Simarc Lease Extension

inthegroove2010

Sadly we have let the lease on a flat run down to 44 years and are now in the grip off Simarc properties! 

In fairness to them thus far they have supplied a value for a 90 year lease extension and confirmed there is no negotiation option. 

My concern is that the 90 year lease extension cost is just under £20,000 for a property that is currently worth £55-60k With the lease extended to 134 years it could be worth £75-£80k 

I have emailed a solicitor to discuss the Section 42 notice but this seems more relevant for those situations when you cannot obtain a lease extention quote from the landlord?? 

I only want to try and negotiate on price, does this mean i skip this step and complete the First Tier Tribunal documentation and would/should i have a solicitor for this process? 

Any advice greatfully appreicated. 

Mark_d

You have the price and the freeholder does not want to negotiate.  They don't have to.

It sounds like you can sell the property now for 55k-60k or pay 20k to extend the lease, and then sell the property for 20k more.

I'm now living in the 5th flat I've bought.  Whenever buying a flat I've checked that there'd be many years left on the lease when I come to sell.  Did you not check the lease before buying your property?

eddddy

inthegroove2010 said:

I have emailed a solicitor to discuss the Section 42 notice but this seems more relevant for those situations when you cannot obtain a lease extention quote from the landlord?? 

Not really - there are other reasons as well.

You would use the 'Statutory Lease extension' process (starting with a section 42 notice), if for example...

• You believe that the terms you freeholder is offering are worse than a tribunal would set (e.g. The freeholder is asking for too much money.)

• The freeholder is refusing to offer a lease extension

• You don't trust your freeholder, and you are worried that they might try some 'nasty tricks' to get more money out of you, or to stop you getting a lease extension

inthegroove2010 said:

I only want to try and negotiate on price, does this mean i skip this step and complete the First Tier Tribunal documentation and would/should i have a solicitor for this process? 

No. If you want a tribunal to decide the price, you have to start the Statutory process by serving a section 42 notice.

Very few lease extension applications go all the way to tribunal - because the fees would be very high. And it would probably take 18 months or so, overall.


Just to clarify - typically the negotiation would be very technical, perhaps along the lines of...


"I believe that a tribunal would agree that the lease extension should cost (say) £15k, so I'm offering you £15k...
...because, based on the legislation and precedents, I believe that the tribunal would agree that...

The yield rate used should be x%
The deferment rate used should be y%
The value of the property (based on comparables a, b and c) is £z"


And if it did go all the way to tribunal, you would have to justify why you chose the figures x%, y% and £z.

inthegroove2010

Mark_d said:

You have the price and the freeholder does not want to negotiate.  They don't have to.

It sounds like you can sell the property now for 55k-60k or pay 20k to extend the lease, and then sell the property for 20k more.

I'm now living in the 5th flat I've bought.  Whenever buying a flat I've checked that there'd be many years left on the lease when I come to sell.  Did you not check the lease before buying your property?

Its a long and complex story but suffice to say we were not in a position to extend the lease until this point. 

In essence you are correct that we potentially could recover the costs in sale but still that doesnt sound "reasonable" from the freeholders perspective seeing the property is only worth 60k. I thought the marriage allowance was based on profit from short to long lease and shared between the freeholder and leaseholder? 

youth_leader

I've just helped my aunt extend her lease from 74 years, one bedroom flat, she gave her freeholder £10K.  To my knowledge the marriage value was included in this sum. You might like this article - Marriage Value In Leasehold Property Lease Extensions