Asking price

20122013

 I had 3 valuations over 2 days for my property with under 90years lease, a local agent who had worked in the same firm for over 40years, another independent which had been taken over (but had sold a property in my development) and a a nationwide chain.

Local agent, formal but knows what he is going to do / tells me what to do ..  'of course it is up to you') (and seem to have selective hearing) has told me to extend the lease for x amount fee (cheap he said) and also set the asking price to the lower end of the range, I have found this odd, as the fee was less than what is was 4 years ago, I asked what if the lease is not renewed and he said very very difficult to sell as no lender will lend, asked about cash buyers and he said it will be reduced the price greatly. He said, the market is buzzing so list it now.    Also, he told me his fees and then it had increased when he emailed.  

Agent who had sold one in my development,the minimum asking price is still  £10000 higher than the independent agent and the fee for extension is 3x more..It had taken  her 10 months to get the lease extended and what she had told me was not easy listening. I am fairly certain this is not for me

Nationwide chain, the agent seems to have a strategic mind but not able to answer my questions but willing to find outm however, I wonder whether I am told what  she thinks I want to hear. She has valued 35% more than the independent and also said I do not need to renew (better to but no if I do not want to), they have a lot of resource including tech etc and can find a broker to get a lender to lend on low leases .. as they have a lot of resources.  She will not be doing the viewings and she does not seem to know the local areas.

I am thinking I should select the independent but I am not going to get market rate so I need to do it in my terms. I do not think going to more estate agents will help as they are all chains and I have chosen the best out of the ones I know, am I wrong?.  Comments, welcome.

NameUnavailable

How long is the lease?

The EA won't know what it is going to cost to extend, they might have a very rough idea (you can also check online calculators yourself) but ultimately it is down to valuation/negotiation plus the legal costs.

20122013

85 years left.

I agree that the EA won't know about the cost. The Chain estate agent have said that they 'are the only one  who has access to a lot of lenders' and who will offer mortage with low leases, if this is true, why sellers are renewing their lease? .  I will also check out the lease calculator

RHemmings

How much is the ground rent, and what is the model for increases (if any) in the ground rent over time? E.g. is there a doubling clause? This will affect the cost to extend the lease. Note that most online calculators assume a static rent, and RPI increases or doubling clauses can make the extension much more expensive. 

A buyer cannot extend the lease themselves for two years after they purchase. Hence a potential buyer may ask you to start the lease extension process before sale. There are other complexities as well: https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

If you can extend the lease before sale, then that may make your property more attractive to potential buyers. I personally would find the claims of the EA who says that you don't need to extend and could get what seems to be a high price not that credible. But, I only have the information given in this thread to work on. 

Albermarle

20122013 said:

85 years left.

I agree that the EA won't know about the cost. The Chain estate agent have said that they 'are the only one  who has access to a lot of lenders' and who will offer mortage with low leases, if this is true, why sellers are renewing their lease? .  I will also check out the lease calculator

EA's are always keen for you to use their favoured mortgage broker as they get a kickback.
You could easily just go to any mortgage broker you like, and ask their opinion on the situation.
You can get mortgages with lower leases, but you would be unlikely to get the same asking price as if it had been extended.

20122013

RHemmings said:

How much is the ground rent, and what is the model for increases (if any) in the ground rent over time? E.g. is there a doubling clause? This will affect the cost to extend the lease. Note that most online calculators assume a static rent, and RPI increases or doubling clauses can make the extension much more expensive. 

A buyer cannot extend the lease themselves for two years after they purchase. Hence a potential buyer may ask you to start the lease extension process before sale. There are other complexities as well: https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

If you can extend the lease before sale, then that may make your property more attractive to potential buyers. I personally would find the claims of the EA who says that you don't need to extend and could get what seems to be a high price not that credible. But, I only have the information given in this thread to work on. 

I am unsure about the model for the ground rent however, it has been the same amount for the past ten years.

Good to know about the online calculator

I had  a quick look at the link (lease extension).. very interesting (I think I will need a specialist lease solicitor and have excellent negitation skills (this will be a different solicitor to the one who will be dealing with the sell of my property? better to keep the two things separate? or use two soliictors within the same firm? If possible? )

 https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

I had another nationwide agent (chain) valued and I can start the application and get the buyer to complete it, if I do this the asking price will be 10% lower than the independent agent valuation with the lease extended.   I was in two minds about who to instruct : the independent or the agent (chain) from today. According to them they have been working in the industry for a long time.and the value has not changed in the past 7 years.

I know the independent is more upfront and realistic. however, he seems certain the extension must be done!!  It seems he has not buyer (nortgage( for my property otherwise, or cash buyer who will want a big discount.

I will do some research on the lenders (low lease), 

RHemmings

20122013 said:

RHemmings said:

How much is the ground rent, and what is the model for increases (if any) in the ground rent over time? E.g. is there a doubling clause? This will affect the cost to extend the lease. Note that most online calculators assume a static rent, and RPI increases or doubling clauses can make the extension much more expensive. 

A buyer cannot extend the lease themselves for two years after they purchase. Hence a potential buyer may ask you to start the lease extension process before sale. There are other complexities as well: https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

If you can extend the lease before sale, then that may make your property more attractive to potential buyers. I personally would find the claims of the EA who says that you don't need to extend and could get what seems to be a high price not that credible. But, I only have the information given in this thread to work on. 

I am unsure about the model for the ground rent however, it has been the same amount for the past ten years.

Good to know about the online calculator

I had  a quick look at the link (lease extension).. very interesting (I think I will need a specialist lease solicitor and have excellent negitation skills (this will be a different solicitor to the one who will be dealing with the sell of my property? better to keep the two things separate? or use two soliictors within the same firm? If possible? )

 https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

I had another nationwide agent (chain) valued and I can start the application and get the buyer to complete it, if I do this the asking price will be 10% lower than the independent agent valuation with the lease extended.   I was in two minds about who to instruct : the independent or the agent (chain) from today. According to them they have been working in the industry for a long time.and the value has not changed in the past 7 years.

I know the independent is more upfront and realistic. however, he seems certain the extension must be done!!  It seems he has not buyer (nortgage( for my property otherwise, or cash buyer who will want a big discount.

I will do some research on the lenders (low lease), 

If your ground rent hasn't changed for ten years, that seems to indicate it's a fixed unchanging amount. Which is good. Though, there are leases where the amount will double after very long times. The most recent lease I read had fixed increases at different intervals, mostly 25 years apart. There have been others that double every 20 years or so. But, your lease agreement will say if there are increases. 

I'm far from the expert on this, but generally it's advised that you use a specialist solicitor for the lease extension. Not a general conveyancing solicitor who may be inexperienced in lease extensions.

As I don't know your ground rent, and the value of your property, I can't make any comment on the decrease of 10% for the property with the shorter lease compared to the price you would sell it if it had a longer lease. But, I assume you have done the actual numbers. If you have a fancy flat or leasehold house in London and a low ground rent, then that 10% could be way out of proportion to the costs of getting the lease extension. But, if you have a small flat in Sunderland, the 10% might even be similar to what the legal costs alone are. 

20122013

RHemmings said:

20122013 said:

RHemmings said:

How much is the ground rent, and what is the model for increases (if any) in the ground rent over time? E.g. is there a doubling clause? This will affect the cost to extend the lease. Note that most online calculators assume a static rent, and RPI increases or doubling clauses can make the extension much more expensive. 

A buyer cannot extend the lease themselves for two years after they purchase. Hence a potential buyer may ask you to start the lease extension process before sale. There are other complexities as well: https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

If you can extend the lease before sale, then that may make your property more attractive to potential buyers. I personally would find the claims of the EA who says that you don't need to extend and could get what seems to be a high price not that credible. But, I only have the information given in this thread to work on. 

I am unsure about the model for the ground rent however, it has been the same amount for the past ten years.

Good to know about the online calculator

I had  a quick look at the link (lease extension).. very interesting (I think I will need a specialist lease solicitor and have excellent negitation skills (this will be a different solicitor to the one who will be dealing with the sell of my property? better to keep the two things separate? or use two soliictors within the same firm? If possible? )

 https://www.samconveyancing.co.uk/news/conveyancing/lease-extension-on-completion-10416  

I had another nationwide agent (chain) valued and I can start the application and get the buyer to complete it, if I do this the asking price will be 10% lower than the independent agent valuation with the lease extended.   I was in two minds about who to instruct : the independent or the agent (chain) from today. According to them they have been working in the industry for a long time.and the value has not changed in the past 7 years.

I know the independent is more upfront and realistic. however, he seems certain the extension must be done!!  It seems he has not buyer (nortgage( for my property otherwise, or cash buyer who will want a big discount.

I will do some research on the lenders (low lease), 

If your ground rent hasn't changed for ten years, that seems to indicate it's a fixed unchanging amount. Which is good. Though, there are leases where the amount will double after very long times. The most recent lease I read had fixed increases at different intervals, mostly 25 years apart. There have been others that double every 20 years or so. But, your lease agreement will say if there are increases. 

I'm far from the expert on this, but generally it's advised that you use a specialist solicitor for the lease extension. Not a general conveyancing solicitor who may be inexperienced in lease extensions.

As I don't know your ground rent, and the value of your property, I can't make any comment on the decrease of 10% for the property with the shorter lease compared to the price you would sell it if it had a longer lease. But, I assume you have done the actual numbers. If you have a fancy flat or leasehold house in London and a low ground rent, then that 10% could be way out of proportion to the costs of getting the lease extension. But, if you have a small flat in Sunderland, the 10% might even be similar to what the legal costs alone are. 

My property is in London but not fancy at all, perhaps that is one of the reasons why the value reamined the same for some time. From the 3 (out of the 4) valuation, it had made me think that the agents' calculation are based on what they think the lease will cost and then add and substract that amount to the value they think the property is worth (I note I have used the word 'think' a few times, is a 'guestimate')  Apparently, August is very busy, I was told FTB do not stop and they will carry on looking through out. And I should list my property now rather than in Septemeber, I wonder I should list now, as there are still more demand (still buyers are chosy) than supply, I believe there will be more properties coming onto the market in September / October and at the same time do not want to list too soon and no viewers and have to reduce the price. 

I am not understanding why the independent agent is reluctant for me to leave my lease as it is, he is on a fixed fee. and he is valued it very low so low that he cannot give me a figure - but if the lease is extended than the value will be higher than the chain agent.   Is it worth contacting the Freeholder to enquire about the price now? or wait to see what type of buyer I get?

RHemmings

As well as deducting the cost of extending the leasehold from the price you would achieve for the same property with a long lease, remember that some potential buyers may not want the bother of extending the lease. That could possibly reduce your pool of potential buyers. 

I don't know your values, but given what you say about your flat I've wildly guessed it's worth about £400k with a long lease. And, I've wildly guessed £100p/a for ground rent. Given that, the cost of a lease extension will be between about £8000 and £9000 plus costs, which will be in the thousands. Sam Conveyancing says that costs to extend a lease are about  £3,600 to £6,598 which seems strangely precise at the high end. However, even putting the two higher numbers together, that's about £15,598 which is still a lot less than losing 10% of the potential sale price. But, then if the price is lower, that increases your pool of potential buyers. 

Have you done the sums? 

This is all assuming a statutory lease extension. I personally can't see any problems in contacting the freeholder now to see if they are interested in an informal lease extension. But, make sure that you have done your sums so that you can know if you are being offered a worse deal than you would get by going the statutory route. 

20122013

RHemmings said:

As well as deducting the cost of extending the leasehold from the price you would achieve for the same property with a long lease, remember that some potential buyers may not want the bother of extending the lease. That could possibly reduce your pool of potential buyers. 

I don't know your values, but given what you say about your flat I've wildly guessed it's worth about £400k with a long lease. And, I've wildly guessed £100p/a for ground rent. Given that, the cost of a lease extension will be between about £8000 and £9000 plus costs, which will be in the thousands. Sam Conveyancing says that costs to extend a lease are about  £3,600 to £6,598 which seems strangely precise at the high end. However, even putting the two higher numbers together, that's about £15,598 which is still a lot less than losing 10% of the potential sale price. But, then if the price is lower, that increases your pool of potential buyers. 

Have you done the sums? 

This is all assuming a statutory lease extension. I personally can't see any problems in contacting the freeholder now to see if they are interested in an informal lease extension. But, make sure that you have done your sums so that you can know if you are being offered a worse deal than you would get by going the statutory route. 

I agree with 'some potential buyers may not want the bother of extending the lease. That could possibly reduce your pool of potential buyers.'  I was wondering whether the sold price affects the amount to pay on Stamp Duty ?  and as my property is more suitable for single, or couple or btl, limited market pool?

I have not done the sums yet, may I ask which calculator did you use? As the freeholder takes over a month to respond would it be worth waiting for their response before listing (original was going to list later when people are back from holidays but was told that my market pool are always active) so can list now?

RHemmings

Yesterday I used the calculator on the Leasehold Advisory Service's page. Note that like many such calculators, it warns that it's based on data from December 2021. When I do things myself, particularly with unusual schedules of increases in ground rent, I sometimes write my own throwaway calculator. E.g. for doubling ground rents. But, when I do that, I have to estimate the pre- and post- extension valuations which are probably off. 

https://www.lease-advice.org/calculator/

EDIT: I get an estimate for the premium of about £6000. So, possibly the whole thing can be done for £10k. That's less than half of 10% less purchase price. 

I've no idea if it's worth waiting for the freeholder to respond. It could be that you get good offers for your flat if you list now. Or, you might not and by the time you do the extension your property might look 'old' to people on the market. There's also your own situation to consider. Are there ongoing costs for the property that you'll avoid if you sell? I can't see anything in what you've posted that suggests that? 

It's really up to you. I've seen quite a few properties listed that mention that the process of applying for a lease extension has been started. I personally am not put off by that, and I will evaluate the flat based on the expectation that the lease will be extended. So, I personally would probably list early. But, that could easily be a bad idea. I wouldn't sign up to an EA with a long lock-in period. So that gives me a time a few months in the future to reconsider and potentially move agent so that the properly pops up again looking 'fresh'.

Note that if you advertise the property pre-extension, and then re-list later post-extension at a higher price, then people who use browser plugins for property may be aware of the previous price and relisting. (Depends if anyone links the listing.) Certainly when I see properties where the price has gone up in a static market, my eyebrows go up a bit. However, if the property was re-listed prominently saying 'newly extended lease', then that would satisfy me if the price increase is reasonable. 

If you're saying that you would list for 10% less than post-extension value, then that could make it attractive pre-extension. As that £25k reduction would be a lot more than the cost of getting the lease extension done. 

Note also that the above is only my personal thoughts and impressions. Others may think entirely differently. And, it's not going to be me that's in your set of target buyers.