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  • Leasehold Property

    Downstairs flat only has 60 years on lease

    I have recently purchased an upstairs flat where I am the freeholder. Before purchasing, the previous owners informed me that the landlord of the downstairs flat was interested in extending the lease but this never got sorted whilst they owned the property, therefore it is up to me to deal with it.

    After looking through documents I’m now aware that the landlord below only has 60 years left on the lease, and through previous research this seems drastically low.

    My question is how do I go about getting him to extend the lease, as his flat is currently rented therefore I can’t get in contact with him. Do I go through a solicitor? Or try to find a way to speak to him myself.

    Also, am I able to profit out of this and charge a premium since he has minimal years left... it seems in some cases it can cos the leaseholder £1000s to renew the lease as he would struggle the sell the flat with only having 60 years left.

    Any help would be greatly appreciated! 

    Oli
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    Land Registry will give name of owner for just £3.

    As for cost of Lease Extension - there are online calculators which will indicate a ballpark figure - noting that Leaseholder is responsible for both parties' legal fees.

    With just 60 yrs left the likely cost of extension will be in tens of thousands of pounds - being essentially the difference between current full market value with a long lease eg over say 90 yrs and today's value with a sale in to a limited pool of cash buyers.

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    Agree with above but you can't force him to extend his lease. He can use it for the next 60 years but then he does have to give the apartment back to you. This will become an issue for him when he comes to sell as no one will buy it and no company will mortgage it. The shorter the time on the lease the more he has to pay you! 

    Couple of questions come to mind here as your the freeholder:
    1) is there a ground rent you should be charging him annually?
    2) there will be a requirement on you to maintain the building and then recover a portion of the cost from him
    3) as freeholder you should be insuring and billing him his apportionment
    4) are you putting a pot of money aside for when repairs are needed, he has to contribute

    You have a lot of responsibility as the freeholder to the apartment below. You need to find him and make contact with him. Ask his tenant for his details could be a starting point. Good luck
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    Thanks for the reply.

    This is my first property therefore I have little to no knowledge about the role of a feeeholder, apart from researching online.

    Looking at online calculators it’s looks as though it’s roughly going to cost him £10,000. Is this realistic?

    I would also be interested in purchasing his property.. could I use this to my own advantage if he was willing to sell?

    Thanks again.
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    10 k sounds far too low unless the flat is worth very little and is eg in a deprived location

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    I live not far from Newcastle so the houses are relatively cheap. His flat is worth around 75k going off others sold in this street recently.
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    Not sure this helps but here's a story that may be relevant.
    My mother was a property developer who separated with my dad who went on to live in a flat he owned but he didn't care about extending the lease. With 70 years left on it he was not interested at that late stage in his life to make the investment. Just didn't care...  So my mum got a bank loan and bought the lease extension and the flat from him for 250K, and let him live there rent free. When he moved out into an elderly care home 2 years later she put the flat on the market and sold it for £900k.

    So I am sure somewhere there is a way for you to make a profit out of that situation somehow!

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    Another quick question. How can I be entitled this amount of money if he was to extend to lease? I appreciate that it is to go towards repairs which may arise but I can’t see how it can cost him so much and benefit myself a great deal. 

    I’ve done my research but it still baffles me how it costs the leaseholder so much.
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    With a tentative £10k for lease extension that is all you would net if the G/F flat leaseholder does opt to extend the lease - though it could cost him/her double that when both sets of legal fees/valuation are factored in. So hardly a king's ransom...

    If for example a flat with a 10 yr lease sells for £100k - the buyer is effectively paying a lump sum upfront to rent the place for those 10 yrs at say £833 pcm in rent.

    On expiry of the lease the buyer has to move out - unless they have the funds to extend the lease at some stage during those 10 yrs - and in that situation the cost would probably exceed the original purchase price of the short lease property - especially if there was significant capital growth in meantime.



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    The premium you would receives is yours and you have no obligation to spend it in the property.



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    I’d occupy myself making sure your other freeholder responsibilities are in order first, you’ll have plenty to learn to keep you busy for a while, there is  the sinking fund, service charge, maintenance schedule, fire risk assessment , emrgency lighting in common areas, etc etc to get in order.
    Once you’ve tracked the leaseholder down and start passing his share of costs on, you’ll soon find out where you stand, it’s entirely upto him as to wether they wish to pursue a lease extension, the comments from the vendor could well have been little more than a dangled carrot of a possible “bonus”.
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