Advice re 2 year ownership before asking for a lease extension

[LRankin]

Hi all,

I'm hoping someone could give me some advice. I have a sale agreed on my flat for £148k with a 77 year lease with an annual ground rent of £35.00. We are in the final stages but the buyer has just requested the sum of £3,750 in contribution towards extending the lease. I have lived in the property for 4 years but have not applied for an extension. Is it correct that they would have to live in the property for 2 years before applying & if so is that always the case or is it at the landlords discretion?
My solicitor is not being very helpful but i just want to understand if it is reasonable that they ask this? If they can't apply for 2 years then i think not as they could sell the property within that time and then i would have given them nearly £4,000 for no reason.

Any advice appreciated, thanks

[jeffrey]

1. Any long-lessee CAN negotiate to extend, if lessor is co-operative.

2. To use statutory rights of extension, one must be:
a. a long-lessee who has owned for > 2yrs; or
b. such lessee's successor. This entails:
i. lessee serving Notice of Claim before completing sale (pref. before exchanging contracts); and
ii. lessee assigning Notice's benefit to P on completing sale to P.

[Lawcruncher]

We are in the final stages but the buyer has just requested the sum of £3,750 in contribution towards extending the lease.

Sounds like a case of disguised gazundering.

[LRankin]

Thank you Jeffrey, so would that mean that the new owners could not extend the lease unless:

a) they have owned it for 2 years
b) i serve the notice on their behalf

I'm just trying to get the facts straight so that i can try & negotiate something as i don't want to pull out of the property we are buying

Much appreciated, Lauren

[jeffrey]

Thank you Jeffrey, so would that mean that the new owners could not extend the lease unless:

a) they have owned it for 2 years
b) i serve the notice on their behalf.
Effectively, yes- but you serve the Notice on your own behalf legally. Intending to assign it later to P is irrelevant at the time of service.

[LRankin]

That's great thank you very much for the help, at least i know where i stand now!

[Richard Webster]

Background is that most buyers don't understand about the eventual need for lease extension and few estate agents really price flats in accordance with the length of the lease remaining.

This means that when a buyer realises that he may have to pay for a lease extension when he wants to sell, he either asks for a reduction to cover the cost of this in the future or asks the seller to arrange the extension out of the purchase money so that the buyer gets a newly extended lease.

The latter will only work if the landlord is willing, but it is worth asking for this because any reluctance to approach the landlord by the seller or any delay/prevarication on the landlord's part will suggest that there may be difficulties in obtaining an extension later. Sometimes sellers will reluctantly agree an allowance which their solicitor suspects is a lot less than what the landlord would actually want for an extension!

Even if this buyer does not get an extension himself he is likely to be asked the same question and have to suffer some price reduction when he sells because his buyer finds out that he could get caught having to pay for an extension.

Whether these discounts/allowances are agreed will depend on the length of the lease remaining and market conditions at the time.