Lease extension to 999 will LH gain possession

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Lease extension to 999 will LH gain possession

    I don't know if this has been asked in the forum already by someone.

    I am FH in a property of which it has 3 flats and a shop of which two are sold of on a 125yr LH in a property.

    As FH if I allow to extend the lease to 999yrs, will the LH gain any or more authority in the FH. IE will they use abuse their power in it.

    I know I will gain some money and
    I know the LH will gain the value of the property and saleable and increase mortgage-ability.


    #2
    You should consult a solicitor who specialises in "Landlord & Tenant Act" matters because "landlords" on the LZforum are lay-persons and don't know the answer to your question.

    Comment


      #3
      Extending the lease to 999 years does not impact on the leaseholder's rights in terms of the freehold. The leaseholder will still be a leaseholder on the same terms irrespective of the term (period) of the lease extension.

      However, the value of the freehold reduces the longer the leases as the main value of a freehold is in the leases: short leases particularly those with less than 80 years are very attractive to freeholders as the premium for a lease extension is much higher owing to the landlord's entitlement to marriage value. See the LEASE website for further details.

      How long is the existing lease?
      Why are you considering 999 years? A leaseholder is only entitled to + 90 years added to the unexpired term even if they use the statutory route to extend their lease. In this case their ground rent will also be reduced to peppercorn (nil).

      Have you had a landlord's valuation undertaken in respect of a lease extension? If not, that is the first step to assist you to determine a fair premium. The leaseholder is liable to pay for the landlord's valuation and legal costs in relation to extending the lease. You can ask the leaseholder to pay the valuation fee upfront and make clear it is not refundable should the extension not go ahead for any reason. Even if they go the statutory route they are still liable for your reasonable valuation and legal costs.

      Use a RICs qualified surveyor; they will often handle the negotiation on your behalf.


      Comment


        #4
        Originally posted by vmart View Post
        Extending the lease to 999 years does not impact on the leaseholder's rights in terms of the freehold. The leaseholder will still be a leaseholder on the same terms irrespective of the term (period) of the lease extension.

        However, the value of the freehold reduces the longer the leases as the main value of a freehold is in the leases: short leases particularly those with less than 80 years are very attractive to freeholders as the premium for a lease extension is much higher owing to the landlord's entitlement to marriage value. See the LEASE website for further details.

        How long is the existing lease?
        Why are you considering 999 years? A leaseholder is only entitled to + 90 years added to the unexpired term even if they use the statutory route to extend their lease. In this case their ground rent will also be reduced to peppercorn (nil).

        Thanks for the response vmart.

        The lease was issued in 1999 for 125yrs.

        I appreciate the downfall in value for long leases.

        I am money strapped and wanted some money which I cant get hold of anywhere else(loans remortgage etc). Someone suggested this extension scenario to get the capital I need for now. I intend to hold on to the property and as a FH. I still have a 1bed flat and shop so out of 3 flats two of them are on the lease of 125yrs and still have 104yrs left. As this is a London property the value of the flat alone could increase in value in the future.

        I guess how much I get could determine if it is worth going through it.

        Comment


          #5
          Given that it is a long lease, there may be no incentive for the leaseholder to extend. You can always approach them with an offer though.

          Comment


            #6
            Won't it increase the LH's flat value.

            What kind of incentives can I offer,I know the Gr Rent can be £0 from £150/an currently and will double every 25yrs hence in 4yrs it will be £300 not much I think but it could incentive for the buyer to have a LL not to worry about the GR.

            The only thing I can think of is sell them at BMV of the RIC's surveyor's figure.

            Comment


              #7
              What is the value of the flat?

              As the flat has a long lease extending to 999 years does not really add that much in terms of realizable selling price. I would suggest you speak to an estate agent and ask them how much more the flat would sell for with a £0 ground rent and 999 years' lease. Once you have this figure and the current value of the flat you will be able to work out a rough premium but I doubt it will be that much or that attractive to the leaseholder especially when you factor in surveyors and legal fees. Though in this scenario, you might not need a surveyor's valuation to make an offer to the leaseholder. As ground rent increases to £300 there may be room for negotiation and I note there are 3 flats so if all accepted it may generate a reasonable sum.

              How long is the lease on the other flat?

              Comment


                #8
                Do you own any of the flats?

                Would you consider selling the freehold? Another option to consider. However, from your OP I don't think you want to do this.

                Comment


                  #9
                  vmart, I don't knwo what happened I couldn't get on to the site for some reason. It was reporting a virus infiltration while it also said the site was going through some upgrade.

                  With regard to your query I do own 1 of 3 flats so only 2 are LH.

                  Yes you are right I am not considering making an offer to sell the share of freehold. You might be thinking I am charging them to do some works in their flats, well not a penny. The only expense they would have to pay is the legals fees.

                  Another option someone one suggested I could sell something called Airspace to the basement LH. you might be familiar with it. This might allow the LH to extend a room on first floor on top of his current GF room subject to planning permission. He did ask for extension at the back for which he only got a permission smaller than he wanted, not worth spending the money on.

                  Currently he has a 2 bed flat. So to make it a 3 bed in Camden is going to help his value. Figure wise he bought it for £500k, current value around £600k. By the looks of it at the time it won't increase by much but he is looking to live there for long term to increase his family ie have kids. So he might take up on the offer.

                  Comment

                  Latest Activity

                  Collapse

                  • Restitution for overpaid service charges
                    by Lorimer
                    I have just had a First Tier Tribunal hearing for a service charge challenge spanning the years 2014-2016. The FTT confirmed what I suspected - that I had overpaid 10K of service charges and that although the FTT is not in a position to order repayment to me, I might consider making a county court claim...
                    18-04-2019, 09:01 AM
                  • Reply to Restitution for overpaid service charges
                    by CANADA576
                    Hi Lorimer,would love to know the outcome as I have a very similar problem with a persistent leak plus wrongly apportioned and exaggerate Buildings Insurance premiums from a landlord that owns 8 properties in a row, including mine.
                    09-12-2019, 10:08 AM
                  • Reply to Council or housing association as freeholder
                    by propertyboy
                    Will I have the same statutory right to extend after 2 years like another leaseholder regardless of the fact that the freeholder is the council?

                    Does it matter if you are a non-resident landlord? Can you extend your lease after 2 years if you are based overseas?...
                    08-12-2019, 17:49 PM
                  • Council or housing association as freeholder
                    by propertyboy
                    Hi all,

                    I do not have any appetite to buy ex-local stock and look to buy period property in London.

                    This is personal preference (lots of ex local supply and prefer victorian stock in a period property with 2-3 flats in the block).

                    Recently I have been looking at...
                    24-11-2019, 21:28 PM
                  • Reply to Correct Accounting report for an RMC
                    by Gordon999
                    The unspent service charge money including "reserve fund/sinking fund " belongs to the leaseholders. The RMC has to keep the service charge money in separate bank accounts called "client account" for which the bank will issue a letter to acknowledge the "client account"...
                    08-12-2019, 14:00 PM
                  • Correct Accounting report for an RMC
                    by Libra
                    I am wondering what is the correct accounting report for an RMC, that is owned by the leaseholders / freeholders and also owns the freehold.
                    Has the Tec/03/11 been superseded? Is the Financial reporting standard 102 section 1A appropriate?
                    Is it correct to report that the reserve fund...
                    07-12-2019, 16:49 PM
                  • Reply to Correct Accounting report for an RMC
                    by Gordon999
                    The RMC has to file its own "RMC company accounts" to Companies House and if it has no ground rent income, it will be filing dormant accounts.

                    The RMC has responsibility under the lease to collect the service charge money from leaseholders and arrange maintenance of the building...
                    08-12-2019, 13:44 PM
                  • Reply to Correct Accounting report for an RMC
                    by Libra
                    Thank you Leaseholder 64. I
                    07-12-2019, 20:05 PM
                  • Reporting the directors of a RMC to be unfit
                    by Libra
                    Hello...and thank you for listening
                    I am wondering if one could report the RMC directors to be unfit - several breaches of Companies Act - blackmailing / coercing the residents / misleading statements regarding the right to acquire the freehold - probably false accounting ( still investigating...
                    07-12-2019, 16:39 PM
                  • Reply to Reporting the directors of a RMC to be unfit
                    by Libra
                    Hello Leaseholder 64,
                    Thank your for your reply. I didn't think that they are the same issues ...that's why I started another post. I can now see how they can have a common point. To my mind, whether I can report the directors was different to what is the correct account report for a RMC. My apologies....
                    07-12-2019, 20:00 PM
                  Working...
                  X