Lease Extension Valuation Report done......now what?

[CreativeB]

Hi,

I'd appreciate some operational advice from you good souls out there regarding what to do after I have had a valuation report done

I want to sell my £280,000 flat with 69 years left and buy a house asap.

The valuation report has come back with £19-23k for 90 + 69 = 159 yrs plus peppercorn rent. My ideal scenario would be to do a deal with the freeholder for 99yrs for about £8000 + costs.

The last offer he gave us was a rather unappealing 12 year extension for £10,000. He has tended to play hardball and take forever to get back to us so I'm tempted by the legal route if only because it means there will be deadlines/milestones I can hang onto as the process drags on.

I just want to sell but want any prospective buyer to know that the lease extension process is under way. So wanted to ask the experts what the best way to go was - try negotiating one last time, serve notice, get a solicitor to start agreeing the rights of the lease into the proposed sale of my flat etc etc

Help greatly appreciated

CreativeB

[sgclacy]

Assuming the ground rent is around £50 per annum I would have thought the premium would be at the lower end ie £19k

I would go back to the freeholder and see if he would accept a higher ground rent and do a deal on a 99 year lease. Very roughly make the following allowances.

For a 99 year lease as opposed to a 159 year lease expect to see £1,250 reduction

For a ground rent of say £250 per annum expect to see nearly £4k reduction. On a £280k flat a ground rent as high as £350 should not necessarily pose a problem and if you accept that then expect a £5,500 reduction.

69 lear lease on a £280k flat in this market will pose a problem as I am sure you will have found out

[quarterday]

one of the reason landlords are reluctant to negotiate outside the act.......

is that capital gains tax liability is rolled over if the lease extension is granted pursuant to the 93 act, and not otherwise. So if your landlord doesnt want to deal other than at a peppercorn and for 90 years it may be for tax reasons

[Gazou]

Hi,

I just want to sell but want any prospective buyer to know that the lease extension process is under way. So wanted to ask the experts what the best way to go was - try negotiating one last time, serve notice, get a solicitor to start agreeing the rights of the lease into the proposed sale of my flat etc etc

You can contemporaneously serve a Section 42 Notice to obtain a statutory lease extension (90 years, peppercorn rent) and commence selling your property.

The sale and purchase agreement would include provisions for assigning the benefit of the Section 42 Notice. See post #7 by jeffrey at http://www.landlordzone.co.uk/forums...ad.php?t=22082 for an explanation of the legal process.

[CreativeB]

Freeholder laughs at my offer and farts in my general direction

I did try to negotiate with my freeholder but he told me that my offer was ridiculous, that I should stop wasting his time, and only talk to him when I was serious

I have instructed my solicitor to serve notice

BTW - it's difficult to put your flat/house on the market with the new lease extension period until it is finalised - those who say otherwise here are not living in the real world

[kikuyu]

I did try to negotiate with my freeholder but he told me that my offer was ridiculous, that I should stop wasting his time, and only talk to him when I was serious

I have instructed my solicitor to serve notice

BTW - it's difficult to put your flat/house on the market with the new lease extension period until it is finalised - those who say otherwise here are not living in the real world

Believe it or not, there are people who do buy flats where the section 42 has been assigned and they live in THIS world!!

All this means is that they will take account of the premium and other costs they will be liable for, plus the aggro.

Take it from me, I am speaking from experience.

[James 2009]

I did try to negotiate with my freeholder but he told me that my offer was ridiculous, that I should stop wasting his time, and only talk to him when I was serious

I have instructed my solicitor to serve notice

BTW - it's difficult to put your flat/house on the market with the new lease extension period until it is finalised - those who say otherwise here are not living in the real world

Putting your house on the market is pretty damn easy if you ask me! Or are you saying that the offers you anticipate getting with a short lease are not what you want? If so that is nothing to do with putting the property on the market, and everything to do with your expectation of market value. Your expectation of market value may be high full stop, but your opinion of market value with a short lease (and hassle, legal costs associated with extending) might be far too high.