Lease- 69 yrs. unexpired; statutory rights better?

[ziggy99]

Hi There

I am hoping someone will be able to help with a couple of queries I have regarding lease extension.

We own a flat in London and at the time of purchase the Freeholder was absent and had been for some years, no ground rent has been paid to him for at least 6 or 7 year and for over 10 years he has not maintained or insured the property and all maintenance and insurance costs have been shared between the 3 flats. We have managed to now track him down though and he continues to have no interest in looking after the building or collecting the ground rent.

We are very keen to sell our property and with a lease of 69 years need to start a lease extension process so that we do not put off potential buyers.
The Freeholder is a private landlord and has said he would extend the lease back to 99 years for a cost of 18K + his legal expenses.

My queries on this are:
- Does 18K sound a fair price to extend the lease. Our flat is on the market for 355K, is a large 1 bed (with garden) in, excellent condition in Clapham and has a ground rent of £50 per annum.
- Does the fact that the landlord has been absent for so many years and effectively breaking the terms of the lease (by not maintaining and insuring the property) have any bearing on the negotiations surrounding the cost of the lease extension?
- Does anyone have idea what sort of legal costs we would normally have to pay for the Freeholder re the lease extension and would we appoint a solicitor on his behalf?
- As we are now in contact with the landlord would he still be viewed by a potential buyer as an absent landlord as he does not maintain or insure the building or collect ground rent?

If anyone can help with any of the questions above I would be very greatful.

Many Thanks

[sgclacy]

I believe that 18K is slightly on the light side and I would suggest you take it up if the new ground rent is modest. My calculations suggest a figure nearer £22k

My estimate assumes that the ground rent rises from £50 to only say £100-£150 in 3 years time when the lease has 66 years left. The flat would have a value with a new long lease and a peppercorn rent of around £370K

In arriving at the value of a lease extension the breaches under the lease are not taken into account; that would have to be a separate action. The LVT view is that in assessing any damages the fact you have not paid for any repair work is deducted from any damages so often it results in no damages being assessed.

The legal costs on the landlord’s part should be around the £500 to £750 mark

I would suggest you set up a Right to Manage Company (RTM) to formalise the maintenance arrangements, from what has been said I assume the landlord would be more than happy with the proposal. After all he can be sued if the building subsides as he would be liable for not insuring the building. The RTM takes that nightmare away from him.

[jeffrey]

We own a flat in London and at the time of purchase the Freeholder was absent and had been for some years, no ground rent has been paid to him for at least 6 or 7 year and for over 10 years he has not maintained or insured the property and all maintenance and insurance costs have been shared between the 3 flats. We have managed to now track him down though and he continues to have no interest in looking after the building or collecting the ground rent.

We are very keen to sell our property and with a lease of 69 years need to start a lease extension process so that we do not put off potential buyers.
The Freeholder is a private landlord and has said he would extend the lease back to 99 years for a cost of 18K + his legal expenses.

- Does the fact that the landlord has been absent for so many years and effectively breaking the terms of the lease (by not maintaining and insuring the property) have any bearing on the negotiations surrounding the cost of the lease extension?
- Does anyone have idea what sort of legal costs we would normally have to pay for the Freeholder re the lease extension and would we appoint a solicitor on his behalf?
- As we are now in contact with the landlord would he still be viewed by a potential buyer as an absent landlord as he does not maintain or insure the building or collect ground rent?

Besides comments from sglacy, note these:
1. As you have owned leasehold for >2 yrs., you have a statutory right to add 90 yrs. to existing 69 yrs. AND to eliminate ground rent. L's offer to you is non-statutory so not as good value.
2. L's previous absence is irrelevant for present purposes.
3. L appoints his own solicitor (for whose services you pay) and you appoint your own. Fees vary but budget for approx. £1000 total.

[ziggy99]

Many Thanks for your help on this query!