Lease extension
Discussion
My flat is currently on the market with an 85yr lease.
I've asked the freeholder to give me a price on extending the lease back to 99yrs.
He's mailed back saying he needs to get the flat valued by a surveyor at a cost of £450 (&VAT).
WTF??? The flat has been valued by the estate agent!
Does the landlord have the right to ask me to pay this??
TIA
I've asked the freeholder to give me a price on extending the lease back to 99yrs.
He's mailed back saying he needs to get the flat valued by a surveyor at a cost of £450 (&VAT).
WTF??? The flat has been valued by the estate agent!
Does the landlord have the right to ask me to pay this??
TIA
Unfortunately, yes. The freeholder can claim back all costs associationed with a lease extension from the leaseholder as far as I am aware.
Has the estate agent indicated that the lease is the reason that your flat is not selling? Normally, leases don't lose much value until they hit the 80 year mark.
Extending from 85 to 99 years is not usually a good idea, because it will cost a lot for the extra benefit you will get.
If you choose to do it, I'd be tempted to ask for a longer lease term, and if the freeholder refuses you can enforce a 90 year extension through the Leasehold Reform Act to take you to 175 years in total. Under the Act, a tribunal will value the lease so the freeholder can't rip you off.
It will still be expensive, though, and you will have to pay all of the fees.
Has the estate agent indicated that the lease is the reason that your flat is not selling? Normally, leases don't lose much value until they hit the 80 year mark.
Extending from 85 to 99 years is not usually a good idea, because it will cost a lot for the extra benefit you will get.
If you choose to do it, I'd be tempted to ask for a longer lease term, and if the freeholder refuses you can enforce a 90 year extension through the Leasehold Reform Act to take you to 175 years in total. Under the Act, a tribunal will value the lease so the freeholder can't rip you off.
It will still be expensive, though, and you will have to pay all of the fees.
The Lease extension will take ages, also any extension usually adds 99years rather than resets the clock. Lease extensions aren't cheap, you pay valuation, survey, legal fees etc, but 85 years should be ok to sell with of course a savy buyer may not want a lease that short as circa 70 starts to cause trouble.
What exactly is the problem with short leases?
I could understand if you wanted to take out a 25 year mortgage on a property with 10 years left to run on the lease but why do lenders start quimming when you want to buy something with say 67 years left to run on the lease but only borrow for 25 years?
I could understand if you wanted to take out a 25 year mortgage on a property with 10 years left to run on the lease but why do lenders start quimming when you want to buy something with say 67 years left to run on the lease but only borrow for 25 years?
neilski said:
What exactly is the problem with short leases?
I could understand if you wanted to take out a 25 year mortgage on a property with 10 years left to run on the lease but why do lenders start quimming when you want to buy something with say 67 years left to run on the lease but only borrow for 25 years?
Simple, too short a lease and if you default on your mortgage the bank will struggle to sell on, lets say you default in year 24 on your mortgage, well the bank needs there to be at least 30 years left to be able to et someone interested and ofcourse the bank of the new buyer may well be similarly jitter about a short lease so realistically anything under 70 starts to get them jumpy especially at the moment when they aren't too keen on lending anyway. I could understand if you wanted to take out a 25 year mortgage on a property with 10 years left to run on the lease but why do lenders start quimming when you want to buy something with say 67 years left to run on the lease but only borrow for 25 years?
Edited to add IIRC it is cheaper to extend a lease while it has a good term left to run than when it starts getting towards the length where banks are jittery.
Engineer1 said:
Simple, too short a lease and if you default on your mortgage the bank will struggle to sell on, lets say you default in year 24 on your mortgage, well the bank needs there to be at least 30 years left to be able to et someone interested and ofcourse the bank of the new buyer may well be similarly jitter about a short lease so realistically anything under 70 starts to get them jumpy especially at the moment when they aren't too keen on lending anyway.
Edited to add IIRC it is cheaper to extend a lease while it has a good term left to run than when it starts getting towards the length where banks are jittery.
IIRC it gets significantly more expensive if its less than 70 yrs - have no idea why.Edited to add IIRC it is cheaper to extend a lease while it has a good term left to run than when it starts getting towards the length where banks are jittery.
We're in the process of selling our flat, with 80 years left on the lease.
If the lease drops below 80 years remaining, then the cost of an extension includes the "marriage value", which significantly increases the cost of extending. It's something to do with having to make a contribution to the freeholder for the increased value of the property.
To put it in perspective, for us it'll cost £6k to extend to 99 years now, however if we wait and let it fall below 80 years it will cost £16k!
Lots of useful info at http://www.lease-advice.org/
If the lease drops below 80 years remaining, then the cost of an extension includes the "marriage value", which significantly increases the cost of extending. It's something to do with having to make a contribution to the freeholder for the increased value of the property.
To put it in perspective, for us it'll cost £6k to extend to 99 years now, however if we wait and let it fall below 80 years it will cost £16k!
Lots of useful info at http://www.lease-advice.org/
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