Extending Leasehold

SeanG79 · 20 April 2018 at 9:05AM

We own a leasehold property, which has 68 years remaining. We want to extend the lease, as you do.

The issue is this, I used several online calculators, which came back with figures of £18-21k, which would add 90 years to the current lease.

I approached the Freeholder informally to see if we could come to some sort of arrangement. The Freeholder came back and they want £25k, with the ground rent doubling now and then doubling every 15 years thereafter. I went back to see if there was any movement on this and essentially they said the property wont be attractive to buyers or mortgage-able with 68 years remaining and so their price is £25k.

Sorry for the long-winded intro, but my question is this, considering the £4-7k difference in online calculations vs. the Freeholder offer, would I be best off simply accepting the £25k, or would you opt to go the formal route and involve solicitors and potentially tribunal? I am in two minds...

eddddy · 20 April 2018 at 11:05AM

The ground rent doubling every 15 years might worry some buyers.

Fees for an informal lease extension (like the freeholder is offering) might be around £2k. Fees for a statutory lease extension might be £3k to £5k.

TBH, I think you might be approaching this negotiation in slightly the wrong way...

SeanG79 wrote: »

I went back to see if there was any movement on this...

Based on your numbers, I would approach the freeholder a little more robustly, maybe something like this...

"If I follow the statutory lease extension route, I understand that the premium would be about £15k to £17k for an additional 90 years with zero ground rent.

Therefore, I'm prepared to offer you £18k instead (for 90 years, zero ground rent), so that we share the savings in fees.

Please let me know asap, as I need to know whether to instruct a solicitor to commence the statutory process."

It may not work, or you might have to increase your offer a bit, but you have absolutely nothing to lose by trying this.

Edit to add:

The freeholder is 'taking a punt' by asking for £25k - so you can 'take a punt' as well by offering £18k (or maybe less). Hopefully, you might meet somewhere in the middle.

SeanG79 · 20 April 2018 at 11:29AM

Thanks. I will try your suggested approach.

I forgot to mention, in their offer, they were only extending the lease period to 99yrs as opposed to adding the 90 years via the statutory route.

eddddy · 20 April 2018 at 11:34AM

SeanG79 wrote: »

Thanks. I will try your suggested approach.

I forgot to mention, in their offer, they were only extending the lease period to 99yrs as opposed to adding the 90 years via the statutory route.

Which makes the freeholder's offer an even worse deal...

kirtondm · 20 April 2018 at 12:07PM

especially with the ground rent hike!

noddynoo · 20 April 2018 at 1:06PM

Go for the statutory as it negates the need for ground rent and that doubling is excessive and will put off buyers. Plus you will get 90 years added The statutory route is the law and the freeholder can't specify the ground rent etc

[Deleted User] · 20 April 2018 at 2:00PM

Hold fire

There is a lot of activity politically and legally to make enfranchisement easier and cheaper for Leaseholders.

Join the FB page NLC National Leasehold Campaign and read all the updates and activity the latest being an update from the law commission making it better for Leaseholders.

SeanG79 · 20 April 2018 at 2:30PM

Thanks all. I will also join the FB group

Tom99 · 21 April 2018 at 1:14AM

[FONT=Verdana, sans-serif]It is very unlikely that future legislation will make it any cheaper to extend a 68 year lease.[/FONT]
[FONT=Verdana, sans-serif]Its also likely that your current ground rent is not particularly high nor with onerous reviews which is what most of the concern is about[/FONT]
[FONT=Verdana, sans-serif]You may therefore end up paying more because you have waited whilst your lease continues to expire and the premium increases.[/FONT]

SeanG79 · 23 April 2018 at 9:03AM

Thanks Tom, I get the paying more because of the marriage value, etc. This is a property my wife owned when we met, she has moved into my property, and ideally we are looking to sell both properties and move to a larger property, the short term on the lease is however a concern for sale and so we need to get the lease extended before attempting to sell.

If as the Freeholder is offering we only extend the lease to 99 years, and the ground rent initially doubles and then doubles again every 15 years, it is probably less attractive for prospective buyers.

If we opt to go the statutory route and start the process formally, does the premium continue to increase whilst that process is ongoing?

Tom99 · 23 April 2018 at 9:11AM

SeanG79 wrote: »

Thanks Tom, I get the paying more because of the marriage value, etc. This is a property my wife owned when we met, she has moved into my property, and ideally we are looking to sell both properties and move to a larger property, the short term on the lease is however a concern for sale and so we need to get the lease extended before attempting to sell.

If as the Freeholder is offering we only extend the lease to 99 years, and the ground rent initially doubles and then doubles again every 15 years, it is probably less attractive for prospective buyers.

If we opt to go the statutory route and start the process formally, does the premium continue to increase whilst that process is ongoing?

[FONT=Verdana, sans-serif]No your notice date sets the valuation date. You can still continue to negotiate a non statutory extension whilst the statutory extension timetable goes ahead if you want to keep that option open.[/FONT]

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Extending Leasehold

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