Lease extension

Officer_Dibble

You have my sympathy. Unfortunately the determination that keeps you living independently into your late 80s often doesn't get softened when dealing with relatives. We have similar problems with my Aunt-in-law.

Hopefully 75 years rather than 80 years won't make too much difference. At 80 years the marriage value element of the lease renewal cost already starts to cut in, so there's already an impact. £5-10k off the valuation? That's only a guess as it depends on the ground rent and other factors.

Would £130k (income plus eating the capital) really keep her in assisted living for 7 years, or does that include other funds? 

eddddy

youth_leader said:

 Apparently the EA that came to value her flat didn't ask about the lease, I've just phoned him to ask what difference it would make to her asking price, phoning me back.

I would think that the difference it would make to the asking price is probably: The cost of the lease extension, plus a bit extra for the hassle.

So, for example, if the lease would cost £15k to extend, including fees - the buyer might expect £20k to £25k off the price.  (i.e. an extra £5k to £10k for the hassle of extending the lease.)


See what the estate agent says. But the estate agent may not know much about calculating lease extension costs.

eddddy

youth_leader said:

Apparently the owner knocked and offered my aunt the freehold in 1996 and she turned it down - he gave it to her neighbour for free.  

Does the same neighbour still own the freehold?

It might be worth speaking to the neighbour about granting an informal lease extension.

If the neighbour was given the freehold for free, they might not realise that they can now charge, maybe, £10k+ for a lease extension.

Or they might just be nice people - and because they got the freehold for free, they'll give a lease extension for free (or cheaply).

But you should probably offer to pay all their legal expenses.

NameUnavailable

I would take the opportunity at the lunch to have a quiet word. Explain that the flat has to be sold to fund the retirement flat/home and that the lease being 74 years will make the sale more difficult. You could suggest an informal extension to 99 years just to get the flat sold, if you cover the legal fees and make them a goodwill payment (a few K). Usually you'd be adding another 90 years to the existing lease but the cost would be much more.

You will probably find out fairly quickly how much of a friend they really are! They may be happy to help in this way or may suddenly decide the lease is about business.

Quite often EA's value flats without any thought about the lease, they just price all as though the lease doesn't matter. It really annoys me! Even more so if as a potential buyer you call to enquire about lease length or ground rent and they tell you that's for the solicitors to advise as part of the buying process.

The EA is actually selling the lease, not the property. It should be mandatory that a copy of the lease is available for buyers to see on demand.

user1977

youth_leader said:

I've just printed off the copy of the lease I managed to download in May.

I can't see my aunt's landlord's name on it? 

It would only be on it if it was the same landlord. You don't sign up to a new lease every time the freeholder or leaseholder changes, the same lease stays in place.

propertyrental

download the current freehold title from the land registry. That is who currently owns the freehold (not likely to be the same person who originally created the lease many years ago)/.

Download the current leasehold title - that is who currently owns the lease (your aunt?)

£3 each

https://www.gov.uk/get-information-about-property-and-land/copies-of-deeds

eddddy

youth_leader said:

Thank you.

My aunt has just phoned and the EA have just phoned and told her to get a 'survey'.  I'm off to google exactly how to extend a lease.

I think the EA means 'get a lease extension valuation'.

There's no survey that would be relevant.

youth_leader said:

It seems her neighbour was leaving for a two week holiday yesterday

Are you sure the neighbour is going to get on with the lease extension at some point?

I'm not suggesting she's playing games, but perhaps she's a bit overwhelmed by the complexity of it.

It might be worth starting the statutory lease extension process - by serving a section 42 notice - to make sure your aunt eventually gets a lease extension.


(But people are expecting the Leasehold and Freehold Reform Act 2024 to start taking effect in late 2025, and people are expecting that an extension of a 72 year lease will become cheaper. So perhaps you should wait.)

propertyrental

Has she written a will, and if not do you/she know about the way properties/estates pass when someone dies 'intestate'?

https://www.gov.uk/inherits-someone-dies-without-will

eddddy

Just as background info... an executor can still get a statutory lease extension on a property (or complete a statutory lease extension, if the process has been started).

And/or the executor can still negotiate an informal lease extension with the freeholder. 

eddddy

youth_leader said:

I also saw a point made by an experienced poster here that the company offer a fixed fee, I wonder if this does affect their motivation to negotiate.

Do you envisage it getting adversarial?

i.e. You making a low opening offer, the freeholder making you a high counter offer - and then you both get locked into hard negotiation?

Or do you envisage things staying friendly, and you are just using the statutory process to move things along.

If so, you could maybe say something like this to the neighbour "Let's agree a price up front. And then I'll serve the section 42 notice quoting that price, to get things started. Then you just have to confirm that the price is ok etc."

If you do it that way, both if you might not need to retain valuers at all - just your solicitors.