Lease Extension - any experiences?(10 Posts)
We are selling our flat, which has a 79 year lease left. We are aware that the lease will probably need to be extended so have told the EA we are happy to knock 10K off the asking price and serve the free holder with a section 42. This means that we will start the extension process but then upon completion all responsibly will be handed over to the new owner and they can continue the extension themselves. We have been quoted £11K for the Lease extension.
We thought this was a reasonable way of dealing with things as we’ve lowered the price to compensate for the extra expense. We’ve had an offer 6K below the asking price and the buyer insists we deal with the extension. Is it just me who thinks they’re being a tad cheeky? It wouldn’t benefit us financially to accept a lower price AND complete the extension ourselves! It would add value to a flat that we no longer own!
Have any other Mumsnetter’s had similar issues or experiences and what did you do?
It's not only benefiting the new owners to have a longer lease, it is benefiting you too as you are avoiding a lot of the paperwork and you are only offering £10k off a service that has been quoted as costing £11k (incidentally, where did the quote come from? Was it the price that the freeholder is looking for or an estimate from a surveyor? Does it include all the legal fees and VAT?)
From a buyer's point of view, it can be difficult to borrow on flats below 80 years - one solicitor I dealt with said that he advised clients not to buy below 100 years... It sounds as if it would be better for you financially to deal with the extension yourself and sell at the full price rather than expect a buyer to do it.
*that should reach out, "the buyers sorting out a longer lease benefits you too..."
Well you don't have to accept their offer if you think it is 'cheeky' - you can hold our for a better one.
I wouldn't touch your flat with a barge pole - lease extensions are a PITA and expensive.
Why didn't you deal with this before selling? It is a bit silly to let it run down.
I'd get the lease extension process kicked off asap (if you haven't already). It may take you as long to find a decent buyer and complete so it's worth doing. To be honest, it would be better to get this sorted before putting your place on the market as 1)you can ask for a higher selling price and 2)the aggravation/cost of extending the lease will put a lot of buyers off (especially those who may struggle to get a mortgage on a shorter lease).
I suspect your cheeky offerer knows that you won't get as much interest due to your shorter lease so is trying to push home the advantage.
It is hard work as the freeholder may want to string it out as long as possible in the hope of getting more money for the extension. This is more so the case if the freeholder suspects you are trying to sell.
So currently you are stuck between 2 people freeholder and buyer without considering any chain either.
Sort the lease out yourself and then put on the market.
I have seen several flats with short leases advertised and the agents state "investors only" this means cash buyers I think.
thanks all. The annoying part of this is we asked the EA when he did the valuation whether it would make an impact and he advised us to not do anything yet because some people aren’t as bothered about it. (not really helpful in retrospect)
Lalalonglegs We have contacted both our solicitors and the freeholder to ask for a quote to start proceedings. That number was based on what one of the other flats were charged four months ago (we did advise the EA that this was only a holding figure until we get an actual quote)
When I say we’ve ‘knocked 10k off of the asking price’ I fully expect people to knock us down further, so we would accept £15K off for example.
And it’s only been on the market for three weeks so I am happy to sit back and wait for a while. 2 other flats in the block sold within three/four months of going on the market without extending.
Maybe it depends on Area? We’re in Bournemouth
You've been badly advised. When a lease drops below 80 years, that is a critical point (marriage value kicks in) so it becomes more expensive to extend. Perhaps your neighbours got in before their leases dropped below 80 years? Also, you can only go through the process once you've owned the flat for 2 years so refusing to do it means your buyers will only have 77 years left and chances are much more expensive than you think. I would therefore go through the process yourself, irrespective of whether you accept this offer. I doubt you'll be able to sell it otherwise and the longer you sit on it waiting for a buyer to come along, the more expensive the extension will become.
Your EA has given you terrible advice. A lot of mortgage lenders won’t lend on shorter leases, so you’re essentially cutting the pool of people who will be able to buy your flat by not doing it yourself before exchange.
Yes we extended ours because it dipped below the 80 years and many mortgage companies will not lend on properties with leases below that point.
What should have been a straightforward extension took nearly 2 years from start to finish. The freeholder holds the upper hand because they basically have you over a barrell because if your offer is not accepted you end up paying the surveyor fees and any tribunal fees etc. And it may be higher than you expected.
If you already have an amount that your freeholder will accept I would get it put into an extension asap (you will be responsible for his lawyer's costs as well as your own) and get it done. It will be much easier to sell with the extended lease and you won't have to accept knock down prices.
Many estate agents don't have an idea what they are talking about when it comes to this area.
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