Lease Renewal

[baz87]

Hi,

 

Im in the process of purchasing a leasehold flat for £125,000. The lease currently has 63 years remaining and the landlord is asking for £17,000 to renew the lease.

 

My bank has said that 63 years isn't a problem regarding getting my mortgage however i realise that when i come to sell the property in 5-10 years time it may be a problem for the person buying the propery.

 

I was just wondering whether anybody could answer the following qustions:

 

1. Is £17,000 a reasonable amount?

2. Is the £17,000 a fixed non-negoitable fee or is it similar to commercial rents where the tennant and landlord try to reach an agreement and if they can't it is settled in court?

3. Would the price to renew the lease go up every year i let the lease run down? For example if i decided to renew the lease in 3 years would the fee be greater than if i did it now.

4. And finally could somebody explain the '80 year marriage value threshold'?

 

 

Thanks

[MrShed]

1) Yes

2) No - you can go to leasehold tribunal if you wish.

3) Yes

4) The laymans view is that it is basically a figure below which the price of renewal increases dramatically - to be honest, I cant remember why!!! Will find out.

[baz87]

Thanks for the help.

 

Not sure whether you can give a rough answer to this;

 

What would have the price been to renew the lease had it fallen within the 80 year threshold (as i said a rough guide would be great) based on a value of £150,000 and ground rent of £25 per year. And if possible what would the procedure be to calculate the renewal price with 80+ years lease remaining?

[MrShed]

What is the ground rent currently, and proposed new ground rent?

[baz87]

As far as i know the ground rent will remain to be £25 per year.

[MrShed]

OK peppercorn rent then.

 

Give me 5 minutes

[MrShed]

OK, fairly accurate calculated 90 year extension costs:

 

Current(63 years) - £10,623

From 79 year position(marriage value included) - £3370

From 80 year position(marriage value not included) - £785

 

Hope that helps!

 

Just realised, that means the £17k isnt all that reasonable...

Edited June 10, 2008 by MrShed

[baz87]

Thanks. Just one thing though, is that to extend it to 90 years or extend it a further 90 years (90 + 63)?

 

I guess the freeholder is in a good position as he knows i can't apply for a renewal until 2 years down the line.

[MrShed]

Thats for a 90 year extension to the EXISTING term (90+63).

[baz87]

Thanks very much.

[MrShed]

No worries good luck with it.

[oldgrumpy]

MrShed,

 

I have just read your very detailed reply to Baz87s question and wondered if you could help me.

 

Flat in question has 71 Yrs of a 99 yr lease to run and reading in your reply that the shorter the lease the dearer the price, now would be the time to act.

 

How does one go about it? I have searched the internet and seen many articles all claiming to be experts in the field, but how do you tell?

 

Would the solicitor that I used to purchase the flat be qualified to act in this type of matter or does it require a specialist?

 

If so where do I look and what sort of charges am I looking at?

 

Finally, what sort of price would I be looking at to renew assuming a value of £120,00.00?

 

Many Thanks in Anticipation.

 

Old Grumpy

[MrShed]

Hi OG,

 

Before answering - can I ask that you create a new thread to ask this? Include:

- Market value of your property

- EXACT lease left (i.e. full years and months)

- Yearly ground rent