Leasehold Extension Advice

owlsabout

I own a leasehold apartment. 
I didnt realise the implications of letting a lease run down, otherwise I would have renewed this years ago (I could share lengthy discussions on my thoughts of the whole leasehold process however thats not the purpose of this query).

The lease is due to expire 29th April 2082 - so in roughly 59 years.

I have had a renewal fee through to extend by 90 years for £9881 plus freeholder solicitor fess of £1020.

The question I have is do I bite the bullet and renew this now.
OR I have read alot about leasehold reform lately, the indications are if this bill is passed the cost of renewing leases will be reduced and for longer periods. However I don't think there are any guarantees as to when this will come to law?

Id appreciate anyone's advise.

Thanks

eddddy

owlsabout said:

The question I have is do I bite the bullet and renew this now.
OR I have read alot about leasehold reform lately, the indications are if this bill is passed the cost of renewing leases will be reduced and for longer periods. However I don't think there are any guarantees as to when this will come to law?

It seems like you've summarised the situation pretty well.  I agree that it's a difficult decision.

Your lease extension quote will include a "marriage value". There is talk of abolishing "marriage value" in the reforms - but I'd be fairly amazed if it isn't replaced by something else.


(For example, there are flats in London with short leases where the marriage value would hundreds of thousands of pounds. I can't see the government making a new law which takes hundreds of thousands pounds from one party, and gives it to another party.) 


It sounds like you have a quote from your freeholder for an "informal lease extension".

Have you checked what it might cost for a "statutory lease extension"? (But legal fees will probably be higher.)  There are online calculators that might give a rough idea - like this one:  https://www.lease-advice.org/calculator/

A professional lease extension valuer could give you a better idea - but they might charge you £600 to £800.

Emmia

My understanding is the bill only covers houses that are leasehold, not flats. 

eddddy

Emmia said:

My understanding is the bill only covers houses that are leasehold, not flats. 

No - that's not the case.

Here's an extract from a Government press release on 27th November:

A key part of the Government’s Long-Term Plan for Housing, the Leasehold and Freehold Reform Bill, introduced to Parliament today, will make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years for houses and flats...

link:  https://www.gov.uk/government/news/leasehold-reforms-give-more-rights-and-protections-to-homeowners

owlsabout

Thanks for the responses.

Its the abolishment of the marriage value that will make all the difference. If I had renewed the lease without going under the 80 years I would have been looking at a cost of £2000.00
The leaseholders hold all the cards as I honestly don't think the property will increase significantly in value just because of the lease extension.

I have already had to pay £144 just to receive the quote, which is valid for 8 weeks.
Alot of these leasehold companies appear to be "owned" by some major financial institutes, backed by hedge funds which are all linked back to the government. As Edddy mentioned Id be amazed if the system was overhauled as has been alluded to as someone somewhere will ultimately lose alot of money!
I'm tempted to leave it 12 months, see if any reform does take place and if so I would like to think this wont cost as much. however that's a pretty big IF ...... if only we could trust politicians to deliver on their promises!

If only I had a crystal ball!

Thanks again

Jonboy_1984

The value depends on the value of the property with a lease in good order, I am guessing this is a relatively low value flat based on the premiums you are mentioning.

I would consider asking a RICS surveyor to do a desktop survey on your property to give you an indication of the premium range( high and low values) for a statutory extension and see how it compares (cost should be in the region of £300 vs the £600-£800 for a full survey).

Are they looking to change any other terms of the lease with comments such as “bring the lease up to date” “modernise the lease” or any other terms such as changing service charges/ground from retrospective to in advance? If you go the informal route you will need the approval of your mortgage company if applicable as it changes their security.

The legislation change was “imminent” when we started looking at a lease extension in 2016…

starving_artist

The bill is currently going throught its second reading in the House of Commons https://bills.parliament.uk/bills/3523

owlsabout

Jonboy_1984 said:

The value depends on the value of the property with a lease in good order, I am guessing this is a relatively low value flat based on the premiums you are mentioning.

I would consider asking a RICS surveyor to do a desktop survey on your property to give you an indication of the premium range( high and low values) for a statutory extension and see how it compares (cost should be in the region of £300 vs the £600-£800 for a full survey).

Are they looking to change any other terms of the lease with comments such as “bring the lease up to date” “modernise the lease” or any other terms such as changing service charges/ground from retrospective to in advance? If you go the informal route you will need the approval of your mortgage company if applicable as it changes their security.

The legislation change was “imminent” when we started looking at a lease extension in 2016…

The initial quote and associated documentation state the terms of the lease will remain the same.
It reads as though this is a straightforward like for like extension of 90 years.
My mortgage is paid off.

Thanks for all the responses. Taking everything into account and reading further the government have said they want the new legislation  in place before the next election. Further readings took place in the House of Commons yesterday - which is hopefully a sign of progress, Therefore I think I'm going to wait 12 months, the bulk of the I presume is the marriage allowance, therefore if this is abolished I would hope the fee will drop considerable.

horseheaven22

Hi everyone

can I ask what happens if you renew your lease and your property doesn’t go up in value?

my flat is up for sale for £180,000 which I believe to be the ceiling of what it’s worth.  I have 67 years on my lease.  I bought my property last year in a bad mental situation after an acrimonious separation.  I had NO idea about leases.

so my dilemma is it looks like it’s going to cost me around £20,000 to renew my lease but I’m thinking my flat is only worth if I’m lucky £170,000 so an extended lease won’t make any profit to the flat.  What would the marriage value be.

Thankyou so much

RHemmings

owlsabout said:

I have had a renewal fee through to extend by 90 years for £9881 plus freeholder solicitor fess of £1020.

I don't know how these things work. But, for a flat with a lease well under 80 years, that's quite a bit less than I thought it would be. Even if you don't increase the value of your flat, surely it would be easier to sell. But, I find it difficult to see how you wouldn't increase the actual sum you're likely to get for your flat if you extend. For me, perhaps through ignorance, the extension would be worth it for peace of mind. Even if there is the risk of legal changes meaning that it becomes cheaper to extend for longer.