Lease extension - Section 61

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    Lease extension - Section 61

    I am in the process of extending my lease. I have not yet owned my flat for 2 years, so cannot proceed under section 42. I wanted to get it done as soon as possible though as my lease now has less than 70 years remaining. I bought it for £209k in August 2011 and the lease commenced in June 1983.

    I engaged with the Freeholder and they undertook a valuation which stated it would be £12630 for a 90 year extension to the lease. As we could only proceed under a contractual route, I offered £6315 for a 45 year extension to the lease. At first they said they had never proceeded this way, but checked with their solicitors and they agreed to my offer.

    The draft new lease has come back to my solicitor as a new lease of 144 years commencing from 1983, with all the terms of the previous lease, including ground rent still peppercorn, and just a couple of amendments. However, they have included a clause to have the right to terminate the lease in 2082 under section 61 of the 1993 act.

    I have a few questions if anyone can help?

    1) This is really off-putting as I feel as if it makes my lease still only 99 years in effect, is this true?

    2) as we are not proceeding under section 42, I haven't served notice, and it is just contractual negotiations, do they have the right to add this clause?

    3) is this clause normally added to lease extensions?

    4) Am I getting a good deal with/without this clause added? and should I proceed with this clause added?

    thanks very much for any help or input.

    #2
    1 and 3 no as the right exists in law for a statutory extensions if not in the new lease. They are seeking to preserve that in a negotiated lease and compensation is available in any event. The Court will determine the right to terminate and compensation due.

    2 see above

    4 it doesnt really affect price.

    I am confused by the 144 years unless they are trying to keep a leases to a start date of 1983

    I would plump for 125 years from now with the clause in 2082, and if you pan to leave in the next few years abandon a peppercorn and pay a GR of £100 to £400 which reduces the premium.
    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


      #3
      Originally posted by leaseholdanswers View Post
      1 and 3 no as the right exists in law for a statutory extensions if not in the new lease. They are seeking to preserve that in a negotiated lease
      Thanks very much for the reply. So if I waited till I had owned it 2 years and took the statutory route, they could add this clause anyway, at which point I would have to pay more for the 90 year statutory extension.

      The lease would be 144 years as it is 45 years on top of the current 99 year lease (lease ending 2127) - keeping start date at 1983. 125 years from now would be 2138 so only 11 years extra. Would that make much difference?

      Comment


        #4
        well its as posted the clause is not inserted into a statutory extension, but that the legal right arises to seek possession at the end of the original term for redevelopment.

        A 144 or 125 lease makes no real difference.
        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


          #5
          Thanks for the responses.

          Comment


            #6
            Someone else had the same concerns:

            http://www.landlordzone.co.uk/forums...61-of-1993-Act

            Comment

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