Asking price

20122013

Yes, if listed now, I was also thinking whether my property might look 'old if there are no viewings, always pros and cons. ok to list early, however, there is only one person deals with the freeholder lease and I thinkt they are on returning in 4 weeks. (the agent said they can have an offer within 4 weeks??)  I am curious to know why this agent has valued it at the very low, is it to do with Stamp duty - ie attract more buyers, but if the FTB - they will have no stamp duty/  'no SDLT up to £425,000' ? 

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

The EA is 6 weeks tie in and then can give 28 days notice, and approx 1% fee (min).  I need to find out more, other agents are all chains. Good to know if I have to move to another agent the property will be marketed as 'fresh'.

I need to do the sums, more likely to apply for extension and let the buyer take over the application, would be interested to find out what the freeholder can say not to..  

RHemmings

20122013 said:

Yes, if listed now, I was also thinking whether my property might look 'old if there are no viewings, always pros and cons. ok to list early, however, there is only one person deals with the freeholder lease and I thinkt they are on returning in 4 weeks. (the agent said they can have an offer within 4 weeks??)  I am curious to know why this agent has valued it at the very low, is it to do with Stamp duty - ie attract more buyers, but if the FTB - they will have no stamp duty/  'no SDLT up to £425,000' ? 

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

The EA is 6 weeks tie in and then can give 28 days notice, and approx 1% fee (min).  I need to find out more, other agents are all chains. Good to know if I have to move to another agent the property will be marketed as 'fresh'.

I need to do the sums, more likely to apply for extension and let the buyer take over the application, would be interested to find out what the freeholder can say not to..  

Your property has been valued by EAs in a range of £XXX-£YYY That's a very wide range of values, and at least one of those extremes must be unrealistic. Either high or low. 

You yourself valued the property at £AAA-BBBk (if I remember correctly) post-lease extension. So, nearer the lower end of that EA valuation range. 

I don't really want to hazard a guess as to what the various EAs are thinking. Some EAs want to price low to generate interest and hopefully a bidding war. Some want to give a high valuation to attract sellers, and then need to manage the price expectations of the sellers down later in order to get it sold. However, what your actual EAs are thinking - could be anything. It might be worthwhile asking them. E.g. 'You've valued the property lower than other EAs have. Could you explain why you think this is a good asking price?' A good EA should be able to explain their reasoning. 

EDIT: Estimates of value removed as the OP has done so as well. 

20122013

Apperciate you took the time to edit your post.

I have checked online websites which has listed some hight street banks offering low lease mortgages.  Another website says 70 years lease is low and above 80 is still ok. To me 84 years is borderline, hence my OP.

Question is, if the lease is extended, hopefully it will lead to a higher sold price does that mean more CGT to pay?   Also, reflecting on the valuations, I do not believe they are accurate, as I cannot find a property which is similar to mine (the last one sold in my development was 2022) and the ones the agent have used to compare with mine, is a lot fancier (has a garage, private garden etc).

In terms of enquirying the lease extension, is it wise to ask about whether the buyer can take over the application and pay the fee from the sale of property? as another agent had said that this freeholder has said no,  the seller needs to complete the extension.

RHemmings

When net capital gains tax is calculated, it's possible to deduct some costs (e.g. costs for some improvements made to the property). I wasn't previously aware if lease extension costs can be deducted, but according to this link, they can be. 

https://homehold.org/standard-article/are-lease-extensions-tax-deductible/


Can I offset the cost of the lease extension against the Capital Gain Tax Bill?Yes! When you sell your property the Capital Gain is essentially the profit you’ve made on the transaction.This means that if you’ve spent money on improving the flat – either via something like a loft conversion or a lease extension – then you can offset the cost against your Capital Gains tax too.

Clearly there's going to be a calculation that needs to be made concerning how much the lease extension will cost, how much the value of the property and likely sale price will increase, and what that means for CGT. Quite a complicated calculation, to my mind. 

My understanding of lease extension on sale is that if the property is sold at a discount compared to what it would be worth with the extended lease, then the buyer will typically pay for the lease extension. However, if the property is sold at a value that the property would have after the lease extension, then the seller would normally pay for the lease extension. Who will pay for the lease extension needs to be part of price negotiations. Note, this is my understanding. That doesn't mean it's necessarily correct. 

20122013

Agree. 

I am starting over with my own valuations as there are more properties on the market!   I wonder how the buyer will find out about the fees for extensions? as I am trying to work it out myself, so many things to think about.

20122013

I have found out that the freeholder may take even longer to process the extension (as there is no one actually dealing with the leases, retired) and now the management company is ' dealing with it' .  With this in mind, would it be wise to hold off listing my property ?? and use the time to find a specialist solicitor to do the extension?

RHemmings

20122013 said:

I have found out that the freeholder may take even longer to process the extension (as there is no one actually dealing with the leases, retired) and now the management company is ' dealing with it' .  With this in mind, would it be wise to hold off listing my property ?? and use the time to find a specialist solicitor to do the extension?

That's a difficult decision. There will be people who want to buy properties like yours as they are confident they can deal with the problems and are looking for a bargain. The question then is if you would prefer to sell as a bargain, or wait until things are sorted and you can get a better price. 

However, what are the downsides to you staying in the property longer? Some people on this forum are in financial trouble and really need to sell ASAP. Or they have already moved and are paying two mortgages. Others are thinking they might want to move sometime, but an extra year or so isn't really going to make a significant difference to them. What is your feelings about selling? 

20122013

Post edited:
I am selling (not related to issue with the property) and no longer required.

RHemmings

20122013 said:

Post edited:
I am selling (not related to issue with the property) but to do with travelling abroad but do not wish to keep hold of it.

Keeping my options open. to get a valuation to do the lease extension, is it a chartered surveyor I need? and may get a  recommendatin of a solicitor through them?

There are some companies online that will give you a quote/estimate directly. Sam Conveyancing whom I think you mentioned before have a form to submit to get a 'tailored quote'. I'm sure you will be planning to check online reviews before choosing any solicitor or company. If you get a few quotes, then that should give you a ballpark typical figure. Hopefully in a range smaller (percentagewise) than happened for the valuation of your flat. 

In theory you do not need any particular type of valuation by any particular professional to make your initial offer. Even if you have a valuation (which would appear sensible), you don't need to reveal details of that valuation to the freeholder. And your offer doesn't have to be based on it. However, if the freeholder does not agree with your valuation, then they will make a counter-offer. Then, you negotiate. If agreement cannot be reached, then either you or the freeholder can apply to a tribunal to have the value (and hence premium) decided. 

However, the process is quite complicated, and having advice of an experienced professional, who may end up giving evidence at the tribunal, is most likely a good idea. If I was to do this (and I haven't yet), then I would definitely wish to engage a professional who can perform all the tasks mentioned in section 7.1. here: https://www.lease-advice.org/advice-guide/lease-extension-valuation/

20122013

Re: lease extension : I have found out I am anticipating delays ahead. Management company has suggested to try and do an informal agreement - as I have access to their offer they had made a few years ago, the price for extend back to 125 years will be 7% higher than the 'caculator' which I will accept (to avoid delays) but they have also added terms of increasing ground rent and landlord fees, I wonder whether this will put buyers off?