Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • MSE Jenny
    • By MSE Jenny 1st Mar 12, 3:18 PM
    • 1,226Posts
    • 3,556Thanks
    MSE Jenny
    Extend Your Lease guide discussion
    • #1
    • 1st Mar 12, 3:18 PM
    Extend Your Lease guide discussion 1st Mar 12 at 3:18 PM



    Hi all, we've written a new Extend Your Lease guide to help you extend at a fair price.

    How did you find the info? If you've done it, how did it go and do you have any other tips you'd add? How much value do you think it added to your property?

    Thanks
    for your help!


    MSE Jenny

    Last edited by MSE Jenny; 02-03-2012 at 12:59 PM.
Page 33
    • Tom99
    • By Tom99 3rd Mar 18, 12:58 AM
    • 2,645 Posts
    • 1,807 Thanks
    Tom99
    Hi there,
    I wonder if you can help. I am one of 8 flats in my building who all own equal shares in our freehold. We own it via a management company (in which we have equal shares) that was set up to own the freehold as I understand that private individuals are unable to own freeholds (or at least they were at the time that this was set up). We are also all lessees and our leases have now all fallen below 70 years so we need to extend them fairly rapidly. We all thought this would be a simple matter of paying a lawyer to sort out the paperwork seeing as we are all effectively asking for lease extensions from ourselves. However after seeking initial advice, it appears that we may have to charge ourselves the market value for the lease extensions which could be as much as 50-60k per flat! Although we could then reimburse the money to ourselves from the management company via dividends, apparently we will have to pay corporation tax on the lease income that the company gains and then capital gains tax as individuals on the value of the leases that we have granted ourselves, so we get double-taxed to the tune of some 20k or more. Surely there must be some way round this? Aren't there "share of freeholders' with management companies set up to hold their freehold all over the country who have had to deal with this same issue when they come to extending their leases? How do they normally sort this out?
    Originally posted by MHF123
    If all 8 flats are on exactly the same lease length and ground rent and all 8 freeholders and leaseholders are in agreement, you can extend all 8 leases to 999 years at a peppercorn rent at a cost of 0 premium for each tenant.

    You will however all have to pay your own and a share of the freeholder legal costs.
    • Littlechef87
    • By Littlechef87 5th Mar 18, 7:55 AM
    • 1 Posts
    • 0 Thanks
    Littlechef87
    Looking for some advice!

    I recently put in an offer on a flat having been told the lease was at 84 years. Soon after, the agent told me the seller had mad a "mistake" and the lease was actually at 77 years. I requested a reduction of 2k, which they refused, so I withdrew. The thing is, I'm still thinking about the flat - I don't think I'm likely to find another property that suits me so well. So I'm wondering if I should go for it regardless. My main question is if I get the lease extended, well the increase in value definitely (as much as you can say "definitely" in the housing market) cover my costs? The flat is on at 105k and I'm estimating that the total cost to extend if I were to do so in 2 years time will be around 8k. Will extending see the value rise to above 113k? Also, were I to hold out longer - say, for 5 years, so the lease dropped to 72 - would it make much difference?
    • Tom99
    • By Tom99 5th Mar 18, 8:15 AM
    • 2,645 Posts
    • 1,807 Thanks
    Tom99
    Looking for some advice!

    I recently put in an offer on a flat having been told the lease was at 84 years. Soon after, the agent told me the seller had mad a "mistake" and the lease was actually at 77 years. I requested a reduction of 2k, which they refused, so I withdrew. The thing is, I'm still thinking about the flat - I don't think I'm likely to find another property that suits me so well. So I'm wondering if I should go for it regardless. My main question is if I get the lease extended, well the increase in value definitely (as much as you can say "definitely" in the housing market) cover my costs? The flat is on at 105k and I'm estimating that the total cost to extend if I were to do so in 2 years time will be around 8k. Will extending see the value rise to above 113k? Also, were I to hold out longer - say, for 5 years, so the lease dropped to 72 - would it make much difference?
    Originally posted by Littlechef87
    Whether you break even etc will depend on whether you overpay for the flat now.

    There will be quite a hike in the premium you will have to pay with the 77 year lease v the 84 year lease because below 80 years you also pay the freeholder 50% of the marriage value.

    I would expect the extra to be a lot more than the 2k you tried to knock off.

    You can get an idea of the premium here:

    https://www.lease-advice.org/calculator/

    If the seller has owned the flat more than 2 years you can get the seller to start the lease extension process now and you take it over. That way you don't have to wait 2 years.

    If you wait 5 years the cost is likely to rise not only in line with any general increase but because the term is less, marriage value more etc.
    • jeffj46
    • By jeffj46 20th Mar 18, 9:44 PM
    • 1 Posts
    • 0 Thanks
    jeffj46
    Freeholder driving me nuts!
    Hello. Sorry if this is not the right place,I'm new here,as of today. I'm extending the lease on a flat I own as requested by the buyer of the property. This has been dragging on for almost a year now and the Freeholder,in my opinion,is being deliberately obstructive. They did agree to the premium but have since changed the Solicitors acting for them and don't bother to reply to the new ones. Meanwhile my Solicitor wants to charge me hundreds of pounds extra because of the work involved continually chasing with no result. The buyer has had their mortgage offer extended twice already,I doubt it will happen a third time. Even if it does get extended,unless things now progress quickly,I will not be able to complete on my new home as I will have insufficient funds and am too old to get a mortgage. Any advice will be appreciated,for example,can I raise an official complaint and who with? Thanks.
    • eddddy
    • By eddddy 20th Mar 18, 10:12 PM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    Any advice will be appreciated,for example,can I raise an official complaint and who with? Thanks.
    Originally posted by jeffj46
    No - unfortunately not.

    It could be incompetence, or it could be a deliberate delaying strategy by the freeholder.

    The way to get around it would be to do a statutory lease extension instead. But that may still take between 6 and 18 months. Legal fees may be higher, but the premium may be less. (Your solicitor should have explained all this to you.)
    • economic
    • By economic 20th Mar 18, 10:20 PM
    • 2,938 Posts
    • 1,586 Thanks
    economic
    Hello. Sorry if this is not the right place,I'm new here,as of today. I'm extending the lease on a flat I own as requested by the buyer of the property. This has been dragging on for almost a year now and the Freeholder,in my opinion,is being deliberately obstructive. They did agree to the premium but have since changed the Solicitors acting for them and don't bother to reply to the new ones. Meanwhile my Solicitor wants to charge me hundreds of pounds extra because of the work involved continually chasing with no result. The buyer has had their mortgage offer extended twice already,I doubt it will happen a third time. Even if it does get extended,unless things now progress quickly,I will not be able to complete on my new home as I will have insufficient funds and am too old to get a mortgage. Any advice will be appreciated,for example,can I raise an official complaint and who with? Thanks.
    Originally posted by jeffj46
    Can you not just sell it unextended to the buyer and serve section 42 notice of lease extension to the freeholder of the buyers behalf and let the buyer extend after you sold? You can reduce the purchase price by the amount it would cost for lease extension.
    • eddddy
    • By eddddy 20th Mar 18, 10:25 PM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    Can you not just sell it unextended to the buyer and serve section 42 notice of lease extension to the freeholder of the buyers behalf and let the buyer extend after you sold? You can reduce the purchase price by the amount it would cost for lease extension.
    Originally posted by economic
    ... unless the buyer needs the lease extension to get a mortgage.

    Or the buyer doesn't have enough ready cash to pay the extension costs, so they need it rolled into the purchase price so that they can get a bigger mortgage.
    • economic
    • By economic 20th Mar 18, 10:37 PM
    • 2,938 Posts
    • 1,586 Thanks
    economic
    ... unless the buyer needs the lease extension to get a mortgage.

    Or the buyer doesn't have enough ready cash to pay the extension costs, so they need it rolled into the purchase price so that they can get a bigger mortgage.
    Originally posted by eddddy
    Agree, but the OP wasnt clear.
    • cpfcstar
    • By cpfcstar 9th Apr 18, 8:30 PM
    • 83 Posts
    • 44 Thanks
    cpfcstar
    Can anyone help?

    My partner remortgaged to gain funds to renew a lease, and he added me to the mortgage to up the money we could borrow. Remortgage went two months ago. We did this all on advice from a financial advisor.

    However, now we have gone to do the lease renewal and been told that I must be named on the property for two years before a renewal can happen. Before this my partner previously owned it for two years and we believed this would be ok to proceed with.
    Firstly we were never told that adding me would change things.
    Is there anything that can be done? We cannot live in the property for two more years. The financial advisor never said this would be an issue.
    • eddddy
    • By eddddy 9th Apr 18, 9:25 PM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    Can anyone help?

    My partner remortgaged to gain funds to renew a lease, and he added me to the mortgage to up the money we could borrow. Remortgage went two months ago. We did this all on advice from a financial advisor.

    However, now we have gone to do the lease renewal and been told that I must be named on the property for two years before a renewal can happen. Before this my partner previously owned it for two years and we believed this would be ok to proceed with.
    Firstly we were never told that adding me would change things.
    Is there anything that can be done? We cannot live in the property for two more years. The financial advisor never said this would be an issue.
    Originally posted by cpfcstar
    It sounds like the issue is that ownership of the property changed from just your partner, to both of you.

    So you need to be joint owners for 2 years before you can do a statutory lease extension.

    I'm not surprised that a financial advisor doesn't understand lease extension legislation. But presumably a solicitor was involved in the process, who knew that your reason for transfer of ownership was to get a lease extension.

    Perhaps ask the solicitor why they didn't advise you that this was impossible.

    (FWIW, you might still be able to negotiate an informal lease extension with the freeholder.)
    • cpfcstar
    • By cpfcstar 9th Apr 18, 9:45 PM
    • 83 Posts
    • 44 Thanks
    cpfcstar
    It sounds like the issue is that ownership of the property changed from just your partner, to both of you.

    So you need to be joint owners for 2 years before you can do a statutory lease extension.

    I'm not surprised that a financial advisor doesn't understand lease extension legislation. But presumably a solicitor was involved in the process, who knew that your reason for transfer of ownership was to get a lease extension.

    Perhaps ask the solicitor why they didn't advise you that this was impossible.

    (FWIW, you might still be able to negotiate an informal lease extension with the freeholder.)
    Originally posted by eddddy
    Truly wish I'd known this before as we were waiting until this year for him to formally own for two years. Now all of that's been undone as the freeholder is unlikely to accept an informal lease extension.
    There's no way to go back to his sole ownership is there?
    • eddddy
    • By eddddy 9th Apr 18, 10:14 PM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    There's no way to go back to his sole ownership is there?
    Originally posted by cpfcstar
    I doubt it.

    The frustrating thing is that, had you been advised correctly, you could have easily got around it by your partner serving a section 42 notice before transferring ownership.

    As I was suggesting, if you explained your plan to your solicitor, and your solicitor failed to advise you that your plan would not work, there may be scope for a complaint.

    So you could ask your solicitor for their comments.

    (Perhaps there is also scope for a similar complaint about your financial advisor, but it seems less likely.)
    • familyguy101
    • By familyguy101 1st May 18, 11:07 PM
    • 1 Posts
    • 0 Thanks
    familyguy101
    lease extension advice
    Hi all,

    Just hoping for some advice....

    I have owned my flat for over 2 years and have approx 85 years left on the lease. During a conversation with the managing company i asked about extending the lease to which his reply was that it would be 'prohibitively expensive'.

    When i bought the flat i was aware that the ground rent doubles up every 10 years throughout the term (starting from 250) but the flat was relatively cheap and it was always my intention that i was simply extend when the time came... Is there a calculator i can use to estimate how much the extension would cost? Or does anyone have any experience regarding this? It's worth 240,000, not a new build and i am not the first owner.

    The obvious answer would be to find a specialist solicitor to deal with it but although i do have some funds, i am wary of starting something i cannot finish at this point if the cost are as high as suggested.

    Thanks in advance.
    • Tom99
    • By Tom99 2nd May 18, 1:45 AM
    • 2,645 Posts
    • 1,807 Thanks
    Tom99
    Hi all,

    Just hoping for some advice....

    I have owned my flat for over 2 years and have approx 85 years left on the lease. During a conversation with the managing company i asked about extending the lease to which his reply was that it would be 'prohibitively expensive'.

    When i bought the flat i was aware that the ground rent doubles up every 10 years throughout the term (starting from 250) but the flat was relatively cheap and it was always my intention that i was simply extend when the time came... Is there a calculator i can use to estimate how much the extension would cost? Or does anyone have any experience regarding this? It's worth 240,000, not a new build and i am not the first owner.

    The obvious answer would be to find a specialist solicitor to deal with it but although i do have some funds, i am wary of starting something i cannot finish at this point if the cost are as high as suggested.

    Thanks in advance.
    Originally posted by familyguy101
    To give you a rough idea use one of the online calculators to estimate the lease extension premium assuming the ground rent was fixed at 250 pa.

    Then in a spreadsheet list out all the fixed increases in the ground rent over the 250 and discount them at say 6% pa.

    So for example if its 5 years time the the rent increases to 500 then the extra will be:

    Year 5 = (500-250)/1.06^5 = 186.81
    Year 6 = (500-250)/1.06^6 = 176.24

    As so on and so on including:

    Year 15 = (1,000-250)/1.06^15 = 312.95

    etc, etc for each year of ground rent still to pay

    That way add up all of those figure for the next 85 years and add it to the basic calculator figure.
    The actual discount rate will be a matter of negotiation so try 6%/6.5%/7% to give you an idea of how the value can change

    You can then decide whether it is worthwhile employing a RICS surveyor to give you a more formal idea of what values might be agreed.
    • cpfcstar
    • By cpfcstar 2nd May 18, 4:35 PM
    • 83 Posts
    • 44 Thanks
    cpfcstar
    I doubt it.

    The frustrating thing is that, had you been advised correctly, you could have easily got around it by your partner serving a section 42 notice before transferring ownership.

    As I was suggesting, if you explained your plan to your solicitor, and your solicitor failed to advise you that your plan would not work, there may be scope for a complaint.

    So you could ask your solicitor for their comments.

    (Perhaps there is also scope for a similar complaint about your financial advisor, but it seems less likely.)
    Originally posted by eddddy
    Casting your mind back to this post, can you please help?!

    Today we received our title deed back as incomplete (needing more information) from the solicitors handling the mortgage (Qcas), so two months later we have discovered that the title deed completion did not happen. So for all purposes I guess the title is still in my partners name only, and has been for almost 3 years.

    The mortgage completion in both our names went through on 28/02.

    Upon learning this today, immediate first thought was - can we just keep the title deed as it is, ignoring the completion of the change?

    Asked Qcas and they said no, it's started so must be finished. If we want a sole proprioters mortgage we would have to remortgage.

    We also asked Barclays mortgage deed dept over the phone and they said the mortgage doesn't have to match the title deed and we could just keep a sole title deed. However this was telephone hearsay so must not be accurate.

    Would you be able to help? Thanks.
    • eddddy
    • By eddddy 2nd May 18, 6:42 PM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    Casting your mind back to this post, can you please help?!
    Originally posted by cpfcstar
    FWIW, I can see why your solicitors aren't advising you about the lease extension:

    QCAS was established in 1999 to deliver a commoditised remortgage service for banks and building societies.

    Link: https://portals.shulmans.co.uk/Qcasweb/AboutUs
    They are just a 'conveyor belt' remortgaging service.


    I don't know the full answer to your question... but if ownership of the lease hasn't been transferred yet, your partner needs to instruct a solicitor and valuer, and serve a section 42 notice on the freeholder, to start the lease extension process.

    Once that is done, it's OK to transfer ownership of the lease, if you still want to (and assign the benefit of the section 42 notice).


    In your position, I would phone 1 or 2 or 3 'proper' solicitors who specialise in lease extensions and property - and explain what you want to do.

    Most solicitors will discuss your problem with you on the phone for 20 or 30 mins at no charge, and give you an idea of whether they can help you or not (and what it might cost).
    Last edited by eddddy; 02-05-2018 at 6:44 PM.
    • oldwiring
    • By oldwiring 18th May 18, 12:21 AM
    • 2,296 Posts
    • 467 Thanks
    oldwiring
    If I have missed a similar situation scanning through the thread, I apologise.

    Presently we live in our mortgage free freehold house, but we will be 82 later this year, so are thinking soon we may need to downsize to a flat. In our town are a number of flats, but many unexpired terms are in the 65-85 bracket. Clearly, we are not going to live that long, so extension is not something we need per se.

    In theory, therefore, we could occupy one of those available until we either die or go into a home, and accept the depreciation in value until those events.

    Is there any method to estimate such depreciation, and how advisible is such a course?

    P.S. As well as the foregoing, there are some Mccarthy and Stone/ Churchill developments built in the last 2 years, where the short lease problem would not apply, but they are expensive. Might they be less problematical for us to deal with and worthwhile value?
    Last edited by oldwiring; 18-05-2018 at 12:23 AM.
    • eddddy
    • By eddddy 18th May 18, 10:51 AM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    If I have missed a similar situation scanning through the thread, I apologise.

    Presently we live in our mortgage free freehold house, but we will be 82 later this year, so are thinking soon we may need to downsize to a flat. In our town are a number of flats, but many unexpired terms are in the 65-85 bracket. Clearly, we are not going to live that long, so extension is not something we need per se.

    In theory, therefore, we could occupy one of those available until we either die or go into a home, and accept the depreciation in value until those events.
    Originally posted by oldwiring

    Yes - you can just accept the depreciation, if you want to.

    As you probably know, extending a lease costs money - but overall you normally make a profit on it (because the flat becomes more valuable).

    So by extending the lease, you might end up with a larger estate to leave in your will - but perhaps that isn't important to you.

    Is there any method to estimate such depreciation, and how advisible is such a course?
    Originally posted by oldwiring
    Probably the easiest way is to look at the prices of similar flats in your area with, say, 65 year leases and 100+ year leases to see the difference.

    And/or you can ask some local estate agents for their opinion. (But if there is a particular flat that the agent wants to sell you, they might give you a biased opinion.)


    P.S. As well as the foregoing, there are some Mccarthy and Stone/ Churchill developments built in the last 2 years, where the short lease problem would not apply, but they are expensive. Might they be less problematical for us to deal with and worthwhile value?
    Originally posted by oldwiring
    They should certainly be less problematical. But the yearly service charges can also be very high.

    That's because often with retirement flats, the management company are responsible for things like heating, electrics, plumbing (and maybe even kitchen and bathroom fittings) in the flat.

    So, for example, if your heating breaks down, or a pipe leaks in your flat, the management company come and fix it - and they don't charge you. Instead, it's covered by the high yearly service charge.

    Also, they sometimes have a warden that visits you each week, to check if everything is OK. And so the warden's wages have to be paid out of the service charge.

    (But check all these details at your local developments. I guess different developments might have different policies.)
    • cpfcstar
    • By cpfcstar 24th May 18, 4:32 PM
    • 83 Posts
    • 44 Thanks
    cpfcstar
    FWIW, I can see why your solicitors aren't advising you about the lease extension:



    They are just a 'conveyor belt' remortgaging service.


    I don't know the full answer to your question... but if ownership of the lease hasn't been transferred yet, your partner needs to instruct a solicitor and valuer, and serve a section 42 notice on the freeholder, to start the lease extension process.

    Once that is done, it's OK to transfer ownership of the lease, if you still want to (and assign the benefit of the section 42 notice).


    In your position, I would phone 1 or 2 or 3 'proper' solicitors who specialise in lease extensions and property - and explain what you want to do.

    Most solicitors will discuss your problem with you on the phone for 20 or 30 mins at no charge, and give you an idea of whether they can help you or not (and what it might cost).
    Originally posted by eddddy
    I wonder if you could help me further please.

    I contacted about 10 specialist lease solicitors. Maybe two came back to me and said they could help, whereas about four said it was seen as contested and they wouldn't help me.

    I've just spoken to the lease advisory service who flat out denied that there was a chance the lease could be extended through delaying sending the TR1 back and using the interim to send the section 42 bacK.

    Lease advisory said that the TR1 land registry being sent back as incomplete does not mean that the change in ownership has not gone through. It may have been acknowledged just by the application at Land Registry?

    The one solicitor I've found who's happy to take the case on says that all they can do is write a s.42 and assignment of benefit (for 1k ) and see what happens, whether the Freeholder may object then.

    Lease Advisory said the Freeholder will object with grounds that they signed a Licence to Assign in February (which has now run out) which showed intention of us changing the ownership - and that is grounds to dismiss the lease extension being in the original name.

    My question is - what do you think I should do? Do you think the Freeholder would query it, she does believe the property has changed to both of our names - so what could she use/and would she use some method to find out current title deed?
    Would it just be land registry or would it be something else?
    Would she just highlight the fact we used a licence to assign as ground to object to the lease extension.

    Please can someone help before I go and pay for this legal stuff that may end badly.
    Last edited by cpfcstar; 24-05-2018 at 4:37 PM.
    • eddddy
    • By eddddy 24th May 18, 5:34 PM
    • 6,922 Posts
    • 6,856 Thanks
    eddddy
    The one solicitor I've found who's happy to take the case on says that all they can do is write a s.42 and assignment of benefit (for 1k ) and see what happens, whether the Freeholder may object then.

    Lease Advisory said the Freeholder will object with grounds that they signed a Licence to Assign in February (which has now run out) which showed intention of us changing the ownership - and that is grounds to dismiss the lease extension being in the original name.
    Originally posted by cpfcstar
    So essentially...

    your solicitor is saying the s42 won't be valid... but he/she's willing to take a punt and serve it anyway, to see if the freeholder is dopey enough not to notice.

    I suppose it's impossible to guess how dopey or diligent the freeholder is.

    Lots of freeholders don't like statutory lease extensions, so probably go through s42 notices with a fine-tooth comb looking for reasons to reject them.

    Once you serve an s42, you become liable for all the freeholder's valuation and legal costs - which could be 2k to 4k for a lease extension.

    It might be worth asking your solicitor if the freeholder can run up costs, present you with a bill for 4k, before rejecting your s42.

    Others may have a better informed answer.
    Last edited by eddddy; 24-05-2018 at 5:36 PM.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,907Posts Today

8,186Users online

Martin's Twitter
  • Thanks so much to all who watched @itvMLshow LIVE last night. The ratings are in at 2.4m and 12% share, lower tha? https://t.co/Jj62j1fV5F

  • RT @stomp_3k: Oh @MartinSLewis would be proud proud of me went sim free on my mobile contract renewal and bought my handset outright saving?

  • RT @MoneySavingExp: Wales Govt steps up to help ?severely mentally impaired? access crucial council tax discount after MSE campaign - BUT M?

  • Follow Martin