Share of freehold lease extension

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    Share of freehold lease extension

    We are extending our share of freehold lease as it’s under the 70 year mark.


    Both leases of the two flats are equal so it should be a paper based exercise, I’m told. We are both happy to go ahead.

    How long should we extend for? 999 seems obvious but are there any draw backs or tax implications? Ive asked the solicitors when enquiring about the cost and process but they aren’t giving any pointers.

    Thanks

    #2
    Solicitors are not qualified to give advice on taxation matters ; you can get tax advice from accountants.

    Best to choose extension of lease to 999 years at peppercorn ground rent ( = 0 ground rent ).

    Solicitors can quote you their charges for doing their work, if instructed,

    Comment


      #3
      If the existing lease is copied and used for lease extension from 99 years to 999 years, there is minimum work by the solicitor. The Land Registry will charge for registering the extension lease.

      When the leaseholder is also a party on the freehold side , a benefit ( the extension ) has passed from left hand to right hand of the same person and the person has no capital gain to report until after the property is sold at some future date.

      Comment


        #4
        Originally posted by Gordon999 View Post
        Solicitors are not qualified to give advice on taxation matters ; you can get tax advice from accountants.

        Best to choose extension of lease to 999 years at peppercorn ground rent ( = 0 ground rent ).

        Solicitors can quote you their charges for doing their work, if instructed,
        I am an accountant, but this is very specific and specialist area of tax. It’s not covered by normal chartered accountants and there’s nothing definitive online. Therefore a solicitor who specialises in leases is more likely to warn us there is a tax implication, based on hearing about it in their role than a general accountant. Most online advice covers leasehold extensions rather than share of freehold lease extensions. I presume there is no change in valuation upon extension because it’s an admin exercise. It would be good to have this confirmed.

        The pointers I want from the solicitor is about the length of lease. What’s sensible, what do people do generally based on their experience? What are the pros and cons of x years v y years? There’s no information online so hoping someone understands this and can advise.

        Thankfully solicitors I’ve contacted are happy to quote for the work prior to appointment. I have several quotes and have one I’m happy with and will instruct once I understand the period of extension we should ask for.

        Comment


          #5
          The longer the lease the better, so if you can obtain a 999 year lease at a peppercorn rent, that is what you should aim for, Gordon is correct, capital gains only apply when you dispose of an asset. The payment which you make now may be added to the original cost. A solicitor or an accountant should be able to assist you further, you should seek one who specialises in taxation.

          Comment


            #6
            In UK, the leasehold property system is covered by the Landlord & Tenant Acts & Housing Acts . Under this system, the freeholder is the legal owner of the building and leaseholders are tenants under a long term rental agreement .

            Under the law in England & Wales only, the leaseholder after 2 years , has a legal right to seek a statutory 90 years extension at peppercorn ground rent from the freeholder. There is a free guide published on statutory lease extension, which can be downloaded from www.lease-advice.org

            I read in the first post of this thread, that the leaseholders ( in a block of 2 flats ) owns the freehold title.

            This means the leaseholders can grant themselves 999 years lease extension at peppercorn ground rent , without payment to the freeholder ( who are themselves) .

            Ariadne should remove her accountant 's hat , and put on her leaseholder's hat and decide on 999 years.

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