Extending lease whilst owning Freehold.

[George66]

Apologies for any ignorance but I'm looking for some advice

We collectively own the Freehold to our property (6 flats, 5 owners).

My lease, and at least a few others are "99 years from 25th Dec 1982" so we have just under 72 years remaining. There has been some discussion about extending the leases. However, nobody has really provided any definitive reasons why we should. Are there any?

We have been quoted c£750 each to do this. Largely comprising of solicitor's fees. We apparently need 2 solicitors: one to act for the Freehold Company (us) and one to act for the individual leaseholders (also us). Is this a fair price? And would/should it be cheaper to act collectively rather than individually?

I'm confused to say the least. Can anyone advise as to the best way forward i.e. do we even need to do it? If so, why? And how much should it cost roughly?

Very much appreciated.

[jeffrey]

You must all extend your leases. If/when one owner wishes to sell/mortgage, only what he/she individually owns can be sold/mortgaged- i.e. currently, only the existing unextended lease. The same is largely true if one of them dies. You do not need two solicitors' firms; the fees should be nowhere near £750 per flat. If everyone uses the same solicitor, the fees per new lease might be £200 + VAT + HMLR search/reg. fee.

[Gordon999]

The reason for extending your lease is to protect the re-sale value of your flat. A future buyer of a flat in your block may have difficulty finding a high percentage mortgage because mortgage lenders are generally reluctant to offer a mortgage loan against the security of a "leasehold property title" falling under 70 years. Talk to a few local estate agents and mortgage companies about this matter if you need to be convinced.

So if the leaseholders are fortunate to jointly own the freehold, then arrange to extend all leases to 999 years at peppercorn ground rent as advised by Jeffrey and more cost effective done all together.

[pilman]

If a solicitor drafted a 999 year lease on behalf of the company, will it not be possible for each leaseholder to act on their own behalf without using a further solicitor.
Re-typing a lease with different names and flat addresses in it is quite straight forward, especially when a word processor is used.

Since the leaseholders are the owners of the freehold, the risk of DIY conveyancing is not likely to cause problems, IS IT?

[Richard Webster]

If the lessees have mortgages then their lenders will want a solicitor to act for them to secure deeds of substituted security to "transfer" the mortgage from the "old" leases to the newly extended ones.

[jeffrey]

If a solicitor drafted a 999 year lease on behalf of the company, will it not be possible for each leaseholder to act on their own behalf without using a further solicitor.
Re-typing a lease with different names and flat addresses in it is quite straight forward, especially when a word processor is used.

Since the leaseholders are the owners of the freehold, the risk of DIY conveyancing is not likely to cause problems, IS IT?
No, not until they try to sell or mortgage; then it might well be.

[lynatsin]

I have a similar query. We own a third share of a freehold and wish to extend our lease but the other two flats (who own equal share in freehold) aren't bothered about extending there lease. All quite amicable and they would have no objection to just extending our lease. Do you have to extend all three? or is that only the case if you are selling.

We are thinking of selling but think we should sort out the lease in advance.

[Richard Webster]

I have a similar query. We own a third share of a freehold and wish to extend our lease but the other two flats (who own equal share in freehold) aren't bothered about extending there lease. All quite amicable and they would have no objection to just extending our lease. Do you have to extend all three? or is that only the case if you are selling.

We are thinking of selling but think we should sort out the lease in advance.

If the other two are happy to sign the documents to effect the extension then there is no reason why you shouldn't go ahead. It is their problem if they discover further down the track that another co-freeholder (your buyer perhaps) does not want to co-operate when they want theirs extended!

[Gordon999]

I have a similar query. We own a third share of a freehold and wish to extend our lease but the other two flats (who own equal share in freehold) aren't bothered about extending there lease. All quite amicable and they would have no objection to just extending our lease. Do you have to extend all three? or is that only the case if you are selling.

We are thinking of selling but think we should sort out the lease in advance.

Best for all 3 flat leases to extend by the statutory 90 years at the same time since each flat has only 72 years remaining on their leases and legal costs can be shared by 3 flats.

( The other 2 flat owners should be aware that most UK mortgage lender's policy restricts new mortgage lending only to leasehold property having atleast 70 years term. )

[jeffrey]

I agree. Not only would this keep all three flats' ownership aligned but it ought to save a lot of legal fees (3 leases at same time will cost far less than if each is granted with a large time-lag between each transaction) and possible later friction between leaseholders.

[fearnebooboo]

Does anyone know whether Capital gains are liable due on A lease extension while owning the freehold in a freehold company. Does surrender and regrant make this an issue for Capital Gains.