Lease extension / new lease

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    Lease extension / new lease

    i have been in negotiations to extend my lease with FH. We have finally agreed that the lease can be extended for a further 125 years. However the FH has stated that a new lease will be drawn up to include ground rent at £250 pa with an increase every 25 years in line with the RPI. Change the existing arrangement regarding insurance so that the total cost of the building is split per flat (depending on number of bedrooms ie more bedrooms the more insurance you pay. Is this the norm? I find the ground rent very high and have not heard of the split of insurance before? Any advice would be greatly appreciated.
    .

    #2
    It depends on what premium they intend to charge. You can get an extension with a peppercorn ground rent, but, if the premium is low enough, it may be better to accept the current offer.

    The propose ground rent terms are at the top end of acceptable range, according to recent government leasehold report, as long as the property is worth at least £250k, with the extended lease.

    Comment


      #3
      how long is left on your lease, have you considered the formal route? read the thread ...https://forums.landlordzone.co.uk/fo...ort-19th-march

      Comment


        #4
        1. A leaseholder has the "legal right" to seek a statutory 90 years lease extension; , if your existing lease is down to 70 years, then after extension it will become 160 years lease at peppercorn ground rent ( = Nil Ground rent ) .

        There is a free guide on statutory lease extension to download from LEASE ( www.lease-advice.org ) .

        A lease extension with ground rent payment is not a "statutory 90 years lease extension" and the terms are probably more favourable for the freeholder and not on favourable for the tenant. If statutory lease extension was favourable for the freeholder, it would have been offered to you.

        The Housing Minister may decide to change the rules on "ground rents" and you should keep abreast on the LeaseholdKnowledge website and google search for recent articles on the national newspapers.

        2. The buildings insurance policy is part of the service charge and the % contribution is stated in your lease.



        Comment


          #5
          How many flats in the building? All leases would need to changed in order for the insurance proportions to be adjusted.

          What is your current ground rent and remaining years left on your lease?

          Comment


            #6
            The current ground rent is unknown as it has always been paid from the Management account (which it probably should never be). The lease states £25 ground rent which is increased every 25 years I line with RPzi. The original lease is dated 1981 the current lease has 61 years left. I have made an agreement with my FH tor lease extension of £22,000. There are 5 flats in my block and current value of flat is around £200,000.

            Comment


              #7
              Also the FH has said that there would need to be new leases drawn up (which includes designated parking spaces) and new leases will include new ground rent and insurance proportions. Can I request a draft copy of the new lease? I don’t want FH adding additional clauses without my acknowledgment.

              I have looked into going down the statutory route but this takes s long time and costly and want to avoid this.

              Comment


                #8
                I don't see how freeholder can change your lease, (re insurance and parking) and not change everyone else's.

                Comment


                  #9
                  The FH is changing every lease as parking is changing and all flats are renewing.

                  Comment


                    #10
                    If all flats are in agreement and are renewing at the same time then it is probably a cost effective solution for the LH and FH to amend all the leases and renew at the same time, especially if some of the proposed changes benifit you.

                    A statutory extension would cost you around £28k(ball park figure) plus legal fees £5k so the £22k you’re paying isn’t too bad.

                    I’d make sure there aren’t any other hidden changes in the lease that may cause you issues in the future.

                    Comment


                      #11
                      Thank you. Can I ask for s copy of the new lease before I sign in case there are additional clauses?

                      Comment


                        #12
                        Originally posted by 169783 View Post
                        The FH is changing every lease as parking is changing and all flats are renewing.
                        Then why not collectively buy the freehold and do away with ground rent entirely? (Also do away with profiteering freeholder.)

                        Comment


                          #13
                          The freehold was offered 19 years ago but unfortunately I was not financially able to buy

                          Comment


                            #14
                            Originally posted by 169783 View Post
                            The freehold was offered 19 years ago but unfortunately I was not financially able to buy
                            But it sounds like you all are now though? The freehold itself won't cost each lessee much more than the lease extensions.

                            Comment


                              #15
                              The freehold is not up for offer. I didn’t think you could buy the freehold if you have already refused it. The Freehold was offered to all 5 leaseholders a while back and at the time and only two agreed. So definitely don’t think there would be a chance to but now.

                              Comment

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