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
    • Suzieclow
    • By Suzieclow 25th Feb 18, 1:22 PM
    • 4Posts
    • 0Thanks
    Suzieclow
    Lease extension
    • #1
    • 25th Feb 18, 1:22 PM
    Lease extension 25th Feb 18 at 1:22 PM
    Hi
    I am in the middle of a lease extension and have been given the following offer. Any thoughts on the 33 year rent doubling? They tell me this is to help me achieve an affordable solution but I think long term it’s going to cost me more.

    “They are prepared to offer two proposals
    A premium of £20,000 for a new 99 year lease, being the same term as the original lease, with a peppercorn rent
    A premium of £17,500 for a lease to 125 years with a peppercorn ground rent for the next 5 years and there after £250 doubling every 33 years

    both offers are plus statutory costs.”

    Also what are the statutory costs he refers to. And how much should I be paying for the land registry?

    Sorry for so many questions at once.

    Thank you.
Page 1
    • eddddy
    • By eddddy 25th Feb 18, 1:48 PM
    • 6,329 Posts
    • 6,185 Thanks
    eddddy
    • #2
    • 25th Feb 18, 1:48 PM
    • #2
    • 25th Feb 18, 1:48 PM
    How does that compare with the potential cost of a statutory lease extension? (And how long do you have left on the lease currently?)

    A statutory lease extension would add 90 years to your lease at a peppercorn ground rent.

    But the valuation and legal fees for a statutory lease extension might be much higher.

    If you haven't investigated the costs of a statutory lase extension, there are many calculators on the internet, including:

    https://www.lease-advice.org/calculator/
    https://www.moneysavingexpert.com/mortgages/extend-your-lease (scroll down)
    • Beardmidget
    • By Beardmidget 26th Feb 18, 4:40 AM
    • 149 Posts
    • 108 Thanks
    Beardmidget
    • #3
    • 26th Feb 18, 4:40 AM
    • #3
    • 26th Feb 18, 4:40 AM
    I know nothing of statutory lease extensions, but if you were going to take one of the options the freeholder has offered, I would steer well clear of plan B- it creates a liability of £100375 across the life of the lease. I would get pretty nervous about this as a potential buyer (or probably conveyancing solicitor)
    • Tom99
    • By Tom99 26th Feb 18, 4:46 AM
    • 2,068 Posts
    • 1,392 Thanks
    Tom99
    • #4
    • 26th Feb 18, 4:46 AM
    • #4
    • 26th Feb 18, 4:46 AM
    You don't say what your current unexpired term and ground rent are so its difficult to say.

    As above, compare the offer to the likely cost of a statutory lease extension.

    I assume saying you will still be liable to statutory costs means the inflated valuation and legal fees of the freeholder.

    One thing is certain, this offer is not made out of the goodness of their heart to give you an affordable solution. It is to benefit the freeholder.
    • bouicca21
    • By bouicca21 26th Feb 18, 8:40 AM
    • 3,621 Posts
    • 5,418 Thanks
    bouicca21
    • #5
    • 26th Feb 18, 8:40 AM
    • #5
    • 26th Feb 18, 8:40 AM
    Option b really isn't that cheap. If you want to go for it, I'd suggest negotiating that premium down considerably. Also try getting a cap on the ground rent at £1,000.
    • Suzieclow
    • By Suzieclow 26th Feb 18, 8:40 AM
    • 4 Posts
    • 0 Thanks
    Suzieclow
    • #6
    • 26th Feb 18, 8:40 AM
    • #6
    • 26th Feb 18, 8:40 AM
    I don!!!8217;t know about statutory leases I will look at that now.
    We currently have 57 years remaining on our lease.
    Thank you so much for confirming our thoughts much appreciated

    Suzie
    • Tom99
    • By Tom99 26th Feb 18, 9:23 AM
    • 2,068 Posts
    • 1,392 Thanks
    Tom99
    • #7
    • 26th Feb 18, 9:23 AM
    • #7
    • 26th Feb 18, 9:23 AM
    At 57 years your current lease is probably un-mortgageable so would only sell to a cash buyer.

    If your ground rent is fixed you can get an idea of a statutory lease extension price from the calculator above.

    Given the 57 year term I would expect the premium to be quite high as you will have to pay 50% of the marriage value.

    If you decide to go ahead with a statutory extension you will first need to employ an RICS surveyor to value the flat and extension price and advise what figure to put in the Section 42 notice to the freeholder. You will need a solicitor to prepare the Section 42 notice.

    Once you have served that notice you are responsible for the landlords costs even if you later pull out because the price is too high.
    • Suzieclow
    • By Suzieclow 26th Feb 18, 11:15 AM
    • 4 Posts
    • 0 Thanks
    Suzieclow
    • #8
    • 26th Feb 18, 11:15 AM
    • #8
    • 26th Feb 18, 11:15 AM
    Thanks Tom. We have served the notice and paid surveyors fees. Just at negotiation stage now.
    I will never buy a leasehold property again, such an unfair and stressful process

    Once again I appreciate the advice

    Suzie
    • eddddy
    • By eddddy 26th Feb 18, 11:26 AM
    • 6,329 Posts
    • 6,185 Thanks
    eddddy
    • #9
    • 26th Feb 18, 11:26 AM
    • #9
    • 26th Feb 18, 11:26 AM
    Thanks Tom. We have served the notice and paid surveyors fees. Just at negotiation stage now.
    Originally posted by Suzieclow
    There is some confusion here.

    If you served a notice (i.e. a section 42 notice) you are doing a statutory lease extension.

    So neither of these options are relevant:

    They are prepared to offer two proposals
    A premium of £20,000 for a new 99 year lease, being the same term as the original lease, with a peppercorn rent
    A premium of £17,500 for a lease to 125 years with a peppercorn ground rent for the next 5 years and there after £250 doubling every 33 years
    Originally posted by Suzieclow
    Those two options would be for an informal lease extension. And if you are doing an informal lease extension, there is no notice to serve.

    If you have served a section 42 notice, you will get a 90 year lease extension at zero ground rent, and you will have stated on the section 42 notice what you are offering to pay for the extension.

    So you need to find out if you are doing a statutory lease extension.
    • economic
    • By economic 26th Feb 18, 11:59 AM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    A doubling of GR every 33 years is about 2% a year. Its actually better terms then my previous property which doubled every 25 years and i thought that was reasonable.

    I would probably go for the 125 year lease as if you sell it soon then you are paying a smaller premium upfront. If you stay there for a long time, then with a 99yr lease you are more likely having to extend again.

    But work out what the "fair value" is from online calculators and compare. Maybe statutory route is better after any further negotiation with the FH.
    • economic
    • By economic 26th Feb 18, 12:08 PM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    I know nothing of statutory lease extensions, but if you were going to take one of the options the freeholder has offered, I would steer well clear of plan B- it creates a liability of £100375 across the life of the lease. I would get pretty nervous about this as a potential buyer (or probably conveyancing solicitor)
    Originally posted by Beardmidget
    you are right, you dont know anything about lease extensions.

    The £100k you quoted is not a present value, and although it sounds big, paid over a 125 year period its not nearly as big. Also you assume the OP will be paying it for 125 years. Will he/she really have a life expectancy that by far beats all world records?

    The GR the OP would have to pay is actually one of the better terms i have seen.

    As always, the OP should find out the fair value and compare to what is being offered. In general you either pay more premium upfront and less GR, or vice versa.
    • Tom99
    • By Tom99 27th Feb 18, 6:33 AM
    • 2,068 Posts
    • 1,392 Thanks
    Tom99
    If you have started the statutory lease extension process by serving a section 42 notice remember you both have to comply strictly with the counter notice timetable.
    Don't get distracted by these other alternative offers and overlook the statutory timetable as you may lose your automatic right to a lease extension.
    • eddddy
    • By eddddy 27th Feb 18, 8:00 AM
    • 6,329 Posts
    • 6,185 Thanks
    eddddy
    As Tom99 suggests, your freeholder might be trying to distract you from your statutory lease extension by making informal offers.

    If that is the case, you might have 3 options open to you:

    - Continue with the statutory lease extension option
    - Discontinue with the statutory route and accept the £20k offer
    - Discontinue with the statutory route and accept the £17.5k offer

    Overall, the statutory lease extension is likely to be best value for money (even if it is not the cheapest). And legal and valuation fees will also be higher for the statutory extension.

    Also, some freeholders can be nasty and try to trick leaseholders. For example, they persuade you to discontinue the statutory lease extension... then shortly afterwards, withdraw their £20k and £17.5k offers.

    You should carefully follow your solicitor's and valuer's advice on this.
    • Tom99
    • By Tom99 27th Feb 18, 8:06 AM
    • 2,068 Posts
    • 1,392 Thanks
    Tom99
    A few other freeholder tricks are listed here:

    https://www.leaseholdknowledge.com/lease-extension

    https://www.leaseholdknowledge.com/informal-lease-extensions-are-pure-poison
    Last edited by Tom99; 27-02-2018 at 8:11 AM.
    • Suzieclow
    • By Suzieclow 5th Mar 18, 2:34 PM
    • 4 Posts
    • 0 Thanks
    Suzieclow
    Hi everyone thanks for the information. I believe we started the statutory lease process. The offers have come to us via the landlords surveyor. I am trying to get legal advice before we finalise but at present are still waiting for the surveyor to answer my last email. So perhaps time wasting is on their agenda.
    Thanks agai.
    • Tom99
    • By Tom99 5th Mar 18, 3:11 PM
    • 2,068 Posts
    • 1,392 Thanks
    Tom99
    You need to find out if you have started the statutory process or not.

    If you have, you will have signed a section 42 notice sent to the freeholder stating the premium you are willing to pay. Normally this notice will have been prepared by your solicitor not your surveyor.

    The freeholder normally has 2 months to issue you with a counter-notice which, if your section 42 is valid, will normally include their opinion of what premium you should pay.
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

2,083Posts Today

7,724Users online

Martin's Twitter
  • It's the start of mini MSE's half term. In order to be the best daddy possible, Im stopping work and going off line? https://t.co/kwjvtd75YU

  • RT @shellsince1982: @MartinSLewis thanx to your email I have just saved myself £222 by taking a SIM only deal for £7.50 a month and keeping?

  • Today's Friday twitter poll: An important question, building on yesterday's important discussions: Which is the best bit of the pizza...

  • Follow Martin