Lease extension?

MigsyBigsy

Hello,

apologies if this has been posted previously.

My parents are considering extending the lease on their flat which has 83 years remaining. It is a ex council estate flat and the ground rent is £10 per year. I do not know the value of the property but its a 3 bedroom flat in Chelsea.

I have approached a number of solicitors who have provided quotes.

My question is, should they go for it or wait till legislation kicks in which will make it easier and cheaper to extend? or course, no date is provided and we are getting to that 80 year mark which will make it even more expensive to extend.

thank you in advance 
Migs

Mark_d

We're in a leasehold flat and the agency that collects our ground rent also manages lease extensions on behalf of the freeholder.  I wasn't aware that solicitors are required for you to get the lease extended?

With 83 years remaining on the lease, why are your parents looking to extend?

MigsyBigsy

Mark_d said:

We're in a leasehold flat and the agency that collects our ground rent also manages lease extensions on behalf of the freeholder.  I wasn't aware that solicitors are required for you to get the lease extended?

With 83 years remaining on the lease, why are your parents looking to extend?

Thank you Mark for the response. I am not sure the agency that collects the ground rent also manage lease extensions. It is the council who are the freeholders and do not provide such a service.

Re: why: Would it not be better if the lease is extended for any future sale of the flat?

RAS

The cost of extending the lease increases as the number of years decreases, and it becomes harder to get a mortgage once the lease is for less than 80 years, and much harder to sell. Not great if the folks need to sell to pay for care.

NervyBuyer

I would get on with it and not wait (indefinitely) for this legislation which has been in progress for years already. I was waiting (even solicitors advised me to wait) but decided to just do it in case I needed to sell (I did have 89 years left so not quite as urgent).

Mine was also a local authority freeholder with a ground rent of £10 per year. My freeholder insisted on the formal route. I would absolutely recommend having a solicitor deal with it for you. Mine took just under 6 months, but there was no arguing (the price the freeholder wanted matched what my surveyor said and also what the Leasehold Advisory service calculator estimated). Freeholder was a bit slow to respond (e.g. maxing out the statutory time limit to respond to the initial notice), and I did ask for one correction to be made to the lease which probably delayed the process a bit.

Unfortunately you do have to pay all the freeholder's fees, which they can fleece you on because they know it's too expensive/time-consuming to challenge even if you win, but I thought it was worth it to get it off my mind. Local authority might be less inclined to fleecing than a commercial freeholder as well (mine had a ludicrous surveyors charge but their legal costs were quite reasonable).

I think you'll be glad you've got it out of the way once it's done.

EssexHebridean

You absolutely do need a solicitor to do a lease extension, for the same reasons that you should use one when you buy or sell.

Mrs_pbradley936

I have just been through this although not with a former Council flat. You will need a solicitor and if you have not got one then Kim Higgs from here  Salisbury/Andover Solicitors & Lawyers | Local Law Firm (bishopslaw.co.uk)  is highly recommended.

The longer you leave it the more it will cost and I too was waiting and hoping for the promised legislation to kick in but I did mine two years ago. It will take about 6 to 8 months and forever for the land registry to update their records.

youth_leader

Most unfortunately my 87 year old aunt has allowed her lease to drop to 74 years on her one bed flat.  The lease extension now involves 'marriage value'  - she will have to give her freeholder half of the profit she makes when she sells with the longer lease. 

She wants to sell now so she can go into assisted living.  She will be 88 May 25, and since this started, she has really struggled to understand what is happening.  

I did approach her freeholder for an informal extension in May and she agreed.  Seven weeks later it appeared she had gone straight to her solicitor, so we are now going formal.  I thought her freeholder would investigate and ask for a reasonable sum as she got the freehold for nothing twenty odd years ago.  


My aunt has now seen her solicitor, and paid a surveyor to cost her lease, it is more than the calculator on line.  Her new lease can only be 90 years at the moment, but the ground rent of £10 per year will be deleted.  I 'suggested' she phone her solicitor and ask what the next step is - they don't seem to be communicating with her at all. 

I have had to withdraw my help as she got very distressed because I was 'telling her what to do'.

NameUnavailable

Mark_d said:

We're in a leasehold flat and the agency that collects our ground rent also manages lease extensions on behalf of the freeholder.  I wasn't aware that solicitors are required for you to get the lease extended?

With 83 years remaining on the lease, why are your parents looking to extend?

If a lease goes below 80 years you are then liable to pay 'marriage value' which increases the costs significantly. Also most buyers will be put off, or find it hard to get a mortgage, if a lease is near to 80 years (for the same reasons).

You need really a solicitor to go for a formal lease extension and definitely if you think of going for an informal agreement (often freeholders slip in onerous extra clauses, typically high ground rents).

eddddy

NameUnavailable said:

You need really a solicitor to go for a formal lease extension and definitely if you think of going for an informal agreement (often freeholders slip in onerous extra clauses, typically high ground rents).

It's illegal to increase ground rents in that way.

With an informal lease extension, at most, the existing levels of ground rent  (as documented in the lease) must be retained for the remainder of the original lease period.

Then ground rent must be reduced to zero for the extension period.


That's been the case since June 2022, as a result of the Leasehold Reform (Ground Rent) Act 2022


(But the OP says their freeholder is a council. I've never come across a council that does informal lease extensions. They generally insist on statutory lease extensions.)

MigsyBigsy

I really appreciate the time taken to respond to my question. Thank you all

@NervyBuyer Could I ask what the cost in total was for all that? I have been in contact with quite a few solicitors and valuers. I have been quoted £500 for a valuation - which is reasonable?