Lease extension

[Galatea]

We are 3 flats with unexpired 64 year leases. Each lessee has 1/3 share of freehold. We have a management company. Each lessee is a director. Each flat has a substantially different market value. The 2nd floor flat has the lowest value, mine on the first has middle and the groundfloor is by far the very dearest. So premiums should be paid according to a surveyor. I approached one lessee, the ground floor owner a few months ago about the extension but she refused to discuss. The other lessee has left without leaving a contact. Relations are generally very very poor between all three.

Yesterday the groundfloor owner met with me and said she was intending to sell her property and she needed both me and the other lessee to sign ONLY for her own lease to be extended to 999 years. But said she would NOT sign an extension of my own lease and would NOT sign the extension of the other lessee either. I said this is unreasonable and leaves me and the other owner without extensions of our leases. I said there was no whatsoever incentive for us to sign and no way to conduct a business.

I do not intend to sign somebody else’s lease extension when they refuse to sign mine. What would be the point? But what could be the outcome of that? Anyway I asked her to put into writing what she said.
Thanks for replies

[Gordon999]

The free guide to statutory lease extension and valuation method method may be downloaded from Lease website :

http://www.lease-advice.org/publicat...nt.asp?item=10

All 3 flats leases need to be extended by "statutory 90 years extension" before the flats are offered up for sale since most buyers require mortgage facility. There is no statutory right for leaseholders to seek a new 999 years lease.

If the leases are extended separately, each must pay the cost of lease extension to the Freehold company. The free guide shows an example of flat with 68 years lease valued at 150K and cost payable for extension is roughly 10,700 but ontop there may be a further 300o-4000 to pay for surveyor fees and legal fees. The freehold company will pay tax at 20% on the fee received and balance can be distributed back to the 3 shareholders who may be required to pay extra income tax (if paying at 40% tax rate ).

However if all 3 flat owners agree to pay and share the legal costs, the "freehold company" can issue new 999 years leases to each leaseholder at NIL premium. So the freehold company has no income and no tax to pay and all of you will save on legal costs , surveyor fees and tax.

[Galatea]

Thanks for the reply and the link. It is now clear when the 999 years are granted. The lessee however, says she does not want the 3 flats to come together and share in the legal costs; she says and that each flat must do extension by themselves. I asked her to clarify in writing what she would like to do.

[JK0]

If neighbour tries to extend by herself, I would just bluster until she loses her buyer. Then she might see the wisdom of collective action.

[Galatea]

Thanks, exactly. It would not make sense of me signing someone else’s lease extension when they refuse to sign mine.