lease extension

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    lease extension

    I have been trying to proceed with a new lease extension with {Mod - name removed}.

    Here is the current overview of our flat:

    72.6 years remaining on existinglease
    Value with new lease approx £205,000.00
    Ground rent: £75 for next 7 years, then £150.00 for next 33 years and £225.00 for next 33 years after that.

    So far we just been trying to negotiate outside of the act. The final premium that {Mod - name removed} will accept is £12,400.00. However, having now read through the draft contract my solcitor has raised serious concern about the future ground rent calculations. Basically, it starts at £100 a year and then rises every 25 years. It is the proposed forumla that is a cause for concern:

    Every 25 years, the ground rent essentially doubles, however, it states that they will work out a value based on one five hundredth of the capital value of the demised premises, the value that will apply will be either a doubling of the figure or the rate determined by the capital value calculations depending on which is greater.

    are there any ways round to get {Mod - name removed} to agree or has anybody had the same situation with them

    #2
    They seem to be being greedy to me.

    My flat's ground rent review formula is a %age of the total building value or the previous value.

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      #3
      when you extend your lease did they implement these terms inn themselves

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        #4
        Your right to lease extension is the statutory 90 years = 162 years at peppercorn ground rent . Any agreement outside the statutory terms is probably to LL's advantage. You can download a free guide on statutory lease extension fron www.lease-advice.org.

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          #5
          There is a rough calculation for cost of statutory lease extension posted by our expert a few years back which can give your an idea of the cost of 90 years extension at nil ground rent . Using your " market valuation" at 205K , the calculated cost is about 11,920.

          http://www.landlordzone.co.uk/forums...read.php?11080

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            #6
            Originally posted by Gordon999 View Post
            Your right to lease extension is the statutory 90 years = 162 years at peppercorn ground rent . Any agreement outside the statutory terms is probably to LL's advantage. You can download a free guide on statutory lease extension fron www.lease-advice.org.
            It is possible for a deal to be done outside of the act whereby both parties gain

            The imposition of a modest ground rent will generally not make any difference to the market value of the flat. This ground rent will benefit the freeholder who can offer a lower premium to the lessee. This may well find this an attractive propositio to the lessee if they are selling. Also the deal if done amicably could save significant legal costs for the lessee who under the act has to pay professional fees of both sides, on a contested case could run into £3-£4k

            therefore unless the lease is about to go under 80 yrs it may be worth trying to negotiate at first outside of the act

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