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New lease on completion

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Comments

  • eddddy
    eddddy Posts: 16,384 Forumite
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    edited 4 October 2023 at 3:53PM
    This is a fairly standard situation as often it is the sale process that is funding the lease extension in these situations,

    You're taking about a situation which is significantly different - that would be an informal lease extension on completion.

    As I mentioned above, the OP is dealing with a statutory lease extension before exchange of contracts.


    If I'm buying a property with an informal lease extension on completion, it works like this:

    On completion day...
    • I buy a property with a short lease from Mr Seller
    • I buy a lease extension from Mr Freeholder
    • So it's me that registers the extended lease after completion - not Mr Seller. Mr Seller has never owned the extended lease.

    But you can't do that with a statutory lease extension, because you can never be sure what date it will complete.

    So the process has to be:
    • Mr Seller buys a lease extension from Mr Freeholder
    • Then shortly afterwards, I buy the extended lease from Mr Seller


    (There's the option of Mr Seller starting the statutory lease extension process before completion, then I "buy" the lease extension from Mr Freeholder sometime after completion. But I suspect that won't work in the OP's case, because the existing lease only has 60 years remaining, and their mortgage lender won't accept it.)


  • @Kirant91 how did it go? I am in the same position, mortgage lender is waiting for confirmation to when the lease will be extended. Does this mean i wont get an offer until then? 
  • eddddy
    eddddy Posts: 16,384 Forumite
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    raj2023 said:
    @Kirant91 how did it go? I am in the same position, mortgage lender is waiting for confirmation to when the lease will be extended. Does this mean i wont get an offer until then? 
    You need to define what you mean by "the same position".

    If you mean your seller is in the process of getting a statutory lease extension, that usually takes between 6 and 18 months. Do you know how far the seller has got through the process?

    It might be better to start a new thread, and give a lot more background information about your situation.


  • @eddddy Hi, so I put in an offer on a 3 bed leasehold property, guy who lived there has passed away and his kids just want to sell and get the money. Skipton are my mortgage lenders and they have basically said they wont be able to give an accurate valuation until the sellers solicitor can confirm the lease has been extended. 76 years left. The sellers solicitor is quite efficient they emailed saying they will update skipton with the info they need. The sellers have said they will renew the lease before completion.
    How long does this take? Im a total newbie... 
    Ground rent is £8 and service charge 1200 annually
    Split level maisonette
  • eddddy
    eddddy Posts: 16,384 Forumite
    First Anniversary First Post Name Dropper
    edited 28 October 2023 at 4:41PM
    raj2023 said:
    @eddddy Hi, so I put in an offer on a 3 bed leasehold property, guy who lived there has passed away and his kids just want to sell and get the money. Skipton are my mortgage lenders and they have basically said they wont be able to give an accurate valuation until the sellers solicitor can confirm the lease has been extended. 76 years left. The sellers solicitor is quite efficient they emailed saying they will update skipton with the info they need. The sellers have said they will renew the lease before completion.
    How long does this take? Im a total newbie... 
    Ground rent is £8 and service charge 1200 annually
    Split level maisonette

    Unfortunately, lease extensions can be a very complex topic. You need to provide more info in order to get useful comments.

    As a starting point, there are 2 types of lease extension, do you know which your seller is getting?

    1. A statutory lease extension
    2. An informal lease extension

    Based on your comment that Skipton can't give an accurate valuation until the lease is extended, I'd guess it's an informal lease extension.


    If you  don't know precise details of what's happening, the following info might help people to 'guess'.
    • How many years is the lease being extended by?
    • Was the property advertised as "Lease extension on completion", or did the idea of a lease extension only come up during the purchase process (e.g. at Skipton's request or your request)
    • Do you know when the lease extension process was started? Do you know if the freeholder has agreed to extend the lease? Do you know if all terms have been agreed with the freeholder?
    • Who's paying for the lease extension?

  • raj2023 said:
    @Kirant91 how did it go? I am in the same position, mortgage lender is waiting for confirmation to when the lease will be extended. Does this mean i wont get an offer until then? 
    @raj2023 The seller has agreed terms with their freeholder for the extension & since the seller is using the proceeds from the sale to fund their extension my solicitor has now confirmed that we are able to complete the sale & when we complete, an application to register the new lease will be made, so we don’t have to wait for the extension to be registered before we can complete. 

    So in the end, the issue posed my by solicitor ended up not actually being an issue! 
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