Advice Requested on Extending Lease on Flat

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 £95,000 and the ground rent is £25 per annum. However, I've recently heard one of my neighbours was quoted £12,000 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

Reply to
Johne_uk
Loading thread data ...

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:

You can apply to a leasehold valuation tribunal (LVT) to deal with certain problems.

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).

formatting link
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 £12,000 to extend his lease :)

Reply to
Troy Steadman

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 £9,000 to £16,000. 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

Reply to
Johne_uk

Given that you have 62 years, and that anyone you are selling to:

1) Doesn't realise it is a problem.

...or...

2) Realising it is a problem sees that can be solved.

...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.

Reply to
Troy Steadman

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

Reply to
Johne_uk

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

Reply to
Johne_uk

Mind you, most mortgage lenders want around 55 years left at term, so you may have problems selling.

Reply to
Justice

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.