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  • Leasehold Property

    Extending a short lease-by seller or buyer?

    I had placed an offer on a flat with the short lease subject to the lease being extended which was accepted.
    However the estate agent is now asking for the flat to be purchased with the current duration of the lease ie with a short lease and for the lease extension to be done by myself.(the price of lease extension will be taken off the sale price)

    Does anyone know at what point can a lease extension request be transferred from the seller to the buyer instead of having to wait  for two years?
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    Has the price of the lease extension been agreed with the freeholder?

    This may be of interest - 

    https://www.lease-advice.org/faq/can-the...the-buyer/
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    Apparently the seller  tried to extend the lease two years back but fell into some difficulties with this and was unable to complete.
    No price  has been agreed upon with the freeholder.
     Unfortunately I have no idea about the exact nature of the problem she had(this was inadvertently mentioned by the estate agent)
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    How will you know what amount to deduct from the sale?  What will you do if you also have problems obtaining a lease extension.
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    the reason leases get short are because its a hassle and often tricky (as well as costly) to extend a lease. Your vendor is basically saying I don't have the time or energy to deal with this ('I would have done so by now had I been able to as I could then have sold for more'). 'If you want a good price maybe you can take on the hassle for me'

    They will still need to assign you the right to extend bu serving a notice on the freeholder. You then have two choices, complete with the short lease and extend post completion after the freeholder has responded with how much they want and vendor is happy to pay this amount.

    or if the vendor is not happy to take this amount off the price, they will tell you an amount that they are happy with. you can then either choose to complete or continue negotiating with the freeholder who might come down in price with a good presented argument as why to do so (they will nearly always try their luck for highest payment first). This can be a 6-9mths process if a very short lease and large sum of money involved. Anything 70yrs and above won't affect value very much (circa 7% at 70ys) and anything above 80yrs won't affect value at all (2k max for legals).

    A surveyor is needed to value the property and the lease extension costs (maths algorithm) likely charge £600-1000 and a solicitor required to serve the notice - also a small cost  £200-300. Be warned a freeholder is legally allowed to take 2 months to respond to your request for lease extension - and often do to the day to make you more desperate and pay that bit more.

    best of luck 


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    regards Andrew Peers - property investor / sourcer - 07912674181

    a.peers@seamlessproperty.co.uk

    Property Redress Scheme Number 011436     NLA member 174404

    The vendor should serve the Section 42 Notice after you have exchanged contracts and before completion.

    On completion he assigns over the benefit of the Section 42 Claim to you

    It is VERY IMPORTANT that the Notice of Claim under Section 42 is correct, if it is not and is considered invalid you will have to wait 2 years

    The solicitor who drafts the notice will have to appreciate the significance of getting it right and their fees will have to reflect that level of responsibility



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    This is all if you complete before having extended the lease, you might be able to extend before completion but that would prob involve not negotiating with the freeholder which might be a touch harsh on the vendor (unless they agree to the possibly overly high cost to extend). 

    Say freeholder wants £20,000 and you think £12,000 is more accurate (big difference), vendor says look I will pay you 15k to complete - you might just say yes complete then negotiate with freeholder hoping to get it down under or around the 15k you've been paid.

    So if completing prior to lease being extended i'd at least wait until you have confirmation from the freeholder that the notice has been served correctly and ideally their counter offer in place.

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    regards Andrew Peers - property investor / sourcer - 07912674181

    a.peers@seamlessproperty.co.uk

    Property Redress Scheme Number 011436     NLA member 174404

    I number of freeholders will serve a counter notice on a without prejudice to their claim that the notice is invalid in order to murky the waters

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    It's not ideal buying a flat in this scenerio, but if you do...

    1. Ensure the vendor has owned the flat for at least two years. 
    2. Understand the timescales involved when a notice is served, ie completing the extension within 6 months of the counter notice (sometimes shorter). 
    3. Be aware that you are responsible for the landlord's costs, which can include a grade A fee earner in a top firm of solicitors, as well as their surveyor's costs. 
    4. Ensure that you get the landlord to admit in writing that the section 42 notice is valid. Quite often they will serve a counter notice without admission that the section 42 notice is valid. 

    It goes without saying that with leaseholds, always check future ground rent increases, service charges, sinking funds, major works notices, notice fees etc.
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    Ashley Connell
    Lease Extension Solicitor at Hetts

    http://lease-extensions.org.uk