56 year lease to be extended - how to ensure a fair price?

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    56 year lease to be extended - how to ensure a fair price?

    Dear all,

    I wondered if you could help me help a close colleague. My knowledge of this area is very lacking...

    Property Details:
    She has a property which is a 2 bedroom self contained ground floor flat in North London N11. It is converted (it's the ground floor of a 2 storey terraced house) and the freehold is owned by a chap, who has a few properties in the area, although the neighbouring houses to the discussed flat are unrelated. The flat is valued at approximately £200k. The lease has 56 years left to run.

    She used some online calculator that said to extend the lease would cost around £20k

    1) She won't be selling for 10 years of more. Is it a clear fact that for cost efficiencies she should extend the lease now and not wait and sell the property later with the short lease?

    2) Are there any tips in acheiving the best extension price? Or at-least to not be overcharged. I have no idea how to ensure this or indeed if there is a rule of thumb guide available?

    2) Should she simply go for 125 years - is this the lowest cost approach in terms of extending the lease while not affecting her potential sale price say 10 years along the line.

    3) Would anybody be willing to list a very basic step by step process of how to progress this process. I guess someone experied with lease entensions who may intrinsically identify if the price is too high and thus add more value?

    Very much appreciate your kind assistance...

    Regards

    #2
    1. Whatever the 'true' value/price now, it will rise inexorably as the unexpired term declines: so do it sooner rather than later!
    2I. Serve a s.42 Notice [1993 Act] on L. Some LZ members advise trying to negotiate beforehand.
    2II. Why '125 yrs.'? The s.42 procedure entitles T to add 90yrs. to the unexpired term and to reduce the ground rent to a peppercorn [= non-money rent].
    3. See 2I.

    The best way forwards, however, is for this T to approach T of other flat. He/she will presumably have the same problem.
    If they jointly buy the freehold reversion [s.13 Notice, rather than s.42], they:
    a. save £££ on paying L's legal fees twice;
    b. reduce their own fees, as each of the two can use the same solicitor; and
    c. can thereafter re-grant the leases for 999yrs., far in excess of the statutory 90yr. period.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      Is the flats value of £200k with a very long lease or with its 56 years lease.

      I assume the ground rent will be a very nominal sum..is this correct

      Comment


        #4
        Thank you very much for responding Jeffrey, very helpful.

        In regards to the latter questions, the flat is valued at approx £220k (with a fair lease term) and I think she crudely reduced it by £20k as per the lease extension cost calculator and came up with £200k.

        Not sure if this helps and if 20k woudl be a fair assumption

        Comment

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