Lease Extension - Getting stung!
Discussion
Hi all, hoping I could get some sound advice on my current issue.
The lease on my modest 2 bedroom maisonette has is now 78years, and to extend it by 90years to 2189 will cost £22k plus legal costs. I understand this is due to marriage value and the property dropping below 80years lease.
I thought the laws were changing on this, but is this all a grey area at the moment? Is there anyway of pushing back on this amount as I am looking to sell shortly and this is going to be a big obstacle.
If anyone can recommend a solicitor who can help on lease extension matter, that would also be great !
The lease on my modest 2 bedroom maisonette has is now 78years, and to extend it by 90years to 2189 will cost £22k plus legal costs. I understand this is due to marriage value and the property dropping below 80years lease.
I thought the laws were changing on this, but is this all a grey area at the moment? Is there anyway of pushing back on this amount as I am looking to sell shortly and this is going to be a big obstacle.
If anyone can recommend a solicitor who can help on lease extension matter, that would also be great !
I have done a few of these....
You need a good experienced surveyor on your side who will negotiate on your behalf and if they dig their heels in be willing to threaten them with a Leasehold Valuation Tribunal.
The 22k is I assume their offer but that need not be anything like the end number but it will take some work and some nerve as it is a game of brinkmanship.
In the wider context that is not a long extension either - it's plenty for your purpose.
You need a good experienced surveyor on your side who will negotiate on your behalf and if they dig their heels in be willing to threaten them with a Leasehold Valuation Tribunal.
The 22k is I assume their offer but that need not be anything like the end number but it will take some work and some nerve as it is a game of brinkmanship.
In the wider context that is not a long extension either - it's plenty for your purpose.
Hi,
I have been through quite a lot of this recently as part of a sale (that didn't go through in the end) so might be able to offer some help.
The first question is have you served formal section 42 notice on your freeholder to get that extension quote or was it requested directly?
My experience was that I informally approached my freeholder for a quotation on a lease extension (85yrs remaining). They came back with a price that was much higher than I expected and at that point I considered my options of serving formal notice/instructing my own valuation survey. After some deliberating I decided to phone them up and have a discussion with them directly as to whether that was their most competitive price. Long story short they were quite forthcoming with a 'best and final offer' that was considerably better than their original quotation - they actually gave two options, one keeping a ground rent, one removing the ground rent. I was quite happy with their offer and started the process of paying a deposit for their legal costs (then our buyer pulled out for unrelated reasons so never completed).
If you haven't served formal notice and the price recieved is from an informal enquiry then I would suggest first contacting them to see if that is their best offer. Alternatively, you could arrange for your own valuation survey (£500-700) which should give you a good indication of the lease extension cost should you take the formal route - this quote could then either be used for informal or formal negotiation.
Saying all this I'm aware legislation is due to change at some point in the future, that should be quite advantageous to leaseholders wishing to extend their lease. 'Millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent' https://www.gov.uk/government/news/government-refo...
So would probably be best to wait for this to kick in if at all feasible.
Hope the above is of some help anyway and good luck with it.
I have been through quite a lot of this recently as part of a sale (that didn't go through in the end) so might be able to offer some help.
The first question is have you served formal section 42 notice on your freeholder to get that extension quote or was it requested directly?
My experience was that I informally approached my freeholder for a quotation on a lease extension (85yrs remaining). They came back with a price that was much higher than I expected and at that point I considered my options of serving formal notice/instructing my own valuation survey. After some deliberating I decided to phone them up and have a discussion with them directly as to whether that was their most competitive price. Long story short they were quite forthcoming with a 'best and final offer' that was considerably better than their original quotation - they actually gave two options, one keeping a ground rent, one removing the ground rent. I was quite happy with their offer and started the process of paying a deposit for their legal costs (then our buyer pulled out for unrelated reasons so never completed).
If you haven't served formal notice and the price recieved is from an informal enquiry then I would suggest first contacting them to see if that is their best offer. Alternatively, you could arrange for your own valuation survey (£500-700) which should give you a good indication of the lease extension cost should you take the formal route - this quote could then either be used for informal or formal negotiation.
Saying all this I'm aware legislation is due to change at some point in the future, that should be quite advantageous to leaseholders wishing to extend their lease. 'Millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent' https://www.gov.uk/government/news/government-refo...
So would probably be best to wait for this to kick in if at all feasible.
Hope the above is of some help anyway and good luck with it.
Thanks all. I really appreciate your great replies .
@Willhire89, Johhniem
£22k is their initial offer, and yes, this is not long at all just to extend the lease by 90yrs (again stipulated by the Property Management Service of the freeholder). Freeholders of the street are the family who built the maisonettes in the 50's apparently.
Good to know that this might be negotiable (thought this was set in stone through some calculator).
I will definitely look up for a good experienced surveyor with that link. Thanks Johnniem
@T1547
I haven't served a formal section 42 notice for that quote, it was requested directly from the Property Management Service and is an informal enquiry.
I will do my best to negotiate with them (through use of a Solicitor lest I balls it up... it is a game of negotiations apparently). I've found out I might be able to go down the 'Non-statutory route' and extend maybe another 40years but with higher ground rent, which will reduce the £22k premium. But again this will be a negotiation.
I will be looking to get an independent valuation survey as you mentioned, thanks a lot.
Doing more digging, apparently the laws will not change for another year at least, and even in this case they are unlikely to wipe all aspects of this punitive feudal system due to pushback from freeholders (think of the cronies). It really is archaic and is a form of legalised theft.
Once again appreciate all your useful insights and feedback on this.
@Willhire89, Johhniem
£22k is their initial offer, and yes, this is not long at all just to extend the lease by 90yrs (again stipulated by the Property Management Service of the freeholder). Freeholders of the street are the family who built the maisonettes in the 50's apparently.
Good to know that this might be negotiable (thought this was set in stone through some calculator).
I will definitely look up for a good experienced surveyor with that link. Thanks Johnniem
@T1547
I haven't served a formal section 42 notice for that quote, it was requested directly from the Property Management Service and is an informal enquiry.
I will do my best to negotiate with them (through use of a Solicitor lest I balls it up... it is a game of negotiations apparently). I've found out I might be able to go down the 'Non-statutory route' and extend maybe another 40years but with higher ground rent, which will reduce the £22k premium. But again this will be a negotiation.
I will be looking to get an independent valuation survey as you mentioned, thanks a lot.
Doing more digging, apparently the laws will not change for another year at least, and even in this case they are unlikely to wipe all aspects of this punitive feudal system due to pushback from freeholders (think of the cronies). It really is archaic and is a form of legalised theft.
Once again appreciate all your useful insights and feedback on this.
I did this on a flat with about 70 years left. Approaching the freeholder was a waste of time and I was guided towards a specialist. Andrew Pridell Associates was the firm I used. It didn't matter that they are in Hove and the flat was in SW17. They did sterling job and got me a much extended new lease with no ground rent at all. I seem to remember it cost about £15k at the time.
Andrew Pridell are a well respected and trustworthy company and I would recommend them wholeheartedly. We are freeholders and two of our flats wanted lease extensions a few years ago, we all agreed to abide by their valuations and figures and the outcome was satisfactory for all concerned.
Echoing other comments you need to speak to a lease extension solicitor and get them to serve notice.
We had 93 years on a 200k flat , but our issue was £480 pa ground rent that increased with RPI every 10 years.
We had to extend but a crap conveyancer on a sale told me that a clause in the lease stopped high ground rent 'rack rent' from preventing a sale or something to that effect.
The freeholder wanted 11k plus costs to remove ground rent. We ended up paying through the statutory lease extension process a smidge more to add 90 years and reset the lease.
Take your solicitors recommendation on a valuer. Ours was brilliant, and feel like we got a good price to extend. 'chroma' was the company not sure if they are regional.
So in short they'll do you if you approach them directly.
We had 93 years on a 200k flat , but our issue was £480 pa ground rent that increased with RPI every 10 years.
We had to extend but a crap conveyancer on a sale told me that a clause in the lease stopped high ground rent 'rack rent' from preventing a sale or something to that effect.
The freeholder wanted 11k plus costs to remove ground rent. We ended up paying through the statutory lease extension process a smidge more to add 90 years and reset the lease.
Take your solicitors recommendation on a valuer. Ours was brilliant, and feel like we got a good price to extend. 'chroma' was the company not sure if they are regional.
So in short they'll do you if you approach them directly.
I've experienced this from both sides.
We had a nightmare around 17 years ago trying to purchase the freehold (rather than extend the lease, but the process is reasonably similar) as the freeholder was some large organisation that basically wasn't interested. My wife's dad owned the downstairs maisonette and we had the upstairs in an end of terrace conversion.
They were very obstructive and ultimately agreed the sale the week before it was due to go to the leasehold valuation tribunal. I think the cost was around £16k (leases with less than 80 years remaining), but legal fees etc.. ended up adding something like another £12k on top (I said they were obstructive)!
We later sold both flats and issued new 99 year leases. We've now been approached by the flat owners with a view to them purchasing the freehold.
In order to not cause them the nightmare we had to go through, I looked at various online calculators to get an idea of the value - most gave a figure around £6k per flat (£250k flat value, ground rent £100, 84 years lease remaining). I basically provided this info to the leaseholders and said we'd be happy to sell to them for this price so £12k + our costs (estimate of £750 + VAT), although they were more than welcome to carry out a formal survey if they wanted. They were happy with that and we agreed the sale.
There are a number of online calculators, which you might find useful at least to get a ballpark idea of what the lease extension should be costing you. These are ones I used:
Hardings
Fraser
LBB
Another calculator
You've already been advised re. surveyors and talking to the landlord (maybe use some of the figures from the above calculators).
Good luck with the process, and I hope the landlords are reasonable.
Further helpful advice is available from the Leasehold Advisory Service
We had a nightmare around 17 years ago trying to purchase the freehold (rather than extend the lease, but the process is reasonably similar) as the freeholder was some large organisation that basically wasn't interested. My wife's dad owned the downstairs maisonette and we had the upstairs in an end of terrace conversion.
They were very obstructive and ultimately agreed the sale the week before it was due to go to the leasehold valuation tribunal. I think the cost was around £16k (leases with less than 80 years remaining), but legal fees etc.. ended up adding something like another £12k on top (I said they were obstructive)!
We later sold both flats and issued new 99 year leases. We've now been approached by the flat owners with a view to them purchasing the freehold.
In order to not cause them the nightmare we had to go through, I looked at various online calculators to get an idea of the value - most gave a figure around £6k per flat (£250k flat value, ground rent £100, 84 years lease remaining). I basically provided this info to the leaseholders and said we'd be happy to sell to them for this price so £12k + our costs (estimate of £750 + VAT), although they were more than welcome to carry out a formal survey if they wanted. They were happy with that and we agreed the sale.
There are a number of online calculators, which you might find useful at least to get a ballpark idea of what the lease extension should be costing you. These are ones I used:
Hardings
Fraser
LBB
Another calculator
You've already been advised re. surveyors and talking to the landlord (maybe use some of the figures from the above calculators).
Good luck with the process, and I hope the landlords are reasonable.
Further helpful advice is available from the Leasehold Advisory Service
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