hoofarted
19-09-2006, 14:06 PM
In March 2002, we purchased our flat for £178k with an 82 year lease and at the time did not fully understand the implications of the lease dropping to below 80 years. I have now seen the error of my ways and should have had the lease extended at that point, which would most likely have saved me some money. With all this said and done, I now would like to request advice and information on whether or not to extend the lease and some information regarding this process.
Some additional information.
1. We are planning to move to Australia in a year or so and would like to keep the property. As we will have lived in it for 5 years by then, there is a very good possibility that I will immediately make a profit from the rental and as such, see it as a cash cow, waiting to be milked.
2. An identical flat, in the block of 8, had their lease extended to 99 years at the cost of £15k in March this year. As far as I know, they only had about 52 years on their lease. The new lease subsequently attracted a purchase offer of £265k.
3. Ground rent is £60 per year.
4. The freehold was sold on auction to the new landlord for £25k shortly after. This amount was too much money for the people in the block and considering that our flat was the only flat with a sub 90 year lease, most of the people did not want to carry our costs. And I agree, to a point.
The questions.
1. Do I bother with the extension at this point? The problem with not extending, as I see it, is that the amount of the extortion will only go up and that if I wanted to sell at a later stage, the landlord may, nay WILL, try get as much money from me as he can. On the other hand, if I am only looking at this as a rental property from now on, and intend keeping it till the day I kick it, should I bother?
2. Do I lie back and take it for only an additional 21 years or do I go for the statutory 90 year extension with a peppercorn rent? It seams quite unfair to me to pay all that money and only get 21 / 22 years extra when for not much more, I can have the additional 90 years. As I see it, the marriage value will not be that much higher as a flat with 99 years will have a similar value to one that has 168 years. Maybe a couple of hundred pounds more.
3. How do I get this value of the extension calculated without being burned for costs? I see no point in paying hundreds of pounds for a valuation that would equate to 20 – 30% of the cost of the valuation.
Thanks
Dean
Some additional information.
1. We are planning to move to Australia in a year or so and would like to keep the property. As we will have lived in it for 5 years by then, there is a very good possibility that I will immediately make a profit from the rental and as such, see it as a cash cow, waiting to be milked.
2. An identical flat, in the block of 8, had their lease extended to 99 years at the cost of £15k in March this year. As far as I know, they only had about 52 years on their lease. The new lease subsequently attracted a purchase offer of £265k.
3. Ground rent is £60 per year.
4. The freehold was sold on auction to the new landlord for £25k shortly after. This amount was too much money for the people in the block and considering that our flat was the only flat with a sub 90 year lease, most of the people did not want to carry our costs. And I agree, to a point.
The questions.
1. Do I bother with the extension at this point? The problem with not extending, as I see it, is that the amount of the extortion will only go up and that if I wanted to sell at a later stage, the landlord may, nay WILL, try get as much money from me as he can. On the other hand, if I am only looking at this as a rental property from now on, and intend keeping it till the day I kick it, should I bother?
2. Do I lie back and take it for only an additional 21 years or do I go for the statutory 90 year extension with a peppercorn rent? It seams quite unfair to me to pay all that money and only get 21 / 22 years extra when for not much more, I can have the additional 90 years. As I see it, the marriage value will not be that much higher as a flat with 99 years will have a similar value to one that has 168 years. Maybe a couple of hundred pounds more.
3. How do I get this value of the extension calculated without being burned for costs? I see no point in paying hundreds of pounds for a valuation that would equate to 20 – 30% of the cost of the valuation.
Thanks
Dean