Lease Extension

[Younez]

I'm trying to extend the lease for where I live, there is 78 years remaining. The freeholder has given a ridiculous figure for a 90 year extension. I hired a local chartered surveyor who said the real value is 1/3 of the figure given by the freeholder. I spoke to the freeholder who said take it or leave, they are not willing to negotiate and happy for me to go down the legal route.

Has anyone challenged a freeholder before and suggestions on which route to go down?
Thanks!

[Steve57]

sadly im sure the only route is via the solicitor who will deal with it, currently renewing a 66 year lease so we can sell. we get a survey, told £9k approx if we want quick maybe offer 11k. no rush so we offer the 9k but gets refused so after some back/forward getting nowhere they get a survey (by a friend) and say they want between 12-14k. Offered the 12 and still refused so now we are going the legal route.

[kingston12]

Unfortunately, if the freeholder is not willing to negotiate at all going to the legal route is the only option left.

How confident are you that your valuation is correct and the freeholders requested amount isn't? The problem with going the legal route is that the legal fees are much higher so if the binding valuation comes back as a higher figure than you are expecting you might not be much better off overall.

As an aside, if the block isn't too big and most of the other leases are of a similar length, it might be worth seeing if you can mobilise enough people to actually offer to buy the freehold. In my experience, it is not much more expensive than extending the lease and in this case just might change the freeholders mind about negotiating.

[Easy_Targa]

I'm a surveyor and do this sort of thing for a living.
The surveyor that you instructed should be able to discuss things with the freeholder's surveyor on your behalf and negotiate a compromise.
The two professionals (your surveyor and the freeholder's surveyor) are both using (or should be) the same basic information and feeding it into the same formula/calculations that dictate how much the improvement will cost. This means that on a simple case there really isn't that much room for argument.
If they cant agree then you can go to a tribunal and ask them to adjudicate, but this will be at your expense.

[Younez]

Thanks for all the info.
Spoke to my lawyer who said it's not worth the hassle(law is in favour of freeholder) or money in relation to the lease amount £35k going the legal route.
The freeholder definitely didn't use a surveyor for the figure and when I asked my surveyor he said minimum charge £400 to talk to freeholder and £250 per hour thereafter. This is a local surveyor in zone 3
Have been told to speak to lease advisory service.
Will let you know how I get on, just feel stupid paying £35k for a £10k for a lease

[kingston12]

Younez said:

Thanks for all the info.
Spoke to my lawyer who said it's not worth the hassle(law is in favour of freeholder) or money in relation to the lease amount £35k going the legal route.
The freeholder definitely didn't use a surveyor for the figure and when I asked my surveyor he said minimum charge £400 to talk to freeholder and £250 per hour thereafter. This is a local surveyor in zone 3
Have been told to speak to lease advisory service.
Will let you know how I get on, just feel stupid paying £35k for a £10k for a lease

The solicitor would be the expert of course, but if the £10k valuation is anywhere near correct, I wouldn't be prepared to pay £35k without challenging it.

You shouldn't have to pay anything for your surveyor to speak to the freeholder but you will have to pay all of their legal fees (as well as your own).

Even going the legal route, I can't see both sets of fees adding up to nearly the £25k difference, especially taking into account that you will still have to pay lower fees even if you just agree to the £35k valuation.

Good luck with it, it is always a shame to hear about somebody else dealing with hassle because of our outdated property-ownership system.

[TooMany2cvs]

Younez said:

Have been told to speak to lease advisory service.

Statutory lease extension calculator is at http://www.lease-advice.org/calculator/

[Younez]

TooMany2cvs said:

Younez said:

Have been told to speak to lease advisory service.

Statutory lease extension calculator is at http://www.lease-advice.org/calculator/

The surveyors assessment is about right

[Younez]

kingston12 said:

Younez said:

Thanks for all the info.
Spoke to my lawyer who said it's not worth the hassle(law is in favour of freeholder) or money in relation to the lease amount £35k going the legal route.
The freeholder definitely didn't use a surveyor for the figure and when I asked my surveyor he said minimum charge £400 to talk to freeholder and £250 per hour thereafter. This is a local surveyor in zone 3
Have been told to speak to lease advisory service.
Will let you know how I get on, just feel stupid paying £35k for a £10k for a lease

The solicitor would be the expert of course, but if the £10k valuation is anywhere near correct, I wouldn't be prepared to pay £35k without challenging it.

You shouldn't have to pay anything for your surveyor to speak to the freeholder but you will have to pay all of their legal fees (as well as your own).

Even going the legal route, I can't see both sets of fees adding up to nearly the £25k difference, especially taking into account that you will still have to pay lower fees even if you just agree to the £35k valuation.

Good luck with it, it is always a shame to hear about somebody else dealing with hassle because of our outdated property-ownership system.

Thanks, unfortunately Surveyor is charging.

[Ken Figenus]

Handy calculator - just fell off my chair as it was a six figure sum to extend a lease on a 700k flat that had 50yrs left! Just as well the freehold was bought for £6k 15 years ago and gave myself 999 years! This area is a right mess of a minefield - what would happen to that property on expiry of the lease I wonder? Hope you get it sorted mate.

[TooMany2cvs]

Ken Figenus said:

what would happen to that property on expiry of the lease I wonder?

Simple. Ownership would revert to the freeholder.

[Ken Figenus]

TooMany2cvs said:

Simple. Ownership would revert to the freeholder.

But they don't own the structure - do they buy that from you at fair market value! Wonder if this ever happens?

[TooMany2cvs]

Ken Figenus said:

TooMany2cvs said:

Simple. Ownership would revert to the freeholder.

But they don't own the structure - do they buy that from you at fair market value! Wonder if this ever happens?

Yes, they do... Owning a lease means you've basically just rented the right to live there for a long period. When the lease expires, it's as if you've had a compulsory purchase order with £0 due to you.

[Ken Figenus]

TooMany2cvs said:

Yes, they do... Owning a lease means you've basically just rented the right to live there for a long period. When the lease expires, it's as if you've had a compulsory purchase order with £0 due to you.

That is so not right! Terrifying!

[TooMany2cvs]

Ken Figenus said:

TooMany2cvs said:

Yes, they do... Owning a lease means you've basically just rented the right to live there for a long period. When the lease expires, it's as if you've had a compulsory purchase order with £0 due to you.

That is so not right! Terrifying!

OK, that was massively simplistic, and there's a chunk more to it - but the freeholder certainly does own the structure, and the freeholder certainly can apply for possession.
http://www.lease-advice.org/advice-guide/security-...

[kingston12]

TooMany2cvs said:

OK, that was massively simplistic, and there's a chunk more to it - but the freeholder certainly does own the structure, and the freeholder certainly can apply for possession.
http://www.lease-advice.org/advice-guide/security-...

Indeed. It is a throwback to less greedy times. Now freeholds are bought and sold for huge sums as investment pieces just like the leases on the flats.

Not only has the value of owning the freehold soared, but also the length of time that a lease is 'good' has come down dramatically. A lot of leases only start at 99 years, so it is a disgrace that a lease costs so much to renew when it gets down to 80 years. It used to be about 50 years before leases started to become problematic,

The only upside for the OP is that the freeholder will extend his less by 90 years to 168 in total. I have heard of some cases where they just extend the lease back up to the original.99 years in total which is a complete nonsense.

The worst thing is that new flats being built now still have separate ownership of lease and freehold.

[Ken Figenus]

Never 1000% understood this - so forgive me...

So, that link does my head in as it seems to equate a property owner as being a leasehold tenant in much the same was as someone who is renting but not owning a property.

A freehold owner landlord usually makes the leaseholder responsible for all repairs but they are effectively repairing a property they don't own? They pay the 'purchase cost' not for the bricks and mortar but for the right to occupy as a leaseholder for a set period of time?

Maybe I have it now! Its very messy!

[kingston12]

Ken Figenus said:

Never 1000% understood this - so forgive me...

So, that link does my head in as it seems to equate a property owner as being a leasehold tenant in much the same was as someone who is renting but not owning a property.

A freehold owner landlord usually makes the leaseholder responsible for all repairs but they are effectively repairing a property they don't own? They pay the 'purchase cost' not for the bricks and mortar but for the right to occupy as a leaseholder for a set period of time?

Maybe I have it now! Its very messy!

Basically, yes. When leasehold first become popular, it was probably a reasonable way to do it but now it is fiercely outdated and has given the property greed-mongers another source of income.

It is not quite like renting because you have the right to extend your lease at anytime during the term. The freeholder can make it difficult (as in the case of the OP) but cannot outright refuse to extend it. A leasehold home is a permanent home that you can own in perpetuity, but there will always bee further fees to pay down the line for extending the lease or possibly buying the freehold. This is obviously not the case with a freehold house which you own as soon as you make the last mortgage payment.

Under most leases, the leaseholder is fairly free to do wha they want to to the inside of the home, so you don't have to ask every time you want to hang a picture etc.

[Ken Figenus]

Thanks for clarifying - I'm sure a few signing a 99 year lease (or less) dont get this.

[kingston12]

Ken Figenus said:

Never 1000% understood this - so forgive me...

So, that link does my head in as it seems to equate a property owner as being a leasehold tenant in much the same was as someone who is renting but not owning a property.

A freehold owner landlord usually makes the leaseholder responsible for all repairs but they are effectively repairing a property they don't own? They pay the 'purchase cost' not for the bricks and mortar but for the right to occupy as a leaseholder for a set period of time?

Maybe I have it now! Its very messy!

Basically, yes. When leasehold first become popular, it was probably a reasonable way to do it but now it is fiercely outdated and has given the property greed-mongers another source of income.

It is not quite like renting because you have the right to extend your lease at anytime during the term. The freeholder can make it difficult (as in the case of the OP) but cannot outright refuse to extend it. A leasehold home is a permanent home that you can own in perpetuity, but there will always bee further fees to pay down the line for extending the lease or possibly buying the freehold. This is obviously not the case with a freehold house which you own as soon as you make the last mortgage payment.

Under most leases, the leaseholder is fairly free to do wha they want to to the inside of the home, so you don't have to ask every time you want to hang a picture etc.