Currently I am BTL shopping and noticing some of the flats that has lease that is 90-80 but the agent and seller was saying they can be extended for a certain amount from a website that can estimate that.
However, wouldn’t it be more profitable for the seller to extend it and then sell it at a higher price? if true then why they don’t do it?
It would make me to think that the only reason is they can not extend it so they are selling their property and telling the next buyer it can be extended to fool them to get this off their hand?
Owners have a statutory right to extend for 90 years. This applies 2 years after you have owned it although if current owners starts the process you can finish it. The online calculators are often not accurate so if you want to extend you should get figures from freeholder before you commit.
He may not have the funds, also some buyers will prefer a cheaper property and may not be that concerned by the impact on future value. Solicitors will always recommend it is extended but can depend on personal preference.
Thanks for your response! so are we able to get the solicitor to set up something such as giving the seller the money to extend the lease (if they don’t have the money) and then we purchase their property so we get the extended lease when complete?
Also, how easy is it to get the cost information for the extension from the freeholder before buying?
You wouldn’t give them the money, they start the process which enables the right to extend to be passed to you (without waiting the 2 years). It depends on freeholder how easy or quick process is (unlikely to e simple) but normally they would want money to cover a valuation (for their purposes, separate from your own valuation) and legal costs. The government are saying they will take steps to simplify the process and reduce costs but that will take time if it happens. Best to speak to your solicitor.
So what I am keen to know is before all the cost with solicitor or most importantly deposit paid on exchange am I able to know what they will charge me?
There are online calculators, such as the Leasehold Enquiry Service one. They assume you’re going down the statutory route and they’re a ballpark estimate. They are less accurate below 80 years remaining. They may also not take account of factors such as high or doubling ground rents. You would need to add £3-4k to the price to cover legal and survey fees.
Beware when they extend they do not agree to terms you would not, ALWAYS insist you are in on the negotiations. Ground rent increases and when they increase are the key ones to watch. Also go for the max length term and try to ensure no ground rent
estate agent was telling me about any property below 80 years will be a problem but if above it won’t be as all freeholder will have to extend by law and it is free except the cost of paper work. Is it true?
I don’t think it is as different people saying different things such as another estate agent was saying you will still need to pay some even if it is above 80?
Lastly, is property having 90 years lease worth buying?
