Leasehold extension - can i choose term?

[ellisy]

Hi

I need to move out of my flat as i have a baby and there isn't enough space. However, there are only 73 years left on the lease. I'm not sure what the value is. We bought it in 2006 for £199,950. Estate agents have valued it now at the same price (but none of them have asked how long the lease is).

I think this is going to be an expensive process (my googling research tells me), money which i don't have and can't get hold of so i was wondering if i could just get it extended to 85 years so that it costs me less and i can get it sold more easily. Or shall i just cut my losses and sell it now as is just to get rid? Will/Can people buy it with this length of lease left?

I'd really appreciate any advice as i feel really trapped at the moment.

Thanks

[jeffrey]

You can choose.
1. Sell what you own. Sale price depressed. Seek P buying for cash (or funded by a mortgagee unconcerned by the reduced lease term).
2. Sell what you own but, first, (as you've owned for over two years) serve a s.42 Notice of Claim on L. This allows P to step into your shoes on completion, rather than waiting two years to qualify. To serve costs you little; ensure that P is obliged to cover all associated costs (yours and L's).
3. Extend by non-statutory negotiation with L. The added term can be scaled-down so as to limit the cost to you.
4. Yourself serve a s.42 Notice of Claim on L and extend your lease by 90yrs. Problem: you doubt that you can afford this.

[ellisy]

Thanks Jeffrey that's really helpful. Just so that I am clear though, the only way I can extend by a term less than an additional 90 years is to do it informally with the L. He wants me to go through his solicitors though. So if he won't negotiate informally and i have to serve notice then am I right in thinking that I can only extend by 90 years - no more no less?

Sorry if i'm being a little dumb but this is all new to me!

Many thanks.

[jeffrey]

Thanks Jeffrey that's really helpful. Just so that I am clear though, the only way I can extend by a term less than an additional 90 years is to do it informally with the L. He wants me to go through his solicitors though. So if he won't negotiate informally and i have to serve notice then am I right in thinking that I can only extend by 90 years - no more no less?

Sorry if i'm being a little dumb but this is all new to me!
No, that is precisely what I had in mind. Well done- you're getting the hang of it.

[ellisy]

That's great thank you!

[sgclacy]

If the ground rent is around £50 per annum the cost of a stautory lease extentsion will be £8,750 plus the landlords legal and valuation fees plus your own

[James 2009]

If the ground rent is around £50 per annum the cost of a stautory lease extentsion will be £8,750 plus the landlords legal and valuation fees plus your own

Call me picky, but may I suggest an 'in the region of' between 'be' and '£8,750'? (I have not done any calculations myself and am assuming that sglacy has not made a significant mistake in his calcs.)

[sgclacy]

Call me picky, but may I suggest an 'in the region of' between 'be' and '£8,750'? (I have not done any calculations myself and am assuming that sglacy has not made a significant mistake in his calcs.)

Thank you- I meant in the region of

[Gordon999]

Ellisy,

Check if your existing mortgage lender can provide the extra funding to finance the lease extension.

[quarterday]

This is the only circumstance in which capital gains tax liability can be rolled over rather than be charged on the premium. If the landlord is a private individual and has used up his allowance in the year tax is payable at 18% if a corporation it could be anything up to 40%.

What you ought to appreciate is that if for example the cost to go to +90 years is say £11K inc costs its not going to be that much cheaper to extend the lease to 85 years unexpired. (Possibly could be negotiated privately at £7500 inc costs...)

When the current law was going through Parliament it was to be that any marriage value beyond 90 years unexpired was to be ignored but at the last minute a bunch of MPs who were themselves leaseholders managed to persuade the then Government (quite improperly in my view) that marriage value beyond 80 years unexpired would not be valued in the landlords' favour.

You may as well apply to your lenders to see if they would add £10K to the loan to vastly improve the tenure of their security!

Keep badgering your landlords, you might catch them on a good day and get them to agree something voluntarily by private negotiation which will be good enough for any buyer to rely on ..........