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Paying seller for leasehold extension as an 'extra' to stay under SD threshold

(6 Posts)
Bobo23 Tue 25-Sep-12 10:35:53

Hello,

A flat we love is on the market for Offers In Excess Of £269k - its been on since January, needs some doing up (no C. heating etc) and is also leasehold and would need a lease extension which would cost the sellers £10k. Any sale would involve the sellers paying this lease extension.

We have had an offer of £250k rejected and really don't want to go higher because of stamp duty and mortgage affordability.

Is there a legal way of making an offer of £250k and, as part of the offer, making an agreement to pay the seller £10k for the lease extension ? thereby avoiding stamp duty? Has anyone done this?

Thanks for reading and for any advice!

LittleFrieda Tue 25-Sep-12 11:28:00

In order to extend a lease, you need to have held the lease for the last two years. Your vendor therefore needs to be the one to extend the lease and as he will have to do this prior to selling it to you. If he's selling it with the longer lease, the new price will be £260K (£250K plus £10K) and attract that rate of SDLT.

Otherwise you can buy the property for £250K and wait for two years until you can extend the lease yourself.

Bobo23 Tue 25-Sep-12 11:45:24

Thanks LittleFrieda!

We'd have trouble getting a mortgage without a lease extension so the sale is basically dependent on the lease being extended. My hope was that we could come in under the stamp duty threshold by paying the lease cost separately to the seller in a separate arrangement - is this legal/doable?

herhonesty Tue 25-Sep-12 11:46:50

you can get the leaseholder to apply for a lease extension before sale and it can be handed over to the new owner. There is a special form - you need to ask your solicitor for it. That way you will have 6 months to complete the extension so can sit on the 10 k for a few months.

I wouldnt wait two years, the cost of the extension will increase - do you know how many years it is at the moment.

Bobo23 Tue 25-Sep-12 11:53:10

Ahh interesting! I think the lease is around 70 years at the moment.

herhonesty Tue 25-Sep-12 12:25:22

right, so on that basis, i wouldnt wait - if you decide to sell within 2 years and havent exteneded, then you'll have probs.

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