Extending a lease on an ex-council property before selling? 87 years left

[Sandrine1982]

Hi.

We're thinking of selling our 2-bed flat which is an ex-council. It's quite a popular area in London and the flat is really nice (low rise, view of river etc.). However we have only 87 years left on the lease so by the time it's sold it will be 86, which is kind of borderline, right?
According to the calculator, the extension would cost 5-7K plus fees.
The property was valued at 400K.

A few questions for anyone who knows about this stuff.

• Is it worth extending? Would not extending affect our sale?
• How long does it usually take to extend lease on ex-council properties?
• Is the calculator right about the price? I've heard somewhere that ex-council leases are cheaper to extend.
• I wonder whether the new lease reform will have any impact in our case. We still need to extend it, right??

Any advice gratefully welcome!!!

Thanks :)

You need to have lived in a leasehold property for 2 years before you get the right to extend. In that period of time, the cost to extend can have changed significantly. I think I am correct in saying that you can serve a notification that you intend to extend the lease (which costs you nothing) and then transfer the notification to the new owner. This means that they inherit the right to extend from you without needing to have owned the flat for any length of time. This will potentially make the flat more attractive to a new purchaser - but lease extentions are always something you should get specialist advice on, so do speak to a solicitor that works in this area before getting started.

Thank you @QuantumWeatherButterfly.

Yes we have lived here for over 2 years. It's interesting to hear that we can serve the notice and transfer it to the new owner. However they would still need to pay for the extension which may be expensive, right?

I think it's more the cost that's the problem, not the 2 year minimum period. Or am I looking at this from the wrong angle?

Hi OP, yes, the PP is correct. You can serve the notice and assign the benefit of it. The advice is usually not to serve the notice except as part of a sale unless you would be able to go ahead even if the sale fell through. There will be a provision in the contract dealing with this and it should say that the buyer will pay all the costs ie the cost of the actual extension plus any other ancillary costs.

I'd speak to an agent (who knows the building) and try to gauge what is best in terms of marketing and selling the property.

I wouldn't bother. Marriage value doesn't kick in until 80 years so plenty of time for then new owner to extend if they want to. Plus there is new legislation coming in to overhaul the leasehold system so the new owner would more likely prefer to wait for that as it is favourable to leaseholders.

I’ve had to extend my lease it’s a right time consuming faff, phoning solicitors, waiting for people to do different things.

It cost me around £10,000 from a different area but I think we had gone under the 80 year mark. The main reason I chose to do it was because without it the flat would not be very attractive.

If you can sell it without doing it and factor that in the price I would. It sounds like you may get a lot of interest in your flat?

You may also want to double check if people can get mortgages with the amount of years left on your lease because people may like the flat but not be able to get a mortgage on it.

I sold my flat last year and it had 92 years left on the lease. Many potential buyers didn't even bother to visit because of the length of the lease. My flat was aimed at FTB and they seemed to find the lease situation difficult to understand.

In the end I extended to 110 years and found a buyer very quickly.

Also bear in mind though my flat was in London and the market isn't very good for flats.

Wow ... hmm .... different responses.

I would much rather not have to do it, but I also don't want this to negatively affect the sale.

I know the new legislation will be favourable to leaseholders, but it might not come into effect until much later, and the extension might still be expensive after it's passed...

Oh dear, what a nightmare ..

Having once bought an ex LA flat, I would extend before selling, or at least start the process. I didn’t consider any with leases less than 90 years.

I'm in a similar situation to you but not selling.
There are changes coming so I'm holding out to see what happens.
There's a Facebook page called National Leasehold Campaign (NLC) which has loads of information. You could ask but I expect you could probably find answers in previous posts.

We have just sold a flat that had 92 years left on the lease and we extended it to 125 years for selling. We are the freeholders though so all it cost us was legal fees (about £600) and it made the property a lot more saleable.

Go for a statutory lease extension, it will add 90 years to the lease and make the ground rent zero. This will be more attractive to buyers than an informal lease extension that may up the ground rent charges. As you have been there more than 2 years you have that right. The statutory calculators are normally there or there abouts, you will have to pay the freeholders legal and valuation fees as well as your own so make sure you take those into account as well. Should be 2.5-4k for them both all in on top of the lease premium.

As a buyer I wouldn't care but would knock the cost off what I was willing to pay. I also expect that most morrgage companies would be fine with it too. Ex council leases are probably cheaper to extend because the groundrent is usually low and councils won't be completely unreasonable like some freeholders can be (so will hopefully agree to a reasonable valuation without rackng up huge fees)
However I have seen others put off looking at such leases. Perhaps because they don't think they'll have the spare cash to purchase the lease in the next few years. On balance if you're ready to list it I'd just go ahead and do it, if your not planning on listing it immediately then I'd look to extend the lease.

Hmmm thanks that makes sense.

I've also contacted the council about the possibility of them buying the flat back, so let's see.

I've read that there would be no agent fees and no need to extend the lease if LA bought it back?
Also no chain, so much easier to organise?

I would be willing to go down on sale price if that's the case, as the agent fees and lease extension together could easily be 16K .. and it would be such a headache ... so selling back to LA seems much easier and safer...