Seller's Survey

20122013

AlexMac said:

Don’t overthink it. It’s worth what someone will pay for it.

 We usually invite three local EAs to quote terms and their sale price estimate, then go with our gut (and how they impress).  But ironically, on our last four local sales and purchases over a few decades, we’ve used the same one. 

£100k difference on your EA’s valuations seems a lot; unless maybe it’s a small % of a £1-2million+ gaff?  Our last sale of a leasehold flat came up with a similarly weird range; with EA suggestions from three local agents that they market from £575k - £650!

 In that case we sold at £640k in less than a week; and at only 1% commission. Did well on the  house we bought too; knocking £30k off the £750k asking price, again, from the same agent (pity you ain’t raund ‘ere in Sarf East London or we could give you a personal intro!)

I dunno about the lease (extension?) survey business but I guess that may deter some buyers? Ask the Agents when they visit, not necessarily because you’ve not done your own research here on MSE (?), but just to see how they’ll respond when it comes up as a Q from prospective buyers. 

And while we got lucky with a high valuation and great sale, apply common sense; neighbours opposite us put their house up for a silly price and it hasn’t moved 28 months on; whereas sensibly priced (or even optimistically costed ones) usually sell in a couple of weeks in our popular road.  Good luck 

Valuations were:

1. £360K   (new to the area, but sold lots of property) ? (ruled out spent some time )

2. £230K with lease extension (valuer was not interested in selling his service to me / to discuss anything - baffled why s/he turned up to do valuation with no property comparison )

3. £250K with lease extension, and then spoke to the owner agreed with £260K, then said match the other property sold a week ago to £270K 

All the above said start to extend the lease now otherwise, buyers will not be interested.

4. £280K sold one similar last year (and keen to represent me - I had to request paper work serveral times and different versions of TCs  sent to me and take over one week to post a standard document.  I think have to use this one even though what s/he said will do does not.  Extend lease only when find a buyer.

There was only one viable independent agent but they have now been ruled out .

If I get the lease extended and sale it at £230K , I can see why it will sale quicker.

20122013

The property has not been listed yet (blessing in disguise)
The Freeholder is aware that I am selling,  their terms states that they will add 50 years, bringing the extended lease to 135 years (not 999 years will this put off buyers)? Their fee is £2500 plus VAT more than the Leasehold calculations (plus their solicitor fees).

I am wondering whether I should accept their terms, as it will 84 years lease remaining at the end of Septemeber and I think their offer is good till 31 December 2024, so I have some time to negotiate. However, this will eat into my time and miss my target list date. The price for an end-to-end lease 'extension service' is about £2400 + VAT  I am not sure whether there are any benefits to pay for the 'extension service' ie whether I can see a better deal ?

I was going and see when I have find a buyer then renew the lease (as some buyers may pay less for a shorter lease?) Most of these agents told me that 'all' the lender will tell their buyers to look elsewhere due to short lease (cash buyers?)  I was not going to extend until I know what the buyer want. Risk is losing out a lot of buyer?

eddddy

Lease extensions are complicated (probably more complicated than you realise).  There are many different ways to approach them.

One (of the many) options is as follows:

• Advertise the property for sale at £250k (or whatever) with a 84 year lease

• And say in the property advert that the freeholder is offering a 50 year lease extension on completion for £x (whatever the freeholder has quoted) if the buyer wants it. But you should only do this if you trust the freeholder.

• And/or say in the property advert that you are willing to serve a Section 42 notice before completion, to start the statutory lease extension process

Then the buyer can choose which way to go.

20122013

eddddy said:

Lease extensions are complicated (probably more complicated than you realise).  There are many different ways to approach them.

Agree  - the Freeholder terms did seem straight forward with 3 lines but I can see the 'finer points' :

1. As a propery is a house, we will offer a Statutory 50 year lease extension for a consideration of £x amount
2. Paymenet of our solicitor fees of £1200 + VAT plus disbursements (if any) once they have been instructed whether the matere processeds to completion or not
3. The above terms are only for acceptance and completion prior to 31 December 2024

One (of the many) options is as follows:

• Advertise the property for sale at £250k (or whatever) with a 84 year lease

• And say in the property advert that the freeholder is offering a 50 year lease extension on completion for £x (whatever the freeholder has quoted) if the buyer wants it. But you should only do this if you trust the freeholder.

• And/or say in the property advert that you are willing to serve a Section 42 notice before completion, to start the statutory lease extension process

Very helpful !

Then the buyer can choose which way to go.

The 'Lease extensions are complicated, if I choose to do the bullet points above, when will the negotation needs to be done by and does it have to be done by the 'seller'? 

The management company had  suggested to do an informal agreement with the Freeholder  (as 'the  lease extension is complicated'  and I do not know what I am looking at and do not know the freeholder, is it wise to ask the Freeholder questions eg what are the costs for disrubsment?.  

I tried before but have not found a firm who are available to do 'end to end negotiation', I will go back and try to find a chartered surveyor and a specialist solicitor?   (I was told by an EA that the Freeholder only agreed to an extension if it was completed by the seller.  I am unsure how true this is. I am tempted to ask the Freeholder is this the case as then the 3 bullet option can be strike out )

eddddy

It's a house??? Not a flat???

Why are you attempting to extend the lease?  If it's a house, you should be buying the freehold.

Did somebody advise you to extend the lease? If so, why?

Doing a statutory lease extension on a house can be a very bad thing to do. It can reduce the value of your house. And the process is completely different from extending the lease on a flat.


Now you've explained it's a house, I'd suggest that you forget everything mentioned in this thread, and start investigating buying the freehold.

20122013

eddddy said:

It's a house??? Not a flat???

My property is  a leasehold terrace house, with communal areas and managed by a management company who charges ground rent,  service charge, insurance etc.  

Why are you attempting to extend the lease?  If it's a house, you should be buying the freehold.

As I did not realised about the Freehold.

Did somebody advise you to extend the lease? If so, why?

Literally all but one EA! as more chance it will get sold.

Doing a statutory lease extension on a house can be a very bad thing to do. It can reduce the value of your house. And the process is completely different from extending the lease on a flat.
I did not know that - thank you

Now you've explained it's a house, I'd suggest that you forget everything mentioned in this thread, and start investigating buying the freehold.

I have found a temptate ;https://www.lease-advice.org/template-document/informal-letter-asking-lease-extension-purchase-freehold-house-flat/

Should I use this template and wait for the Freehold's response before instructing a 'end to end' buying freehold specialist?  or instruct someone right from the start ?

eddddy

20122013 said:

eddddy said:

It's a house??? Not a flat???

Why are you attempting to extend the lease?  If it's a house, you should be buying the freehold.

Did somebody advise you to extend the lease? If so, why?

Doing a statutory lease extension on a house can be a very bad thing to do. It can reduce the value of your house. And the process is completely different from extending the lease on a flat.


Now you've explained it's a house, I'd suggest that you forget everything mentioned in this thread, and start investigating buying the freehold.

My property is  a leasehold terrace house, it has  and communal areas managed by a management company who charges ground rent,  service charge).  I have not heard about the freehold is available to  buy.

I was told by all of the agent apart from to do the lease extension (what they do know?) and some of the other sellers on the estate have also extended their leases.    I wonder how I can find out whether I can buy the Freehold?

The law (The Leasehold Reform Act 1967) gives you the legal right to buy your freehold (subject to certain conditions). The freeholder cannot stop you.

• You can buy the freehold of your terraced house.

• You can continue to use the communal areas. The management company will continue to manage them. You will continue to pay a service charge for the communal areas.

You can also ask the freeholder if they will informally sell you the freehold (without using your rights under The Leasehold Reform Act 1967).

Here's some info: https://www.lease-advice.org/advice-guide/houses-qualification-valuation/

20122013

One of the estate agent who had valued my property had said that it will take about the same time to buy the Freehold and increase the value of the property (I think they mean the 'asking price') to £ 5 - 10K and sell it quicker than a leasehold.  As the Freehold still have to pay the service charge I wonder whether is still appeal to the buyers. As it will be a more complicated process and with the Freehold, whether i can add an extension to the loft? .

eddddy

20122013 said:

As the Freehold still have to pay the service charge I wonder whether is still appeal to the buyers. As it will be a more complicated process and with the Freehold, whether i can add an extension to the loft? .

Service Charge

• If the house is leasehold - the buyer will have to pay the service charge.

• If the house is freehold - the buyer will have to pay the same service charge.

... so the service charge issue is the same either way.


Timescale/complexity

• Buying the freehold isn't really any more complicated than extending a lease. Going down the statutory route for either might take between 6 months and 18 months.

• An informal agreement (about buying the freehold) could be much quicker.

Converting/extending the loft

• Converting/extending the loft will probably be easier if you own the freehold.

• But if their is scope for development (e.g. converting/extending the loft), the freeholder can use that as a reason for charging more for the freehold. So don't mention to the freeholder about a loft conversion/extension.

Edit to add...

Do you realise that if you do a Statutory Lease Extension for a house, the ground rent for the extra 50 years is likely to increase to thousands of pounds per year?

A future ground rent of thousands of pounds per year is likely to scare away many buyers.

20122013

eddddy said:

Edit to add...

Do you realise that if you do a Statutory Lease Extension for a house, the ground rent for the extra 50 years is likely to increase to thousands of pounds per year?

A future ground rent of thousands of pounds per year is likely to scare away many buyers.

Edited  (see text in italics)

No, I did not know. In fact, I do not think the ground rent was menionted in the term offered by the Freeholder.

More reason I should buy the Freehold.  Once the Freeholder has agreed to sell the Freehold, when should I list my property for sale? can 'buying the freehold' be transferred to the buyer to complete? or wait till the transter has been complete then list?