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  • Property-a-holics

    Cost for share of freeholder to extend lease?

    Hi

    I wonder someone can help on the leasehold extension issue, I found a flat which has about 70 years leasehold left. But this flat also has share of freehold. My question is, if I am going to extend the leasehold, say into 125 years or 999 years, do I need to pay a premium for it and how much likely to be? the estate agent say I only need to pay for the solicitor's fee, no premium. Is the estate agent correct on this?

    the market value for flat is about £90,000 and it is in England.

    thank you very much
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    if there's just one other flat in the block with the same length lease and same size thus same value then yes it will cost virtually zero (legals) as you'll have to pay each other the same amount to extend the lease. if there's other flats in the block all different sizes, values and length leases then unless previous owners have extended with just legals and there is thus a agreement in place to do this by all leaseholders it might then cost to extend, however, you'll be paid every time someone else extends as you have a share of the cost of someone else's lease extension.

    does that make sense?

    example : 2 flats in block 70yr lease, costs 5k (say) to extend lease by another 90yrs. The other flat has already extended and paid the former owner of your lease his share. If you are both 50% shareholders - the 5k payment will go 50% to you and 50% to him thus payment of 2.5k + costs.

    if 3 flats in the block and both have already extended and the share in the freehold is 33% each then you'll pay £1666 to each of the other leaseholders and so on.

    if others haven't extended yet and flats are similar value it is fairly normal to have an agreement between leaseholders to extend free of charge (avoids big legal and val fees) as long as rule applies to all - this only doesn't work if some flats are worth more than others.
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    regards Andrew Peers - property investor / sourcer - 07912674181

    a.peers@seamlessproperty.co.uk

    Property Redress Scheme Number 011436     NLA member 174404

    Thanks Andy for details explanation. I understand now.

    best regards.
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    Hi. I own a flat in a block of 12 and a share of the freehold. My lease has 52 years remaining. To extend the lease I inquired with the solicitor of the residents limited company. The solicitor said the option to extend the lease to 999 years is open to me and will be a simple form of Lease by Way of Renewal. She has suggested  to sign the lease in escrow and they will hold onto it it until further dealings regarding the lease such as a re-mortgage or sale of the flat, at which point it can be dated. She states it's more convenient as it will be the cheaper option. However, before anything begins I must pay the legal costs and disbursements. Is it wise to take this advice or am I setting myself up for a fall?...as there has been no mention of any premiums to be paid to the other freeholders. Do I assume it's a free extension of the lease! It's been mentioned it's wiser to get the value of the freehold into the leasehold and the sooner the better. So, is it wiser not to go down the lease in escrow route and to actually get the renewed lease signed, dated and registered now? For the latter, can I request amendments? Any guidance is truly appreciated.

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