Extend Your Lease guide discussion

NormW · 27 January 2014 at 1:58PM

I'm thinking of informally approaching the leaseholder to see what they offer to extend the lease - does anyone know if I need a solicitor for this or can I just write them a letter? I know they are Chancery St James.

Thanks.

System · 27 January 2014 at 2:31PM

NormW wrote: »

I'm thinking of informally approaching the leaseholder to see what they offer to extend the lease - does anyone know if I need a solicitor for this or can I just write them a letter? I know they are Chancery St James.

I did this with my freeholder without using a solicitor - sent them a letter asking them how much they'd want for X extension to the lease. However, in order to avoid more time lapsing on the lease (especially if the lease is very short) you should probably employ a solicitor to submit a Notice of intent as soon as possible. That then 'stops the clock' on the lease length. I think it's called a 'Section 42 Notice', but your legal representative will be able to advise you of that. This is something I found out afterwards, at some cost.

System · 27 January 2014 at 2:41PM

Tykva wrote: »

Hello everyone,

We have 75 years left of lease. Free estate agents evaluations showed the market price of around 150-155K as it is now. Ground rent is £75 per year. We have talked to the landlord informally who returned us back with the quote of 10K+£450 solicitors fee to extend for 99 years with no ground rent fee further on. We have asked him from what market price he came up with the quote, his answer was (he himself is a real estate agent in the are) somebody sold similar flat on our street for 140K recently. He then said he can agree with 10K including all fees (surveyor and solicitor will be his as he has some he works with for a long time now).

The calculator says about 8K plus fees for additional 90 years. So overall quote seems like all right but more like to gain by the freeholder. It seems to me if we approach officially via solicitor at the end we will end up paying 10K too but that involving kind of negotiating costs. Whereas current 10K will be earned by parties involved with freeholder. So all gains of informal negotiations are for him. Whereas of course initially we started so to cut our own expenses too. Do you think quote is reasonable? Or am I wrong? Should we negotiate further? Please advise. Thank you!

Hi Tykva,

I'm not an expert, just a person who recently went through the lease extension process.

If you've been quoted by a 'calculater' that it should be £8k plus fees, and your freeholder has said he will take £10k for everything, I would bite his hand off. The fees alone for my lease extension came to £4,290 (£1,650 for my side and £2,640 for the freeholder's side).

It sounds like the freeholder is only offering to include his fees in this £10k, so you should still budget for your own. But still, this price doesn't sound unreasonable to me and the ease of getting this done without any legal negotiations is worth a lot in time and stress alone.

However, only you can decide if it's worth negotiating further.

Tykva · 27 January 2014 at 3:33PM

In The Red 2009

thanks for your experience! Do you mean that even if we agree with freeholder informally we will still incur additional fees for hiring on our side (solicitor, surveyor)? Hiring can not be avoided? Thank you!

System · 27 January 2014 at 3:53PM

Tykva wrote: »

In The Red 2009

thanks for your experience! Do you mean that even if we agree with freeholder informally we will still incur additional fees for hiring on our side (solicitor, surveyor)? Hiring can not be avoided? Thank you!

I only used a surveyor to get a report/quote for the extension (£420) and then also for negotiating with the freeholder (this was £0 in the end as they didn't manage to negotiate a price for me). If you don't need to do either of these things, then you may not need a surveyor. You won't get away without employing a solicitor though (unless you are one?). Costs are variable, but I would recommend you choose one with experience of lease extensions.

NormW · 28 January 2014 at 2:01PM

In_The_Red_2009 wrote: »

I did this with my freeholder without using a solicitor - sent them a letter asking them how much they'd want for X extension to the lease. However, in order to avoid more time lapsing on the lease (especially if the lease is very short) you should probably employ a solicitor to submit a Notice of intent as soon as possible. That then 'stops the clock' on the lease length. I think it's called a 'Section 42 Notice', but your legal representative will be able to advise you of that. This is something I found out afterwards, at some cost.

Hi, thanks, I'm not in a position to serve the statutory notice to 'stop the clock' as I believe this also ties me into:

2 years to complete the extension or the clock starts again anyway.
Adding 99 years to the lease, as the lease has approximately 58 years left, will cost in excess of £10,000 (the online calculators only go down to 60 years).

I can't afford to go that route, so I'm living in the hope of being offered a lump sum payment of less than 5k with ground rent up from £25/yr to £250/yr doubling every 'x' years for example. I have heard of other people receiving similar offers, I was just going to extend back to 99 years rather than add 99 years to try and keep costs down.

smilalott · 5 February 2014 at 6:40PM

Hi,

Just to let you know you don't need a solicitor for initial talks with the freeholder nor serving the Section 42 notice nor for that matter going to a Leasehold tribunal. The Section 42 notice is such a basic form very dificult to get it wrong then send it by registered post. Obviously make sure you have the rights to serve the notice, have owned the property for two years.

Always ask the cost of renewal directly from the Freeholder, probably with the exception of local authorities, this figure will always be above what should be paid. They will assume that you need to sell quickly so will offer to bring the lease backup to 99 years, increase your ground rent etc. probably charge you around £6-7k for a 28 year extension, ground rent probably around £150 - £250 with 10 year increments linked way above RPI. Use the generic calculators (Moneysavingexpert's seem reasonably accurate) to find out if their offer is fair. Also if you are in a large block of flats chances are others have renewed, you can view other peoples recently negotiated lease extensions costs if you have a professional subscription to the Land Registry otherwise its going to cost you £30 a go.

If your not planning on selling and have the money go for the full 90 years with no ground rent option so for another £2k you get a 90 year extension (plus remaining term) with no rent.

Go to the Lease Tribunal follow their process, clearly laid out and 9 times out of 10 the freeholder will negotiate somewhere in between, they may leave it till very near the tribunal date but I'm sure they will negotiate.

I negotiated not only the price but also clauses in the contract as they are going to make quite a few adjustments, obviously you may need advice on contractual matters as I do now

so will be posting another query on here shortly:), but thats what these forums are about to share knowledge and experience.

Remember you don't pay their legal costs all the time you are negotiating via the Lease tribunal process, so my costs were negliable some surveyor costs but just be a little brave and you will get there I'm sure.

liam1989 · 7 February 2014 at 10:34AM

Morning all,

I had some great news the other week. After 2 years ofsearching I was finally able to track down the freeholder.

Now I’m on to the next phase. Negotiating the premium!

I had a survey done on my property just before Christmasand I was advised a premium

of £5,700 wasappropriate to extend the current unexpired lease of 72 years for 99 years @zero ground rent.

Having looked at pretty much every lease extensionpremium calculator on the internet, with the average premium amount between5.5k-6k, I feel that £5,700 is a fair amount.

When I went to see my solicitors the other day he advisedme - and I agreed to – proposing an extension of 125 years for £5,000 @ zeroground rent.

My question is this, having had the survey done andhaving looked at the various calculators on the internet I feel that a premiumof £6,000 is probably the most I would agree to. Obviously the freeholder mightaccept the initial £5k proposal or further down the line an amount below £6k.

For those ‘experienced’ in this field, do you feel mystance is a good idea. Basically do you feel I would be foolish to go to atribunal If you freeholder demands a premium more than 6k

Your responses will be very much appreciated. thanks and have a great weekend

Liam

AndyGuil · 7 February 2014 at 11:44AM

That sounds like a good news. I would definitely go to tribunal if the freeholder does not agree to at least 99 years extension on top of your current lease or if the fees are over £6k. If you can do it for £5k then that is great. Covering their solicitor costs would be similar to yours so it would be less than £6k if they want to fight it, but why would they? They would lose.

FirstTimeBuyerLondon1 · 12 February 2014 at 2:04AM

Hi all,

I am writing to ask for your advice.

I am planning to buy a flat that its valuation is 298K and the remaining years of the lease are 84. The ground rent is currently 300 pounds and in 4 years it will go up to 600, in 24 years it will go up to 900, in 44 years it will go up to 1200 pounds, in the next 64 years it will go up to 1500, and no other increase after that.

a) The owner of the freeholder 4 months ago offered a premium of 6400 plus 1100 total additional cost to add 15 years to the lease with a rent of 400 pounds for the next 20 years and then it will follow the inflation.

b) The other option is to follow the statutory procedure that will add 90 years to the lease and will reduce the rent to peppercorn. I don’t know what to insert as ground rent in the calculator but if I add the average of the next 24 years so 550 pounds the premium price is 11-14K plus cost. Making the assumption that the total cost in LVT will be 4000 pounds I estimate the total cost to be 12.500+4000=16500 pounds.

I was wondering if the total cost for statutory procedure is realistic or I should expect something higher.

Is the offer from the owner of the freehold reasonable? Overall I tend to prefer the statutory procedure. What do you think?

Thank you for any advice recommendation or comment.

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