Lease extention advice

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    Lease extention advice

    Hi, i live in a leasehold ground floor flat in a 2 flat converted house with a lease of 67 years remaining.
    I intend to sell the flat in the next few months and have contacted the managing agents for the leaseholder for a lease extention quote. They have quoted £10`000 with a ground rent increase on top of that.
    Can anyone advise as to whether it would be wise to just extend it for that price, sell it without increasing it or get a solicitor and try and get a smaller quote.
    The flat is valued at approximately £235`000. There is also the possibility that the original leaseholders have sold the freehold on without first offering it to us ( a neighbour with the same freeholder and agents has found out hers has been sold on).
    I would be grateful for any assistance as i am not getting anywhere on my own.

    #2
    Lease extensions are a matter for negotiation between the freeholder and the lessee. No one can here can advise you as to whether a quoted premium is a good price.

    Take a look at the Leasehold Advisory Service website.

    Comment


      #3
      Originally posted by Tallulahballulah View Post
      Hi, i live in a leasehold ground floor flat in a 2 flat converted house with a lease of 67 years remaining.
      I intend to sell the flat in the next few months and have contacted the managing agents for the leaseholder for a lease extention quote. They have quoted £10`000 with a ground rent increase on top of that.
      Can anyone advise as to whether it would be wise to just extend it for that price, sell it without increasing it or get a solicitor and try and get a smaller quote.
      The flat is valued at approximately £235`000. There is also the possibility that the original leaseholders have sold the freehold on without first offering it to us ( a neighbour with the same freeholder and agents has found out hers has been sold on).
      I would be grateful for any assistance as i am not getting anywhere on my own.
      Well, on a lease with 67 yrs left, you really must do something; the sooner you do, the less you'll pay.
      How long have you owned it/ Once you have > 2 yrs stacked up, you have a statutory extension right: 90 yrs extra and NO ground rent as from completion. That is possibly better than what's currently on offer. Consult a surveyor re what would be a reasonable price for one or other.
      Finally, it's a CRIMINAL offence to sell f/r on flats without first offering it to collective lessees; no two-year rule here.
      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


        #4
        Tallulah,

        If you've owned your property for 2 years, you have the right to extend your lease for an additional 90 years. A property with less than 80 years left on the lease will be more costly to extend, since it attracts whats called a marriage value (calculated from the value of the property).

        You need to extend the lease because most lenders will not release funds on a property which has less than 30-40 years more on the lease than the term of the mortgage (so the lease must have a duration of 55-75 years for a 25 year mortgage, depending on the preferences of the lender).

        A specialist valuer will advise you on how much to offer the freeholder to extend your lease, and negotiate an agreement. If you cannot agree a price, a Leasehold Valuation Tribunal will make the decision for you (and possibly assign costs).

        A property with a long lease of over 80 years shouldn't cost more than £1000 to extend, but the marriage value can add several thousand to this. I'd think to extend your lease of 67 years on a property of that value, £10k could very well be a realistic price - consult the Leasehold Advisory Service if you think you're being quoted unreasonable figures.

        Its highly inadvisable (and costly) to let your lease run less than 80 years, and highly desirable to extend it as soon as possible if this is the case. The process can take up to 6 months, but its possible to 'assign' the lease extension to a purchaser before it is concluded, so as not to hold up sale.

        Hope this sets you on the right track.

        Regards

        Comment


          #5
          lease extention

          Thanks for all the replies.
          I have owned the flat for 7 years and therefore definately qualify to extend the lease.
          I will contact a solicitor to start the ball rolling.
          Regarding the time it takes to extend it, i was really hoping to put the flat on the market in the next few months how does the notice of intent to extend a lease work.

          Comment


            #6
            Originally posted by Tallulahballulah View Post
            Thanks for all the replies.
            I have owned the flat for 7 years and therefore definately qualify to extend the lease.
            I will contact a solicitor to start the ball rolling.
            Regarding the time it takes to extend it, i was really hoping to put the flat on the market in the next few months how does the notice of intent to extend a lease work.
            Once Notice served, sale of existing lease can proceed. On completion, you can assign to purchaser the benefit of the extension rights staked-out by the Notice.
            Only problem would be if P needs extended lease completing on or before completing purchase from you (eg mortgagee won't accept existing lease as sufficient security).
            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


              #7
              lease extention

              Thanks for all your help Jeffrey.
              Best wishes.
              Tallulah

              Comment

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