Lease Extension - share of freehold

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    Lease Extension - share of freehold

    Hi there,

    I own a flat, with share of freehold (1 of 21 shares) in a block of 21 flats, with a 63 year lease remaining. I’ve owned the property for just under a year, so am a way off considering the 1993 Act option.

    I understand that other flats in the block will be on more or less similarly short leases, as there is apparently a “head lease” dating from 1979, I’m fairly hopeful therefore that a consensus might be reached with the other freeholders, without having to go down the statutory route.

    My question at this stage is really what should my first step be? Should I simply email the office of the managing agent stating that I am interested in extending my lease, or is there other action I could/should take at this stage?

    Any advice appreciated.

    #2
    Try knocking on the front door of the other 20 flats and ask if any other flat has extended their lease and how it was done.

    The free guide on statutory lease extension can be downloaded from www.lease-advice.org .

    Comment


      #3
      If you are a shareholder in the freehold owning company contact the directors of the company expressing your interest in extending your lease. (You could even get on the board as it's usually difficult to get directors!)

      It is likely (=normal) that some of the leaseholders, ie those that originally contributed to the collective enfranchisement to secure the freehold have given themselves longer leases, eg up to 999 years, at that time. Those that didn't contribute stuck on the old lease term and you've bought one of those.

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        #4
        As members have got their answers pre crash, please say if you need further help.
        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
          I'm in a similar position, where we have 6 flats in the property that all own a share in the freehold via a company. Leases were issued in 1975 and the freehold was purchased in 1994. The leases only have c. 65 years left on them now so we are looking to get them extended.

          I have received advice that we need to get valuations done on the value of the lease extensions as at 1994 and now and that a chargeable gain may arise in the feehold company which will mean that we could have a tax liability to pay to HMRC. I am unclear about whether we are talking about thousands or tens of thousands of pounds for this tax cost.

          Has anyone come across this before? I thought as we are share of freehold we would be able to extend the leases incurring only legal costs to draw up the lease extensions.

          Comment


            #6
            No and thats because you though that you had the mythical and highly misleading, case in point, SOF.

            The company owns the freehold, you have one share in that company. The right to sell lease extensions is vested in the company, not you or the others, even if you are a shareholder.

            As long as their was agreement at the time or agreement can be reached between you to grant leases* now, at no premium, plus costs, the company in granting the lease extension will be liable to pay tax as it has disposed of its assets. This is always the case though there are work arounds had this been done in 1994……

            As to the date of valuation there is an argument as to 94 or today, but I’ll leave it at the hopeful “dov” of 94, as when it comes to tax there are workarounds now but speak to your accountants.

            * as the company owns the right to sell lease extensions, if there is no agreement a person with no interest in seeking an extension may rightly insist that the company sell them at full value. While you get a form of cash back, a share in all the premiums paid in, a person who doesn’t buy one benefits for the cash in the meantime. This may present a problem as someone will feel that they are paying for something ( tax) that they already have when they didn’t, the company did. Which is why I will bury in sand and cover in honey, next to an ant farm and beehive, the person who first used the terms SoF.
            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

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