| Advice Requested on Extending Lease on Flat [message #383526] |
Do, 27 April 2006 00:42 |
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Hi,
I currently live in an upstairs flat (block of 4) which is a leasehold.
There are 63 years remaining on the lease and I have been there for
about 3 years. When I purchased the property the remaining length of
the lease was never raised as an issue by my conveyancer,
A couple of people have recently sold their properties and one sale
fell through because of the remaining length of the lease. This raised
an element of concern.
I'm therefore interested in either buying the freehold or extending the
lease. The property is worth about =A395,000 and the ground rent is =A325
per annum. However, I've recently heard one of my neighbours was quoted
=A312,000 to extend the lease.
This seems to be somewhat punitive and I am only imagine that the
leasehold management company is trying it on. Can such leaseholders
charge what they want for these services as it is totally unaffordable?
Surely, there must be some government regulations to prevent
profiteering.
Any advice would be greatly apprececiated.
Thanks in advance
John
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| Re: Advice Requested on Extending Lease on Flat [message #383555 ] |
Do, 27 April 2006 09:48 |
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Johne_uk wrote:
> Hi,
>
> I currently live in an upstairs flat (block of 4) which is a leasehold.
> There are 63 years remaining on the lease and I have been there for
> about 3 years. When I purchased the property the remaining length of
> the lease was never raised as an issue by my conveyancer,
>
> A couple of people have recently sold their properties and one sale
> fell through because of the remaining length of the lease. This raised
> an element of concern.
>
> I'm therefore interested in either buying the freehold or extending the
> lease. The property is worth about =A395,000 and the ground rent is =A325
> per annum. However, I've recently heard one of my neighbours was quoted
> =A312,000 to extend the lease.
>
> This seems to be somewhat punitive and I am only imagine that the
> leasehold management company is trying it on. Can such leaseholders
> charge what they want for these services as it is totally unaffordable?
> Surely, there must be some government regulations to prevent
> profiteering.
>
> Any advice would be greatly apprececiated.
>
> Thanks in advance
> John
All of these decisions turn on the specific facts of your situation, so
you probably need legal advice. There's a weaklth of general advice on
the net, including:
<quote>
You can apply to a leasehold valuation tribunal (LVT) to deal with
certain problems.
<snip>
You can also apply to an LVT if you think that the price the freeholder
wants you to pay for a new lease or to buy the freehold is
unreasonable.
Other problems, such as enforcing the landlord's obligations under the
terms of the lease, may mean you have to go to court. The Leasehold
Advisory Service can give you more information about your rights as a
leaseholder, and put you in touch with your local leasehold valuation
tribunal (see 'Further help' for details).
</quote>
http://www.clsdirect.org.uk/legalhelp/leaflet05.jsp?section= 3D8&lang=3Den
The four flats should certainly consider buying the freehold, and being
shot of the problem for ever. If (say) one flat holder doesn't want to,
then fine! The other three buy the freehold and you can charge him
=A312,000 to extend his lease :)
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| Re: Advice Requested on Extending Lease on Flat [message #383603 ] |
Do, 27 April 2006 19:26 |
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Hi,
Thanks for the reply. I've decided to put the flat up for sale in a few
months (after finishing improvements) and then only purchase a new
(freehold) property when I have exchanged contracts, as there's a high
risk of the buyer pulling out. There are currently 2 owners on the
development trying to extend their lease and I've heard initial offers
ranging from =A39,000 to =A316,000. If I have problems selling because of
the 62 yrs remaining then i will have to get involved with other
tenants and possibly fund an LVT tribunal to try and get a fair price
(i.e. test case) as this should then provide a precedent for other
tenants to follow in their own negotiations (apparently LVT rulings are
published on the web). The problem is one of tenant apathy as people do
not seem to understand all the inns and outs of a leashold property
(myself included when I purchased).
regards
John
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| Re: Advice Requested on Extending Lease on Flat [message #383606 ] |
Do, 27 April 2006 19:42 |
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Johne_uk wrote:
> Hi,
>
> Thanks for the reply. I've decided to put the flat up for sale in a few
> months (after finishing improvements) and then only purchase a new
> (freehold) property when I have exchanged contracts, as there's a high
> risk of the buyer pulling out. There are currently 2 owners on the
> development trying to extend their lease and I've heard initial offers
> ranging from =A39,000 to =A316,000. If I have problems selling because of
> the 62 yrs remaining then i will have to get involved with other
> tenants and possibly fund an LVT tribunal to try and get a fair price
> (i.e. test case) as this should then provide a precedent for other
> tenants to follow in their own negotiations (apparently LVT rulings are
> published on the web). The problem is one of tenant apathy as people do
> not seem to understand all the inns and outs of a leashold property
> (myself included when I purchased).
>
> regards
> John
Given that you have 62 years, and that anyone you are selling to:
1) Doesn't realise it is a problem.
..=2E.or...
2) Realising it is a problem sees that can be solved.
..=2E.you might as well just sell.
62 years is a long time. There is an approximate rule of "materiality",
and it is often set by accountants at around 10%. In other words, most
figures below 10% either way will appear the same to most people.
Above 10% they start to discern a meaningful or material difference,
and that will affect their decision-making.
Whether your lease is 68 or 62 or 56 years is not going to matter a
whole bunch to most people.
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| Re: Advice Requested on Extending Lease on Flat [message #383613 ] |
Do, 27 April 2006 20:52 |
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Mind you, most mortgage lenders want around 55 years left at term, so you
may have problems selling.
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| Re: Advice Requested on Extending Lease on Flat [message #383614 ] |
Do, 27 April 2006 20:47 |
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Yes I see your point about the 10% rule as I thought like that until
somebody explicitly pointed it out to me. I was planning to move within
2 yrs anyway and part of my decision to sell sooner is because I am one
of those people that likes 'closure' which I will not get until I
either sell or extend the lease. Selling seems the easiest option.
regards
John
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| Re: Advice Requested on Extending Lease on Flat [message #383616 ] |
Do, 27 April 2006 20:51 |
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Hi, by 'term' do you mean the length of the mortgage plus 55 years,
which in this case would be 77 years (55 + 22 years I have left to
pay)?
regards
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| Re: Advice Requested on Extending Lease on Flat [message #383651 ] |
Fr, 28 April 2006 13:41 |
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There are plenty of lenders who only require 25 years remaining on the
lease at the end of the mortgage term so provided your buyer uses the
correct lender this won't cause any problems and it saves you having to
spend money extending the lease on your flat.
A good mortgage broker to speak to this about is www.optiomortgages.com
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| Re: Advice Requested on Extending Lease on Flat [message #383683 ] |
Fr, 28 April 2006 22:01 |
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> A good mortgage broker to speak to this about is www.optiomortgages.com
LOL - seen you advertise this four times today.
Do you work for them or something?
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| Re: Advice Requested on Extending Lease on Flat [message #383742 ] |
Sa, 29 April 2006 16:17 |
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abuse [at] uk2.net
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| Re: Advice Requested on Extending Lease on Flat [message #383751 ] |
Sa, 29 April 2006 20:11 |
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Yes I've found that the term varies from lender to lender. I think I'm
going to delay selling until the beginning of next year as I don't see
61 years remaining on the lease really being that different to 62
years. This will give me time to improve the property and see what
happens on the lease extension front.
Thanks to all who replied.
John
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