Lease Extension Process - Advice and Tips

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    Lease Extension Process - Advice and Tips

    Good Afternoon,

    I currently have 3x flats on the same estate which have around 85 years lease remaining (so still have a few years before I hit the 80 year mark).

    I am actually holding fire on starting the lease extension process to see if the expected upcoming reforms (due in this parliament) would be of benefit.

    I am also thinking of buying a 4th flat on the estate which I am 99% certain will have a similar remaining lease - I am aware that I cannot start the extension process on this flat until I have owned it for 2 years.

    I have never actually gone through the process of extending a lease and I wanted some advice before I consider taking the plunge by putting an offer in on a 4th flat.

    Specifically, the flats are not particularly high value (around £75k each) and the ground rent is only £10 per annum... online calculators suggest a premium to extend of around £1-2k per flat.
    Clearly there will be solicitors fees that will also need to be taken into account, and I believe I need to pay for the freeholders fees (including professional valuation), but I am hoping £2-3k per flat will be sufficient for the process.

    Can I ask advice of fellow landlords who have gone through the process of lease extension? Is it relatively painless if appointing a solicitor with experience in this area? Is the freeholder (Estates & Management Limited) likely to make the process any more difficult than is necessary? Am I being optimistic with my expectations with regards total cost?

    As I mention above, I am looking at purchasing a 4th flat - hence the request for advice... I don't want to buy the additional flat if I find that I am significantly underestimating the process/cost of extending each of the leases.

    Thanks in advance,
    cdub.


    #2
    If you already own 3 properties you should already have a feeling on how good the freeholder/Management company are in things like repairs/issues and dealing with them, if they are not then it's most likely they will not be good on the lease matters either.

    When dealing with lease extension, as you've stated the more years you have left on your lease the less you will have to pay, it's a negotiation concerning the cost of the lease, and how many years you want, return to 125, or 199 years or some other number of years. You may have a better negotiation if you do all 3 at the same time.

    A good resource is https://www.lease-advice.org/advice-...tting-started/ if you and the freeholder can't agree on the cost of the lease.

    Comment


      #3
      Stick to the statutory route and you should make some savings on valuation and legal fees if you do 3 or 4 together (you can afford to wait 2 years before starting the process), the proposed reforms won't make much odds in your case as there will be no marriage value element.

      I will pm the name of a specialist company as most solicitors have no idea and can mess up the process

      Comment


        #4
        Thanks for your input, much appreciated

        Comment


          #5
          At 84 years the cost of a statutory lease extentsion in your case is very easy indeed to calculate it is

          value of ground rent stream plus value of reversion

          Value of ground rent stream = £10 capitalised at 6% = £10 / 0.06 = £167

          Value of reversion = £75000 / 1.05 ^ 84 = £75000 / 60.24 = £1245

          premium = £1412 - on that I am very confident if the flat has a value with a very long lease of £75000

          it is highly unlikely there will be any saving resulting from a change in the formula

          More likely is that the landlord in the future may have his costs capped or have to bear them himself

          Comment

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