Lease- 69 yrs. unexpired- cost of extending term?

[littleblue]

Hi, can someone offer me some advice please.
I am trying to sell my first floor flat which I bought three years ago, which now has 69 year's left on the lease, the ground rent is £25 pa. The sale has fallen through because my buyers mortage company need's 85 years left before they will release the fund's. I thought 69 year's was more than enough plus I had no problems with my mortgage company three year's ago.

Now my estate agent has sugested I extend the lease before accepting another offer. I have received a quote from Simarc saying they will offer a 90 year extension to existing lease at £5,750 plus costs. This sounds really exprensive to me.

They are also willing to offer a new 125 year lease with no premimum payable at an initial ground rent of £300 pa which will increase every year in line with Retail Price Index, plus I'll have to pay their costs of £400 plus VAT.
But surely this second option would put potential buyers off, however I cannot afford to pay out £6k.

Does anyone have any advice for me please....?

[tenant29]

Simarc are well known for bullying leaseholders and making extortionate demands.

What town are you located ? What is the name of your freeholder company ? Is your annual building insurance collected by LPM ?

A higher ground rent would put off prospective buyers and adversely affect your sale price. Best course is to aim for a 90 year extension at peppercorn ground rent and check if your mortgage lender can help you with a 6K extra loan ?

To judge if 6K is expensive or not ?, you need to ask your estate agent what is the sale price with 69 year lease and paying 25 pds p.a ground rent compared with 159 years lease and no ground rent ?

[littleblue]

I live in York and Ive no idea who the freeholder is. How do I find that out...?

The first year I paid buildings insurance to the company that the previous owner used but then found cheaper premiums elsewhere so now I pay it myself and do not use that company.

Thanks for the info, I will check with my EA.

[jeffrey]

jss@netheredgelaw.co.uk

1 You have a legal right to extend for 90 yrs at NO ground rent (="peppercorn").
2 Council of Mortgage Lenders demands >70 yrs unexpired. The CML policy has tightened in recent years.
3 So Simarc (not always very generous) is acting within the rules. Consult your surveyor re whether premium (purchase price) is reasonable.
4 The 125 yr deal is worse if it means only 125 at a rent (as against 85+90 with no rent).
5 You'll have to pay Simarc's costs anyway.


Hi, can someone offer me some advice please.
I am trying to sell my first floor flat which I bought three years ago, which now has 69 year's left on the lease, the ground rent is £25 pa. The sale has fallen through because my buyers mortage company need's 85 years left before they will release the fund's. I thought 69 year's was more than enough plus I had no problems with my mortgage company three year's ago.

Now my estate agent has sugested I extend the lease before accepting another offer. I have received a quote from Simarc saying they will offer a 90 year extension to existing lease at £5,750 plus costs. This sounds really exprensive to me.

They are also willing to offer a new 125 year lease with no premimum payable at an initial ground rent of £300 pa which will increase every year in line with Retail Price Index, plus I'll have to pay their costs of £400 plus VAT.
But surely this second option would put potential buyers off, however I cannot afford to pay out £6k.

Does anyone have any advice for me please....?

[andyv]

Try these people at :- http://www.lease-advice.org/

theres a telephone number where you can get good advice.
"The Leasehold Advisory Service provides free advice on the law affecting residential long leasehold property and Commonhold. In a MORI poll 92% of LEASE clients said they would recommend our service to others. This website contains the full text of all our publications and reports on both leasehold and commonhold, as well as lists of Leasehold Valuation Tribunal decisions and scanned images of those decisions. "



I had a solicitor tell me i could charge about 5k for a 25 extension to a lease when i aquired a freehold to a property. But its just pure capitalism and greed.

[tenant29]

I live in York and Ive no idea who the freeholder is. How do I find that out...?

The first year I paid buildings insurance to the company that the previous owner used but then found cheaper premiums elsewhere so now I pay it myself and do not use that company.

Thanks for the info, I will check with my EA.

Littleblue-

1. The name of the freehold company is given on the ground rent demand.

2. You can get the name of the freeholder from the Land Registry records by linking to your own leasehold flat title and address.

3. You, as a leaseholder, can also demand the name of the freeholder and registered address ( and names of its company directors ) from Simarc .

I am surprised Simarc allow you to buy your own buildings insurance . What Simarc have done in the past is allow you to get into arrears on ground rent and insurance and then at the point of sale , make their demands on owed arrears plus a hefty administrative fee. You should ask for a statement from Simarc of what you owe to the freeholder to avoid any nasty surprises later.

[littleblue]

thanks tenant29, sorry I'm obviously being a bit thick when I ask -
why would I owe the freeholder anything...?
I pay the ground rent on time and I pay all my insurances. How can they charge me....??

[Poppy]

The first year I paid buildings insurance to the company that the previous owner used but then found cheaper premiums elsewhere so now I pay it myself and do not use that company.


I am surprised Simarc allow you to buy your own buildings insurance .
I don't think it's a question of Simarc or any freeholder "allowing" a lessee to buy buildings insurance. All too often lessees on their own volition buy buildings insurance because they are unclear about what they own in the first place. They then ring insurers and erroneously say that they "own" xyz. The insurer has no obligation to check the actual position and will happily take the money. Policies under such conditions are void.

Do you fall into this category littleblue?

What Simarc have done in the past is allow you to get into arrears on ground rent and insurance and then at the point of sale , make their demands on owed arrears plus a hefty administrative fee.

why would I owe the freeholder anything...? I pay the ground rent on time and I pay all my insurances.
The freeholder is still (correctly) charging you for buildings insurance under the terms of the lease. That's why tenant29 is suggesting that you may be getting into arrears. Have you received itemised invoices specifying the inclusion of buildings insurance?

For your own sake you need to find out whether you are paying for buildings insurance twice:

correctly as part of the service charge and
incorrectly and unnecessarily with your own arrangements

Check the service charge invoices.

[littleblue]

As I understand it, I own the actual building but not the land it sit's on. I have asked around and the other flat owners do pay to the specified company. Simarc obviously know that I am not paying to their company of choice, are they able to claim back two year's premiums from me do you think..?

There are no service charges, only a ground rent of £25 pa. I am responsible for the upkeep of top half of the building ie roof and the downstairs is responsible for downstairs ie drains.

I receive an invoice from Simarc every year asking me to pay the £25 which I do. Surely they should tell me if I own them more money for building insurance..?

Thanks for your help guys, its so confusing, I'm never buying leasehold again.!

[tenant29]

You ( or ask a friend) can download the "property title" details of both your flat and the freeholder from http://www.landregisteronline.gov.uk/ at 3 pounds each using a credit card . If your title is "leasehold", you dont own any part of the building.

Your property title should state how much ground rent is payable and when the ground rent will increase ( many leases double up every 25 years )

Ask your estate agent to give you a quotation of the "selling price" of your flat with 69 years left paying 25 pounds per years and same flat with 69+90 = 159 years lease and Nil ground rent. Obviously a lease of 159 years will allow the buyer get a mortgage.

[Poppy]

I doubt that you own the building but merely have a right to occupy it for the length of the term, say 99 years. You need to be clear about what is specified in the lease and what can be recovered by the freeholder in the way of service charges. When did you last read your lease?

[littleblue]

My freeholder is Cavernlodge based in London

My estate agent says there is no increase in value if I extend the lease by a further 90 years but that it would be more saleable. Which makes me think why would I fork out £6k if I'm not going to recoup it back when I sell....?!

I've just received a copy of the lease from Simarc ( which cost me another £65 ! ). This company can obviously charge what they like.

Do you think it be worth writing to the freeholder to offer a smaller amount ie £150 pa for the new 125 year lease...?
Or should I get a valuation carried out on the lease by a surveyor...?

Any advice gratefully received.

[tenant29]

I think the copy of lease could also have been obtained from Land Registry at lower cost.

The method of calculating the cost for adding a 90 year extension to an existing lease under 80 years includes payment of "marriage value" equal to half of the price gain after the lease extension. You normally expect to get a better price on property with leases over 80 years remaining if the buyer can get a mortgage whereas for leases below 70 years, it means a cash buyer only.

e.g If the property price increases by 10K , then you are required to share this gain with the freeholder ,then 5K will go to the freeholder. But if you can show the property price gain is very little, the calculated cost of lease extension may be reduced from Simarc's 6K figure to 1K -2K

Is your agent a well established estate agent business in the same area as your property ?

I suggest that you get the property price valuations in WRITING (at 69 years and 159 years leases ) from your estate agent and then ask a surveyor to calculate the cost for lease extension based on the values given in writing by the estate agent.

Then you can write to Simarc making an offer based on a price say 20% below your surveyor's valuation cost for lease extension and add in your letter that "if they don't agree , you will apply to the LVT".

[user_name]

Yeah, littleblue you'd have to agree with me that Simarc are a complete 'shower of bastards' when it comes to admin fees, I'm in the process of getting a valuation for the purhcase of my freehold for a 3 bed semi-detached house, that cost me £41.00 ish, never heard of paying to get a quotation before, I have my own business, perhaps that's the way to go to get rich quick :-)

They are also not very forthcoming with info, and they are faceless, all correspondence comes signed Simarc, looks like noone wants to admit they work for such a s**t amatuerish company, can't blame them personally, they would probably get strung up by their b**lls and beaten with a stick.

Will keep you posted on my progress with the $imarc (sorry Simarc), but have been bitten once with extortionate demands, this time I'm gonna take em' down, crooks!!!

I'm not bitter you know.

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