Lease extension- 70yrs. unexpired- necessary/desirable?

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    Lease extension- 70yrs. unexpired- necessary/desirable?

    I'm buying a two bedroom flat in north London and there are just under 70 years left on the lease. I'm considering extending the lease by 90 years for £8,000 plus about £1,400 total fees.

    I really don't know if I should bother with it, will it increase the value of the property by more than the amount I'm paying? I may sell in a few years and I'm wondering if a lease of 65 or so years will put off future buyers?

    Any advice would be appreciated.

    Thanks,
    George

    #2
    Originally posted by curiousgeorge
    I'm buying a two bedroom flat in north London and there are just under 70 years left on the lease. I'm considering extending the lease by 90 years for £8,000 plus about £1,400 total fees.

    I really don't know if I should bother with it, will it increase the value of the property by more than the amount I'm paying? I may sell in a few years and I'm wondering if a lease of 65 or so years will put off future buyers?

    Any advice would be appreciated.

    Thanks,
    George
    I have a long lease which has 82 years remaining. I was initially quoted £7,250 including legal costs to increase the lease from 82 years to 125 years. After posting a thread here and offering to pay £2,000, the landlord reduced his demand to £3,000. I retained a local agent who did a formal valuation and offered £750 + legal costs to increase the lease by 90 years or else to take it to the Leasehold Valuation Tribunal. The freeholder has now agreed to increase the lease by 90 years for a payment of £1,500 inclusive of legal costs.

    I think it is a good idea to increase the lease term but at a sensible price. Paying £9,400 including costs doesn't seem like a good idea to me. It seems you are being ripped off. Having said this, at less than 80 years remaining, a 'marriage value' comes into play whereby the freeholder expects to share in the increase in value due to the extension of the term. There is a mathematical formula which doesn't seem logical to the likes of you and I. Find a good agent specialising in the leasehold valuations and see where this takes you. You could also get in touch with the Leaseholders' advice people (see details on other threads).

    Ramnik
    Private advice is available for a fee by sending a private message.

    Comment


      #3
      I bought a flat 2 yrs ago with 61 yrs left on 99 yr lease. I didn't have trouble getting a mortgage but was led to believe that once lease has less than 60 yrs remaining building soc.s wont lend on them and some people told me the flats begin to lose their value. Can this be true? Simarc are the ground rent agents (unfortunately) and with this in mind can anyone recommend a solicitor in the north east to act for me in my dealings with them?

      Comment


        #4
        lease

        I heard that 70 years is the minimum generally before they start to lose value, but most lenders will ask that a certain number of years must remain on the lease on expiry of the term of the mortgage. In my case the Halifax required 30 years.

        George

        Comment


          #5
          update

          I spoke to the agents managing the lease and they said that the lease on flat next door was renewed for the same amount and I'm unlikely to get it any cheaper.

          Also, the freeholder will not accept a lower premium for a shorter extension because this is likely to be the only chance he gets to benefit from being a freeholder in his lifetime.

          He also siad that I'll struggle to sell in a few years time with less than 70 years on the lease.

          It's a difficult one, I might just put an 'offer' in of £7k and say take it or leave it.

          George

          Comment


            #6
            I have inserted my replies in red

            I spoke to the agents managing the lease and they said that the lease on flat next door was renewed for the same amount and I'm unlikely to get it any cheaper.

            Also, the freeholder will not accept a lower premium for a shorter extension because this is likely to be the only chance he gets to benefit from being a freeholder in his lifetime.

            He also siad that I'll struggle to sell in a few years time with less than 70 years on the lease.

            Who is this agent working for? How do you know for sure what the ''next door'' paid? In any case, did the ''next door'' have theirs valued before paying for the lease extension?

            It's a difficult one, I might just put an 'offer' in of £7k and say take it or leave it.
            Well, its your money. If you are willing to pay £7,000, surely you could afford to spend a few hundred for a professional valuation. This way at least you will know that you haven't paid any more than what you had to.

            Ramnik
            Private advice is available for a fee by sending a private message.

            Comment


              #7
              Be realistic

              What is a lease extension? It is an additional period of time that the lessor grants to the lessee for permission to remain in the dwelling.

              Now, what's it worth to you having that additional time? That's just one of the ways how you should look at this figure in my opinion.

              Comment


                #8
                lease

                Ramnik,

                The agents managing the lease are estate agents. The freeholder has several flats, one of which is next door. The agent told me that the same questions were asked when the lease on the adjacent flat was renewed and £8k was deemed an acceptable premium. All I have is the agent's word, I can't prove how much was actually agreed for that lease extension.

                Poppy,

                An extended lease will add value to the flat and make it easier for me to sell it in a few years' time.

                George

                Comment


                  #9
                  Originally posted by curiousgeorge
                  Ramnik,

                  The agents managing the lease are estate agents. The freeholder has several flats, one of which is next door. The agent told me that the same questions were asked when the lease on the adjacent flat was renewed and £8k was deemed an acceptable premium. All I have is the agent's word, I can't prove how much was actually agreed for that lease extension.

                  Poppy,

                  An extended lease will add value to the flat and make it easier for me to sell it in a few years' time.

                  George

                  All I would say again is to reiterate the comments in the last paragraph of my last reply, ie:



                  Well, its your money. If you are willing to pay £7,000, surely you could afford to spend a few hundred for a professional valuation. This way at least you will know that you haven't paid any more than what you had to.


                  Ramnik
                  Private advice is available for a fee by sending a private message.

                  Comment


                    #10
                    lease

                    Yeah, I know. I've got a lot of thinking to do.

                    Anyway, it looks like I'm about to be gazzumped so it might not matter!

                    Comment


                      #11
                      Problem with leasehold flat

                      Hi,

                      I'm looking at selling my flat which I've had for nearly 7 years.
                      The lease was taken out in June 1972 for 99 years.
                      Unfortunatley, I was not advised when purchasing the flat that I could possibly have problems selling in the future.
                      I'm now at the stage where estate agents who have valued the flat are saying that buyers could be put off or even refused a mortgage. There is 66 years left on the lease.

                      I have contacted the freehold management agent and they have instructed me that the lease can ONLY be extended by 90 years (Apparently this is the law). This will cost me £6,300 + 3% for the agent + £1,000 approx solicitors fees.

                      The flat is in East Tilbury, Essex and valued at £97,500 - £100,000.

                      Can anyone give me some advice on this.
                      Some estate agents have said just put it on the market and hope the buyer gets a mortgage ok and his solicitor doesn't create waves. Some say extend the lease.

                      If, as the previous replys in this thread, the advice is to get the property independantly valued and then approach the freeholder with a reviewed price. Can anyone advise on a good company in the Essex area.

                      Inciddentally, I'm not sure whether I'm allowed to mention the freehold agent (MS) but he was extremly rude and abrupt over the phone and didn
                      t seem like he would either be interested in compromising or even listening to anything I had to say.

                      Please help, I don't really want to pay £7,600 if I can help it.


                      Regads


                      Danny

                      Comment


                        #12
                        Yes, I believe it is correct to say that the lease could be extended for upto 90 years.

                        I don't think that the agent has to be locally based for him/her to value the extension. So long as you give him/her the details of your lease period, ground rent, approximate value etc.

                        You could telephone the agent I used and he could at least give you an indication of where you stand. In my case he had given me a ball park figure and an estimate of his fees before deciding whether I wanted to proceed with a formal valuation. His telephone number is 020 8760 0893

                        Ramnik
                        Private advice is available for a fee by sending a private message.

                        Comment


                          #13
                          Try looking at the situation in a different way.

                          Say there are 66 years unexpired and you intend to sell, you may wish to market the flat at a price to reflect that. The buyer would then have the option at the time of purchase extend the lease. The buyer would still ultimately pay full market price and it would not have cost you anything.

                          The premium of £6,300 that you have mentioned represents many factors to the landlord/freeholder:

                          1. the diminution in the value of the landlord's interest in the flat; that is, the difference between the value of his interest now with the present lease and the value of his interest after the grant of the new lease with the extra 90 years.

                          2. the landlord's share of the marriage value

                          3. compensation for loss arising from the grant of the new lease

                          Between yourself and the landlord you must negotiate what it is worth to extend the lease for a minimum of 90 years.

                          I recommend that you visit the Leasehold Advisory Service website and learn about your rights and your freeholder's rights. www.lease-advice.org

                          Comment


                            #14
                            Originally posted by david r
                            I bought a flat 2 yrs ago with 61 yrs left on 99 yr lease. I didn't have trouble getting a mortgage but was led to believe that once lease has less than 60 yrs remaining building soc.s wont lend on them and some people told me the flats begin to lose their value. Can this be true? Simarc are the ground rent agents (unfortunately) and with this in mind can anyone recommend a solicitor in the north east to act for me in my dealings with them?
                            I am in a similar situation and Simarc are also the ground rent agents (unfortunately).
                            I have just remortgaged and they (Simarc) are charging the solicitor for my new mortgage lender to release details of my leasehold property. The solicitors are in turn passing this on to me for £58.75. Not a huge amount I admit but I would rather have that in my pocket than theirs for moving a few sheets of paper.
                            I am going to try and contact Simarc directly for the information needed if i can and pass it on to the solicitors.
                            A random search about Symarc Property Management Limited came up with an entry on the Parliamentry site below:

                            Mr. Chaytor: I thank my hon. Friend for that reply. Is he aware of the activities of companies such as Ladybrook Securities, Simarc Property Management, Chancery Lane Estates, Leafenvoy Ltd, Grace Favour Ltd, Compton Developments and Urban Point Property Management? They all have a track record throughout Greater Manchester, including my constituency of Bury, North, of issuing extortionate demands to leaseholders for minor administrative procedures such as retrospective consent for planning permission or notification of change

                            17 Nov 1998 : Column 740


                            Steve.

                            Comment


                              #15
                              Create a new thread

                              It would appear that this thread came to a natural conclusion in February 2006.

                              steve_nova, welcome to the forum. May I please recommend that you create your own thread.

                              Any future posters/respondents of this thread, please also start your own thread. It doesn’t make sense for established members to trawl through posts which are months old.

                              Comment

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