Should I accept the lease offer even though it seems unfair??

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    Should I accept the lease offer even though it seems unfair??

    I am in the process of trying to extend the lease on my flat.
    I have had a formal evaluation which suggested the lease extension should be £10,800 for the standard 90 years addition & peppercorn ground rent.
    The flat is one bed in South London valued at approx £200k.
    The valuer then agreed to speak to my freeholders, as they are known to him, and see if we could reach a deal to avoid serving notice and extra legal costs from both sides which i would be required to pay.

    The offer from the freeholder was £12,267 to extend the lease to 99 years with £150 a year ground rent or to 125 years with £250 a year ground rent.
    The valuer thinks this is a reasonable offer and if we can negotiate the ground rent down slightly, suggest that I should go for the extension to 125 years at this price. Thereby saving a long and expensive legal debate.

    Considering this is not the cost for an additional 90 years (which I believe is standard) but simply an extension of either 28 or 54 years on my current lease, this doesn’t sound like a very good deal to me, despite the potential saving on the legal costs. Also considering the increased ground rent instead of reducing it to zero.
    My neighbours in the upstairs flat are also currently trying to extend their lease and have been in a long and protracted legal debate with the freeholders for the last 10 months, resulting in going to tribunal which I am obviously keen to avoid.

    I am struggling to know if I should decide to settle for this poor offer or stand my ground and serve notice possibly letting a tribunal sort it out. I am not in a hurry to move but would be concerned that the legal costs, on both sides, may amount to more than the premium offer they have made.

    Is anyone able to advise?

    #2
    I can't advise on the value, but if you're being told that +90 years and peppercorn rent is £10,800, then any higher offer by the freeholder for a significantly shorter period (plus a ground rent charge of £xxx) should probably be rejected.

    Comment


      #3
      Originally posted by LeaseWorrier View Post
      My neighbours in the upstairs flat are also currently trying to extend their lease and have been in a long and protracted legal debate with the freeholders for the last 10 months, resulting in going to tribunal which I am obviously keen to avoid.
      If the property and the lease are similar, it is a useful decision to refer to, firstly as to terms set and secondly the arguments that were presented.
      Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

      Comment


        #4
        Originally posted by thevaliant View Post
        I can't advise on the value, but if you're being told that +90 years and peppercorn rent is £10,800, then any higher offer by the freeholder for a significantly shorter period (plus a ground rent charge of £xxx) should probably be rejected.
        Seems obvious but the valuer, who gave me the £10,800 estimate, is the one saying i should probably take the deal - mainly to avoid the possibly escalating legal costs. How much would I need to factor in (roughly) for the legal costs of both parties and plus possible tribunal? I'm not sure if this would end up being more than the £12k they are offering.

        Comment


          #5
          Originally posted by leaseholdanswers View Post
          If the property and the lease are similar, it is a useful decision to refer to, firstly as to terms set and secondly the arguments that were presented.
          The neighbours' property is bigger but from conversations with them, sounds like they were offered a poor deal that they haven't accepted and are now going the legal route (ongoing for nearly a year). I am concerned that if I do the same it will end up costing more than the poor deal i have been offered. I don't really know how much the legal process/ lawyer fees would cost if i serve notice. Any ideas?

          Comment


            #6
            Leaseworrier,

            Did you read my comments here: http://www.landlordzone.co.uk/forums...tension-HELP!!

            Is renting your flat out a possibility?
            To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.

            Comment


              #7
              You have a right to buy the Freehold! Why not take advice on that and purchase you could then extend your leases for nothing but it would mean setting up a company but I am sure that is not too difficult!

              Comment


                #8
                But buying the freehold requires agreement on the value of those lease extensions which are the largest part of the FH value....

                Terms agreement would, based on the above, end up at the LVT anyway....
                Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                Comment


                  #9
                  Originally posted by LeaseWorrier View Post
                  The neighbours' property is bigger but from conversations with them, sounds like they were offered a poor deal that they haven't accepted and are now going the legal route (ongoing for nearly a year). I am concerned that if I do the same it will end up costing more than the poor deal i have been offered. I don't really know how much the legal process/ lawyer fees would cost if i serve notice. Any ideas?
                  Realistically a simple straightforward extension will cost 4 to 6K.

                  It is fair to say that part of the negotiated lease extension amount put forward does include an amount for the cost of the applicant making a statutory application- "it'll cost them £x K to argue, add it on".
                  Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                  Comment


                    #10
                    Originally posted by leaseholdanswers View Post
                    Realistically a simple straightforward extension will cost 4 to 6K.

                    It is fair to say that part of the negotiated lease extension amount put forward does include an amount for the cost of the applicant making a statutory application- "it'll cost them £x K to argue, add it on".
                    Thanks for that. Can i just confirm the £4-£6k you mention here is for the legal costs, serving notice etc on top of the value of the extension (valued at £10,800)?
                    If thats the case it would definitely be better to take the deal they've offered wouldn't it?

                    Comment


                      #11
                      Get a quote from a solicitor specialising in 90 year statutory lease extension who can tell you what the real costs should be. Ask for a quote from KatieCohen and legalmaze etc. Dont accept offers for 28 or 54 year extensions at higher ground rent- its really a form of switch selling .

                      Just go for the 90 years + peppercorn ground rent. Ask your mortgage lender to help you on financing.

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