are swings and roundabouts to this sort of set up. Anything I should be looking out for / asking? 

So who is the freeholder? What type of person or organisation are they?

This arrangement sometimes suggests a 'disinterested' freeholder.

Does the freeholder actually arrange repairs and maintenance - and bill the leaseholders? Or do the leaseholders have to sort things out between themselves?  Has the building been kept in good condition?

Again, all great questions I will ask before commiting any further - thank you

louhar247

eddddy said:

louhar247 said:

Thanks. As I understand it because the lease was so low it was just extended up to 99 years.

I think something has been misinterpreted by somebody (maybe intentionally or unintentionally).

So 49 years was added to the lease. That would be cheaper than adding 90 years to the lease.

So I guess the leaseholder chose to add 49 years, because they couldn't afford to add 90 years.


What's the ground rent?  Sometimes leaseholders would agree to high ground rents, in order to make the lease extension even  cheaper - or even to make the lease extension free.

It’s a very low ground rent. I am going to check all this out. I also haven’t appointed a solicitor yet so I’m going to make sure they will back me up on all these queries before I engage the their services.