Extending Leasehold

That's what happens when you buy something leasehold!

She won’t be able to sell it with such a short lease, so she has to factor the costs in to her selling / buying costs.

Helpful as always qq. Some older towns have a lot of leasehold. It isn't always able to avoid it.

She's aware of that and it is why she wants to extend the lease Oopsadaisy.

She was young when she bought it and life doesn't always go to plan. It's a lovely flat, but not big enough for her and my GS.

I was hoping to hear from someone that's gone through the process to get an idea of costs. With a long lease, the flat has got a very good value. And is in a very sought after area. It'd sell in a shot. But since I'll probably have to lend her the money, I'd want to make sure I'll recoup the costs.

Grammar! It isn't always POSSIBLE to avoid it.

The solicitors costs might be charged per hour, but the Leasehold extension will depend on how much the Leaseholder wants you to pay, I don’t think that there is a set value.

So past experiences might not be very helpful.

Would be best for her/ you to buy the Freehold. But if she is going to sell soon she probably wouldn’t recoup her costs.

The freehold isn't available.

I read for another nearby local authority, that the leasehold is awarded at a peppercorn rent, which for them was nothing. BUT there is no assurance that this will be the case for hers.

Could she offer it for sale To Cash buyers only? Then if it doesn’t sell, go down the lease extension route?
It looks as though she might break even if she extended the lease, but she might not. Depends on how greedy the Lease owner is. She might be lucky

I'd be fine with doing it if I had an idea of costs beforehand. But to have to go in blind and then find out that I might not be able to afford it and STILL have to pay for 2 solicitors and 2 valuations galls me.

My friend had to extend her lease on a London flat 5 years ago and that cost her over £20,000 and that did not include the solicitor's fees.

That's helpful Charleygirl. I suppose she needs to get a valuation of flat as it stands now, with a short lease. With a longer lease it would be worth double the outstanding mortgage.

To be honest, I think she'll have to leave it.

I understand that flats can’t be freehold because the land they stand on houses however many stories there are in the flats. My elderly parents bought the freehold to their house a few years ago, but now Dad is no longer with us, and Mum moved south to be near us, and bought a sheltered apartment, we will have a similar problem to you GagaJo whenever we lose Mum. Sorry, I know this doesn’t help your daughter, I’m just agreeing that leaseholds are very difficult, especially on flats.

Gagajo I did this a few years ago. Unfortunately, the cost is increased because of the ‘marriage value’ once a lease has less than 80 years left on it. Good luck to your DD ?

I believe there’s a formula for working out the rough actual cost of a lease extension. AFAIK the freeholder can’t just charge whatever they like. (Solicitors’ fees will of course be extra.). Mr Google should be able to tell you. Unfortunately it gets rather more expensive once the lease period drops below 80 years.

There are specialist solicitors for such things, so unless you know of a good one already, maybe best to look online for one. Many will give a free initial consultation.

Mortgage lenders will I gather not usually lend on relatively short lease properties, but there will always be cash buyers who may like to buy at a discount and extend the lease themselves.

As for buying the freehold, we have been through all this for a maisonette, one of just two where the other owner didn’t want to buy her share, so it was relatively straightforward, but for one in a block it’s likely to be more complicated and very likely not permitted if the freeholder is the local council.

We sold my FiL’s maisonette and were over a barrel with the leasehold, as they knew we couldn’t sell without extending it. I think it cost us £11k, about 10% of the value. This was much more than the formula suggested. It very much depends on who owns the freehold - many have been bought up by unscrupulous people.

Gagajo could you make an informal enquiry to the Leaseholder about how much they would want to extend the lease, before you get Solicitors etc involved?

The Leasehold Advisory Service is a Government funded agency that she can talk to.

You get a 15 minute appointment by telephone so you need to have all the facts and figures at your fingertips when you call. Obviously they just cover the general issues in that time.

Or you can write a letter for specific individual advice but I guess this takes longer.

clients.lease-advice.org

I have also used Leashold Advisory Service when my son was having problems selling his flat due to his management agency. I contacted them by e mail and they replied by e mail they were helpful. Other than that could she try to get to speak to solicitor through Citizens Advice ( not sure if that service is still available) and perhaps they could give her some idea what costs she would be looking at . Good luck it is a stressful process.

Having an extended lease could improve the value of the property and estate agent may have set a lower value knowing there was a relatively short lease.

Laughterlines

Having an extended lease could improve the value of the property and estate agent may have set a lower value knowing there was a relatively short lease.

That will definitely be the case. Although she may still turn a profit. It's in a very expensive area.

Quite a lot of flats are advertised with short leases at a cheap price and once they go under offer the process of extending the lease is started by the vendor but paid for by the buyer. I don't know how well this works but it's worth investigating.

There are proposals going through parliament to try to reduce these costs. Something was rushed through before recess.
Or a cash buyer might buy it at a reduced price to allow for renewing the lease.