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New lease on completion

I am purchasing a flat that will have a new lease on completion (going from 60 to 150 years) & seeking insight from anyone who has bought a flat with a new lease on completion. 

The seller is going under the formal statutory route and is close to completing the extension, but my solicitor who doesn’t seem experience in extensions says I can’t complete the sale of the flat until the seller has registered the new lease with the land registry which is currently taking 10-20 months & my mortgage will expire long before then! 

Has anyone bought a flat with a new lease on completion and come across this issue or found an alternative to avoid the delay with the land registry?
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  • gwynlas
    gwynlas Posts: 1,624
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    I would question your solicitor again as obviously new lease on completion is a relatively common occurrence and means exactly what it says. No way will you need to wait for registration with land registry,
  • user1977
    user1977 Posts: 13,391
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    Kirant91 said:

    my solicitor says I can’t complete the sale of the flat until the seller has registered the new lease with the land registry
    Have they explained why they think this?
  • eddddy
    eddddy Posts: 16,152
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    edited 3 October 2023 at 9:04AM
    Kirant91 said:

    The seller is going under the formal statutory route and is close to completing the extension...

    Has anyone bought a flat with a new lease on completion and come across this issue or found an alternative to avoid the delay with the land registry?

    Just to clarify - it's generally not possible to predict exactly when a statutory lease extension will be completed.

    So I suspect it won't be a case of a "lease extension on completion", but instead a "lease extension before exchange of contracts".



    And be slightly careful about relying on the seller's comment that they are "close to completing the extension".  (As an extreme example - I did a statutory lease extension which took almost 2 years in total. And there were a number of points along the way where it seemed to be close to completing.)



  • user1977 said:
    Kirant91 said:

    my solicitor says I can’t complete the sale of the flat until the seller has registered the new lease with the land registry
    Have they explained why they think this?


    No they haven’t & I have tried to ask for clarification on why but not getting very far. 
  • eddddy said:

    Kirant91 said:

    The seller is going under the formal statutory route and is close to completing the extension...

    Has anyone bought a flat with a new lease on completion and come across this issue or found an alternative to avoid the delay with the land registry?

    Just to clarify - it's generally not possible to predict exactly when a statutory lease extension will be completed.

    So I suspect it won't be a case of a "lease extension on completion", but instead a "lease extension before exchange of contracts".



    And be slightly careful about relying on the seller's comment that they are "close to completing the extension".  (As an extreme example - I did a statutory lease extension which took almost 2 years in total. And there were a number of points along the way where it seemed to be close to completing.)



    That’s helpful but alarming! Was that two years including the registration of the lease or two years just to complete!? 

    I’ve been told now that seller agreed terms with the freeholder last year & they are ready to go to contract but the freeholder is taking a long time to respond/confirm so anticipating further delays with that too! 
  • eddddy
    eddddy Posts: 16,152
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    Kirant91 said:

    That’s helpful but alarming! Was that two years including the registration of the lease or two years just to complete!? 


    No - the two years didn't include the time for registration. But that really was extreme. 6 to 12 months is more usual.
  • JM68
    JM68 Posts: 76
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    The likely issue with the registration is your mortgage company will value it only on the basis of the lease that is registered with the Land Registry, which is when it takes legal effect.

    So it is unlikely a property with a 60 year lease will be valued at the price you are paying for it (with a 150 year lease), which likely means they will not lend you what you need to buy it. 

    There is an expedited process that can be applied for with the LR after the lease has been extended, to get it registered quickly, which can be invoked if a property sale would fall through otherwise.  Your solicitor should know about this.

    However, as others have indicated, the lease extension is only done when its done, and there is not really such thing as 'close' (other than in the minds of the vendor or their estate agent who don't want to lose you as a buyer). 

    We have extended leases in the past and the freeholders always drag their feet as its the only main leverage they have to try and get a higher premium.  In both our cases the final deal was not done until after we applied to the tribunal and the hearing date was approaching, which was months after that.

    Depending on how long is left on your mortgage offer it may well expire before the lease is complete and registered (even if expedited).  So you need to consider the risk of this against any 'sunk' costs you have already paid out on this particular property, and any further costs you may incur.
  • Jonboy_1984
    Jonboy_1984 Posts: 1,195
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    This is a fairly standard situation as often it is the sale process that is funding the lease extension in these situations, so I would ask the Solicitor to look again and possibly talk to your broker if you used one.
  • JM68
    JM68 Posts: 76
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    This is a fairly standard situation as often it is the sale process that is funding the lease extension in these situations, so I would ask the Solicitor to look again and possibly talk to your broker if you used one.
    If the sale proceeds are funding the cost of the lease extension, and as the OP appears to needs a mortgage to buy it, in my view that would be an added complication i.e. the mortgage funds won't be released until completion of sale, so I can't see how the new lease can be granted (and registered) before then?
  • user1977
    user1977 Posts: 13,391
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    JM68 said:
    This is a fairly standard situation as often it is the sale process that is funding the lease extension in these situations, so I would ask the Solicitor to look again and possibly talk to your broker if you used one.
    If the sale proceeds are funding the cost of the lease extension, and as the OP appears to needs a mortgage to buy it, in my view that would be an added complication i.e. the mortgage funds won't be released until completion of sale, so I can't see how the new lease can be granted (and registered) before then?
    Why can't it be done with undertakings among the solicitors?

    It doesn't strike me as being much different from the usual conundrum of how you buy a property free of the seller's mortgage, when the seller can only pay off the mortgage with the price from you...

    Why would the lease need to be actually registered first? What happens when you buy a newbuild property? Generally they're not going to have their own registered title until after you complete and register it.
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